A lot of particularly big companies are nowadays in the position to provide comprehensive information about critical business processes to decision-makers nearly in real-time with low additional efforts. Information about those processes can be traced through information technology, aggregated and analyzed and used for management decision-making. Still these possibilities are not fully recognized and realized. Aim of this work is therefore to examine the thesis that direct activity/process information must be taken into stronger account for management control and that the management accounting system must adopt the changing organizational and environmental realities by developing and implementing mechanisms to model the process perspective and integrating process information. The integration of process information enhances continuous improvement by providing up-to-date, and easy to understand and interpret measures on the local level that forces immanent response and leads to actions based on observable derivations from defined process objectives.
After essential definitions about Management Accounting, Performance Measurement, and Business Process Management criticism on traditional performance measures is presented (chapter 3.1). Further, arguments that underpin the need to change the Performance Measurement system according to the changes that are implied by a process-based view on the organization are given and aggregation issues are discussed (chapter 3.2). Afterwards, concepts for integrated Performance Measurement systems, e.g. based on the Balanced Scorecard and process measurement frameworks like SCOR or EFQM, that integrate process information are presented (chapter 3.3). In the last chapter (3.4) the opportunities and threats of information systems for a process-based Performance Measurement in general are discussed, and finally a number of recent approaches in academic research and practice to integrate process information in the Performance Measurement System, such as Process Mining and Business Activity Monitoring, are introduced.
Inhaltsverzeichnis (Table of Contents)
- 1. Introduction
- 2. Performance Measurement and Business Process Management
- 2.1 Management Accounting
- 2.2 Performance Measurement (PM)
- 2.2.1 Performance Measurement' and 'Performance Measurement Systems'
- 2.2.2 Integrated PMS
- 2.2.3 Balanced Scorecard (BSC)
- 2.3 Business Process Management (BPM)
- 2.3.1 Business Process Re-Engineering (BPR)
- 2.3.2 Business Process: working definition
- 2.3.3 Process Improvement
- 2.3.4 Business Process Standards and frameworks
- 2.3.5 Process Automation and Information Technology
- 2.3.6 BPM as integrated management approach
- 3. Process-based Performance Measurement
- 3.1 Criticism on traditional performance measures for management control
- 3.1.1 Biases because of wrong allocation bases
- 3.1.2 Timeliness issues because of lagging measures
- 3.1.3 Lacking capabilities for Continuous Improvement
- 3.1.4 Lack of connection to corporate strategy and customer perspective
- 3.2 Adoption of a process-based PM approach instead
- 3.2.1 Congruence between organizational structure and the PMS
- 3.2.2 Measuring the process performance
- 3.2.3 Aggregation issues
- 3.3 Approaches for the integration of process information in PMS
- 3.3.1 Academic approaches
- 3.3.2 Practical approaches
- 3.3.3 BSC and process measures
- 3.3.4 Summary
- 3.4 IT-driven approaches for process-based PM
- 3.4.1 Data Warehousing and Business Intelligence
- 3.4.2 Business Process Management systems (BPMS)
- 3.4.3 Comparison of ERP, BI and BPMS
- 3.4.4 IT-enabled Process Performance Measurement
- 3.4.5 Summary of the presented approaches
- 4. Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This work aims to investigate the importance of incorporating direct activity/process information into management control and adapting management accounting systems to reflect changing organizational and environmental realities. It explores the limitations of traditional financial performance measures in dynamic environments and proposes a process-based approach.
- The limitations of traditional management accounting systems.
- The benefits of a process-based approach to performance measurement.
- The integration of process information into performance measurement systems (PMS).
- The role of information technology in process-based performance measurement.
- The need for congruence between organizational structure and the PMS.
Zusammenfassung der Kapitel (Chapter Summaries)
1. Introduction: This chapter introduces the context of the study, highlighting the increasing competition and market saturation faced by modern organizations. It emphasizes the impact of technological innovations and globalization on business processes and the need for new management approaches. The chapter argues that traditional management accounting systems focusing solely on financial figures are insufficient in dynamic environments and criticizes their limitations, including timeliness, detail overload, and a lack of focus on non-financial aspects like process efficiency and customer satisfaction. It sets the stage for the exploration of process-based performance measurement as a more effective alternative.
2. Performance Measurement and Business Process Management: This chapter provides a foundation in performance measurement and business process management. It explores different aspects of performance measurement systems (PMS), including the Balanced Scorecard (BSC), and delves into Business Process Management (BPM) methodologies, such as Business Process Re-engineering (BPR) and continuous improvement. The chapter lays the groundwork for understanding how these concepts are integrated to create a more holistic and effective approach to organizational control and management. It establishes the relationship between process performance and overall organizational success, setting the stage for the integration of process information into PMS.
3. Process-based Performance Measurement: This chapter critiques traditional performance measures, citing issues such as biased allocation bases, timeliness problems due to lagging indicators, a lack of support for continuous improvement, and a disconnect from corporate strategy and customer perspective. It then advocates for the adoption of a process-based PM approach. The chapter details how to achieve congruence between organizational structure and PMS, how to measure process performance effectively, and addresses challenges related to aggregating process-level data. Significant attention is given to various approaches for integrating process information into PMS, ranging from academic models to practical applications, including the use of the Balanced Scorecard and IT-driven solutions like data warehousing, business intelligence, and Business Process Management Systems (BPMS). The different IT-driven approaches are compared and contrasted highlighting their strengths and weaknesses for effective process performance measurement.
Schlüsselwörter (Keywords)
Process Performance Measurement, Business Process Management (BPM), Performance Measurement Systems (PMS), Balanced Scorecard (BSC), Management Accounting, Continuous Improvement, Information Technology, Data Warehousing, Business Intelligence, Business Process Management Systems (BPMS), Organizational Control.
Frequently Asked Questions: A Comprehensive Guide to Process-Based Performance Measurement
What is this document about?
This document is a comprehensive preview of a work that investigates the importance of integrating direct activity/process information into management control and adapting management accounting systems to reflect changing organizational and environmental realities. It focuses on the limitations of traditional financial performance measures and proposes a process-based approach to performance measurement.
What are the key themes explored in this document?
The key themes include the limitations of traditional management accounting systems, the benefits of a process-based approach to performance measurement, the integration of process information into performance measurement systems (PMS), the role of information technology in process-based performance measurement, and the need for congruence between organizational structure and the PMS.
What are the main chapters covered?
The document outlines four main chapters: An introduction setting the context and highlighting the limitations of traditional approaches; a chapter on Performance Measurement and Business Process Management, providing foundational knowledge; a core chapter on Process-based Performance Measurement, detailing its benefits, implementation, and IT-driven approaches; and finally, a conclusion summarizing the key findings.
What are the limitations of traditional performance measures discussed?
The document criticizes traditional performance measures for biases due to wrong allocation bases, timeliness issues because of lagging measures, lacking capabilities for continuous improvement, and a lack of connection to corporate strategy and customer perspective.
How does a process-based performance measurement approach address these limitations?
A process-based approach aims to overcome these limitations by directly incorporating process information, enabling more timely and relevant insights, facilitating continuous improvement, and aligning performance measurement with strategic goals and customer needs. It emphasizes congruence between organizational structure and the PMS.
What role does Information Technology play in process-based performance measurement?
Information technology plays a crucial role, enabling the collection, analysis, and integration of process data. The document discusses the use of data warehousing, business intelligence, and Business Process Management Systems (BPMS) to support process-based performance measurement. The comparison between ERP, BI, and BPMS systems is also highlighted.
What is the significance of the Balanced Scorecard (BSC) in this context?
The Balanced Scorecard is mentioned as a relevant framework that can be adapted to integrate process measures, offering a more holistic view of performance beyond just financial indicators.
What are the key takeaways from this document preview?
The document advocates for a shift from traditional, financially-focused performance measurement to a more holistic, process-based approach. This approach, facilitated by information technology, allows for more timely, relevant, and strategically aligned performance management, ultimately contributing to improved organizational efficiency and competitiveness.
- Quote paper
- Daniel Fürstenau (Author), 2008, Process Performance Measurement, Munich, GRIN Verlag, https://www.grin.com/document/89839
