Process Optimisation Measurement Roger Knocker Business Optimisation Self

Process Optimisation & Measurement Roger Knocker

Business Optimisation Self Service Data Analytics Integrated Planning & Profitability / Cashflow Models Process & Performance Management

Agenda • Introduction • Process Optimisation • Defining Processes • Templates • Process & Compliance Metrics • Demo’s • Reporting, Budgeting & Planning

Clients Financial Services Manufacturing & Mining Retail, FMCG etc

How important are clearly defined processes?

Responses from CFOs, CEOs & Entrepreneurs Only 25% to 35% of managers / supervisors have clearly defined processes.

25 Benefits of Clearly defined Processes 3 Key Reasons for Failure F) STRATEGIC A) FINANCIAL 21. Assists with aligning the organisation with the strategic direction and initiatives 22. Allows you to see the bigger picture and manage risk 23. It's key to innovating, adapting and changing the business without it the business is directionless 24. Helps determine what you should and shouldn't be doing and keeps the organisation focused 25. It is nearly impossible to successfully analyse and change without clear documentation that accurately reflects the reality of the process 1. Eliminates the waste of time & resources, and creates cost advantages 2. Allows for the streamlining or improving of processes, bottlenecks and financial results B) QUALITY 3. Ensures the continuity and consistency of work procedures and performance 4. Not open to individual interpretation thereby assisting to create stability and uniformity within a business 5. Reduces quality issues E) PEOPLE C) OPERATIONAL 15. It's easier to write up job descriptions and communicate roles to incumbents 16. Keeps everyone on the same page with a common understanding 17. Performance management is far easier to implement, track and report 18. Improves accountability as everybody knows what they are responsible for, and where things fit 19. It enables job rotation 20. New staff members have everything documented, and you only need to explain things once 6. Makes business simpler, not more beauracratic 7. Easier to measure the effectiveness of the process 8. Provides a single way to do things 9. Provides clarity as to what the process and outcomes are, and identifies gaps 10. Reporting of KPIs is more logical and actionable 11. Creates transparency between role players and departments 12. Enables the rollout of new IT systems D) RISK 13. A key risk mitigation tool 14. It limits the risk of relying on one or two members of staff and ensures continuity (if the bus runs them over) No Easy Method “Its too daunting. I don’t know how to get started and what methodology to follow” Time “I don’t have time for processes. There are just so many burning issues right now’” Measurement “I cant measure process adherence easily, so I only know the status of the process when it’s too late”

Solution A simple top-down methodology Standard Templates Continuous Process Adherence Metrics

The 5 Step Process Methodology

Example: Making Coffee Document the steps for making a cup of instant coffee for your guests, and serving it in to them in your lounge 1 2 Boil the water Add the coffee 3 Pour the water into the cups 4 5 Place on a tray Walk to the lounge & serve the guests The 5 steps can be equal in effort, or in 5 logical groupings of activity Sorts out Priority from the Top Down!

Define the Roles involved 1 2 3 Boil the water Add the coffee Pour the water into the cups Hostess 4 5 Place on a tray Walk to the lounge & serve the guests Hostess Host Kids Guests Roles are humans who are active in the process regardless of whether they are providing or receiving something

Add the coffee Host (A) Hostess (R) Pour the water into the cups Place on a tray Hostess (R) Outputs Inputs Roles Boil the water • Electricity • Water • Kettle • • Kettle with Boiled Water Cups Teaspoon Instant Coffee Responsible person who does the work • Kettle with Boiled Water • Cups with Instant Coffee Hostess (R) Host (R) Kids (C) Guests (I) • Kettle with Boiled Water • Cups with Instant Coffee • • • Cups of Black Coffee • Tray filled with Coffee in Cups of Black Coffee Tray Sugar Milk Teaspoons Assigning RACI to Roles 1. # of Cups of coffee per Jar (TP) 2. Average cost per Cup (F) 1. # of Cups poured per Minute (TP) 1. Average Time from Boiled Water Reqmnts Accountable person who ensures that 1. Risk: Extension the cable often 1. Control: Use Standard work gets causes short measuring scope to ensure correct strength done 2. Specification: Less than 2 Teaspoons 1. Risk: Hot water could spill and injure somebody • Tray filled with Coffee in Cups Contribute person who provides inputs to the • Happy guests process but • Dirty Cups does not own the process 1. % of Satisfied Guests (Q) to ready Coffee (LT) KPIs 1. # of Wasted litres boiled (Q) Walk to the lounge & serve the guests 1. Specification: Only use wooden trays for guests Informed person who receives the 1. Risk: Loose carpets could result process output in injury 2. Specification: Guests (Physical or want coffee served > 90 Degrees Information) Celsius

Inputs Add the coffee Host (A) Hostess (R) Pour the water into the cups Place on a tray Hostess (R) Outputs Inputs Roles Boil the water • Electricity • Water • Kettle • • • Kettle with Boiled Water • Cups with Instant Coffee Equipment KPIs 1. # of Wasted litres boiled (Q) Hostess (R) Host (R) Kids (C) Guests (I) • Kettle with Boiled Water • Cups with Instant Coffee • • • Cups of Black Coffee • Tray filled with Coffee in Cups • Happy guests • Dirty Cups 1. Average Time from Boiled Water 1. % of Satisfied Guests (Q) Cups of Black Coffee Tray Sugar Milk Teaspoons Inputs: 1. # of Cups of coffee per Jar (TP) 2. Average cost per Cup (F) 1. # of Cups poured per Minute (TP) • Tray filled with Coffee in Cups Another Process to ready Coffee (LT) The things that are required before the step can begin. Tools 1. Risk: Extension cable often Reqmnts Kettle with Boiled Water Cups Teaspoon Instant Coffee Walk to the lounge & serve the guests causes short Also known as Pre-requisites 1. Risk: Hot water could spill and 1. Specification: Only use wooden 1. Control: Use Standard measuring scope to ensure correct strength 2. Specification: Less than 2 Teaspoons injure somebody trays for guests Data 1. Risk: Loose carpets could result in injury 2. Specification: Guests want coffee served > 90 Degrees Celsius

Outputs Add the coffee Host (A) Hostess (R) Pour the water into the cups Inputs Outputs • • • Kettle with Boiled Water • Cups with Instant Coffee 1. # of Wasted litres boiled (Q) 1. # of Cups of coffee per Jar (TP) 2. Average cost per Cup (F) KPIs • Electricity • Water • Kettle Hostess (R) Host (R) Kids (C) Guests (I) • Kettle with Boiled Water • Cups with Instant Coffee • • • Cups of Black Coffee • Tray filled with Coffee in Cups • Happy guests • Dirty Cups 1. Average Time from Boiled Water 1. % of Satisfied Guests (Q) Outputs: 1. # of Cups poured per Minute (TP) Cups of Black Coffee Tray Sugar Milk Teaspoons • Tray filled with Coffee in Cups to ready Coffee (LT) The deliverable that is produced at the end of a process step Can be physical causes short e. g. Product 1. Risk: Extension cable often Reqmnts Kettle with Boiled Water Cups Teaspoon Instant Coffee Walk to the lounge & serve the guests Place on a tray Roles Boil the water Can be a 1. Risk: Hot water could spill and service injure somebody measuring scope to ensure correct strength e. g. 2. Specification: Less than 2 Teaspoons Security 1. Control: Use Standard Can be data trays fore. g. guests Form completed or app updated 1. Specification: Only use wooden 1. Risk: Loose carpets could result in injury 2. Specification: Guests want coffee served > 90 Degrees Celsius

Outputs Inputs Roles KPIs Boil the water Add the coffee Host (A) Hostess (R) Quality e. g. % Waste, # of Errors, • Electricity Rework • Water • Kettle Through-put • Kettle with Boiled#Water e. g. of Widgets produced KPIs: Hostess (R) Place on a tray Walk to the lounge & serve the guests Hostess (R) Host (R) Kids (C) Guests (I) Lead Time e. g. Financial Order lead e. g. Cost of Job time, Deadline (normally • for aggregated processes) • Kettle with Boiled Water • Cups of Black Coffee • Tray filled with Coffee in Cups Date • Cups with Instant Coffee • Tray • Teaspoon • Instant Coffee • Sugar • Milk • Teaspoons • Cups with Instant Coffee • Cups of Black Coffee Efficiency e. g. # of Widgets • Tray filled with Coffee in Cups produced • Happy guests Dirty Cups per • Day or per Head 1. # of Cups of coffee per Jar (TP) 2. Average cost per Cup (F) 1. # of Cups poured per Minute 1. Average Time from Boiled Water 1. Control: Use Standard 1. Risk: Hot water could spill and (TP) 1. % of Satisfied Guests (Q) to ready Coffee (LT) KPIs 1. # of Wasted litres boiled (Q) Pour the water into the cups Reqmnts 1. Risk: Extension cable often causes short measuring scope to ensure correct strength 2. Specification: Less than 2 Teaspoons injure somebody 1. Specification: Only use wooden trays for guests 1. Risk: Loose carpets could result in injury 2. Specification: Guests want coffee served > 90 Degrees Celsius

Requirements Boil the water Add the coffee Host (A) Hostess (R) Risk What could go wrong? KPIs 1. # of Wasted litres boiled (Q) 1. Risk: Extension cable could Reqmnts Hostess (R) Walk to the lounge & serve the guests Hostess (R) Host (R) Kids (C) Guests (I) • Kettle with Boiled Water Kettle withneeds Boiled Water to be • defined Cups of Black Coffee • Tray filled with Coffee in Cups This catches anything else • • that for example: • Cups with Instant Coffee • Tray • Kettle with Boiled Water have a short Place on a tray Requirements: Roles Inputs Outputs • Electricity • Water • Kettle Pour the water into the cups • Teaspoon • Instant Coffee • Sugar • Milk • Teaspoons • Cups of Black Coffee Control a check to ensure no: financial loss, injury / harm, or illegal, misuse, or poured per Minute 1. # of Cups of coffee per Jar (TP) 2. Average cost per Cup (F) out of policy activity • Tray filled with Coffee in Cups 1. Control: Use a standard 1. Specification: Only use wooden • Cups with Instant Coffee measuring scoop to ensure correct strength 2. Specification: Less than 2 Teaspoons 1. Risk: Hot water could spill and injure somebody • Happy guests Specification • Dirty Cups defines the customers requirements in 1. % of Satisfied Guests (Q) 1. Average Time from more Boiled Water detail to ready Coffee (LT) trays for guests 1. Risk: Loose carpets could result in injury 2. Specification: Guests want coffee served > 90 Degrees Celsius

Make coffee and serve to guests Purpose: To make coffee for guests and serve it to them in the lounge Add the coffee Host (A) Hostess (R) Pour the water into the cups Place on a tray Hostess (R) • Electricity • Water • Kettle • • • Kettle with Boiled Water 1. # of Wasted litres boiled (Q) Walk to the lounge & serve the guests Hostess (R) Host (R) Kids (C) Guests (I) • Kettle with Boiled Water • Cups with Instant Coffee • • • Cups with Instant Coffee • Cups of Black Coffee • Tray filled with Coffee in Cups • Happy guests • Dirty Cups 1. # of Cups of coffee per Jar (TP) 2. Average cost per Cup (F) 1. # of Cups poured per Minute 1. Average Time from Boiled Water 1. % of Satisfied Guests (Q) 1. Control: Use Standard 1. Risk: Hot water could spill and Kettle with Boiled Water Cups Teaspoon Instant Coffee (TP) Cups of Black Coffee Tray Sugar Milk Teaspoons • Tray filled with Coffee in Cups to ready Coffee (LT) KPIs Outputs Inputs Roles Boil the water Reqmnts 1. Risk: Extension cable often causes short measuring scope to ensure correct strength 2. Specification: Less than 2 Teaspoons injure somebody 1. Specification: Only use wooden trays for guests 1. Risk: Loose carpets could result in injury 2. Specification: Guests want coffee served > 90 Degrees Celsius

End to End Business Process Resource the Business Market & Sell Roles Back The purpose of this slide is to describe the overall business process model and includes steps, roles, inputs, outputs , KPIs and any other requirements (Controls, Risks, Customer Specifications). Define Strategy, Risk & Improvements Manage Cash & Profitability Make, Deliver & Service Clients Home Managing Director A Operations Director A Financial Director A Managing Director A Sales & Marketing Director R Operations Director R Customer Experience Officer R Operations Director R Financial Director I Financial Director R HR Director R Supply Chain Director R Chief Technical Officer R Supply Chain Director R Financial Director R HR Director R Supply Chain Director C Procurement Director C Outputs Inputs Sales & Marketing Director C • • • Partnership Agreements Market Intelligence Target Market Definition Unique Value Proposition Client Intelligence Sales History Analysis • • • Growth in Revenue Acceptable Gross Profits Growth in New Markets Growth in New Territories Growth in Strategic Products / Services • Revenue from Innovations • Effective Marketing • Increased Brand Awareness • • • Business Strategy Product / Service Roadmap Labour Trends Changes in Legislation Suppliers Product & Service Roadmap • IT Industry Trends • Technical Industry Trends • Growth in New Markets • Sound Technical Direction & • • • • KPIs • 1. Value of Sales 2. % Revenue Variance to Budget 3. % GP 4. % Revenue Growth 5. % Strategic Revenue to Total Revenue 6. % Growth of Inbound Leads 7. Revenue per $1 of Marketing Req. Spend 1. Requirement 1 - N/A Productive Employees Capable Workforce Happy Employees Quality & Reliable Supply Relationships with Strategic Suppliers Business Process Automation Business Intelligence & KPIs Agile IT Infrastructure Enabling Growth Sound Technical Direction & Strategy 1. Revenue per Employee 2. % HR Cost to Revenue 3. % Employee Satisfaction Score 4. % Skills Gap 5. % Suppliers Meeting SLAs 6. % IT Cost to Revenue 7. % IT SLA Compliance 8. % IT Projects on Time, Scope & Budget 9. % Capex Milestones on Time, Scope & Budget 1. Requirement 1 - N/A • Business Strategy • Shareholder Profitability • • Requirements Sales Performance Analytics Operations Analytics Workforce Analytics Procurement Analytics • • • Long Term Shareholder Value Healthy Operating Margins Optimised Working Capital Positive Cash flow Predictable Business • • • Strategy • Quality & Reliable Supply • Capable Workforce • Growth in Strategic Products / Services Revenue from Innovations Increased Brand Awareness Financial Results Profitability Analysis PEST Analysis SWOT Analysis Customer Feedback • Spare Capacity Quality Products On Time Delivery Competitive Products & Services Good Customer Relationships Optimal Inventory Efficient Distribution Increased Production Efficiencies 1. % Schedule Adherence 2. % OTIF (On Time in Full Deliveries) 3. Conversion Cost Per Unit 4. # Rejects per Million 5. % Average Plant Utilisation 6. # of Inventory Turns 7. % Credit Notes to Revenue 8. % Customer Service SLA 9. % Unplanned Overtime 1. Requirement 1 - N/A 1. % Profit Forecast Accuracy 2. Debtors Days 3. % of Days Cash Positive 4. Value of Cash on Hand 5. % Lost Discounts 6. % Variance to Budgeted Overheads 7. % Gross Profit 8. % Operating Profit Margin 9. Operating Profit Value 1. Requirement 1 - N/A Business Transformation Successful Projects ROI on Investments Risk Mitigation Plans Strategically Aligned Organisation • High Performance Culture 1. Audit Score Rating 2. % ISO Score 3. BEE Rating (South Africa) 4. % Strategic Risks Mitigated 5. % Completed Projects with ROI 6. % Projects on Time, Scope & Budget 7. % Business Objectives Achieved 8. Value of Savings from Improvement Initiatives 1. Requirement 1 - N/A

Part II: Vanilla Template Demo

Part III: Measurement

Process Measurement Challenges • Often not done at all • Business and Financial Measures get the focus • It’s typically a once off exercise • Once a year • When there’s a crisis • Sometimes by the Auditors • So much to measure • Long Process • • Requires an IT Project Costly Difficult to change or enhance Difficult to maintain

CABAM Continuous Anomalies & Business Assurance Monitoring Power Users All Users Dashboard & Reports User Defined Rules Continuous Test Engine Data • Data Quality • Anomalies & Exceptions • Compliance • Process Adherence • Reconciliation* Test Results & All Anomalies

Customer Examples • Address Book AC 18 is null or 'ZZZ' • Customer Geo Area is blank or 'ZZZ' • Customer Group is blank or 'ZZZ' • Customer Sales Region is blank or 'ZZZ' • Customer with NO Credit limit • Foreign Customers with VAT Code not "E" • Incorrect VAT Flag on Customer Master • Local Customers with Tax Explanation code other than 'V' • Customer Sales Region is blank or 'ZZZ'

Employee Master Examples • Duplicate ID's • Employees same bank accounts, address, name • Employees with no tax number, ID, Do. B • Employees with frequent address changes • Employees with frequent bank changes • Employees with unexpected age (<16 and >70)

Supplier Master Examples • Supplier ABC Analysis is blank or 'ZZZ' • Supplier BEE / Social Responsibility Category is blank or ZZZ • Supplier Classification is blank or 'ZZZ' • Supplier Description contains invalid punctuation • Supplier Parent Name is blank or 'ZZZ' • Supplier Performance Rating is blank or 'ZZZ' • Supplier region <> 'ZZZ' foreign suppliers • Supplier SIC Classification is blank or 'ZZZ' • Suppliers (Foreign), payment instrument not 'F' • Suppliers (not Foreign), payment instrument 'F' • Suppliers with no banking details • Suppliers, bank account not blank, but description is blank • Duplicate Vendors (Name, address, tel, email, taxnum, vatnum)

Accounts Payable • Suppliers charging VAT, with no VAT number • Unmatched GRV's older than 1 month • Local Sales invoice has no VAT • Match – Purchase Order, Invoice, Payment • Duplicate Vendor Invoices • Payments before invoice date • Creditors with debit balances • PO after Invoice data • GR before PO date • Duplicate PO's • Long outstanding open PO's

GL Transactions • Expenses exceed Budget/GL Account used, but not Budgeted • GL Explanation is NOT populated for this record (GLDCT not 'AE') • GL Explanation is NOT populated for this record (GLDCT not 'AE', 'RC', 'RO', 'T 2') • Journals traced to VAT account • Identify duplicate manual journal entries • Round journal analysis • Journal entries to new GL accounts • Journals with capture date after period closing date • Frequent Journal reversals per user

Procurement • Delivery Note number not populated on GRV • Lost Discounts on Credit payments • PO open for longer than 30 days after promised date • PO Price Variances (PO vs Invoice) • PO Price Variances against Std cost for RM • PO Price Variances more than 5% on Weighted Average Costs • PO awaiting approval older than 1 month (PDNXTR='230') • PO requested date future dated with more than 6 months • PO requested date more than 1 month overdue (Orders not received) • Supplier Remark is blank (DCTO = 'OP') • Receipts with Variances out of Tolerances

Sales • Reason Code is not populated for Cancelled Sales Orders • Actual Ship Date (ADDJ) is blank or future-dated by more than 1 • • • year Credit Note Reason Code is not populated Customer invoiced with incorrect document type Number of Open Sales Orders with Requested Date older than 60 days Order has zero cost Orders with backorder quantity but zero unit price Sales Orders delivered but not posted Sales Orders that have an Invoice Date, but no Actual Delivery Date Sales Unit Price less than zero Scheduled Pick Date (SDPDDJ) is blank or future-dated by more than 1 year SO has zero cost (Line Type not 'DN')

The Framework • System Uptime • System Responsiveness to benchmarked Transactions • • Passwords resets Logon Failures Virus Attacks Virus Preventions Network Breaches Internet Abuse Bandwidth Abuse • • • Modules to GL Modules to Cardex System to System ERP to DW Internal & External Data • Development to Live • Tax Re-calculations System Performanc e IT & System Security • • • Controls Testing 1 Integrated Dashboard Automated Reconciliati ons • • Missing data Wrong Categories Dependent Rules Duplication within System • Duplication Across Enterprise Master Data Process Monitoring Suspicious Events Manual Overrides Process Not followed Policies Violated Incorrect Sequence System controls • Excessive: • Lead Times • Quality Rates • Inefficiencies • Rework • Laziness • Missing Reasons Codes • Old Orders • Wrong dates • Round Amounts • Payments after hours • Excessive Journals & Corrections

Solution Demo • Self Service Analytics • Generic Demo • Create a couple of new tests

Self Service Analytics Demo

Continuous Anomalies Demo This dashboard is interactive and summarises over 450 error tests across multiple systems. It allows you to see a summary of entire organisations error on one screen and then drill to the actual error line items, which provide the document reference etc. The individual tests run every single day and proactively highlight issues in master data, processing, policy, controls, compliance and more. The Business names are fictitious.

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