Page 285 - Performance Leadership

274 • Part IV Implementing the Performance Leadership Framework

made handing over work from one department to the other. A very tan-
gible way of measuring the result of high (or low) quality, is tracking
the days-sales-outstanding, the amount of time it takes the customer to
pay the invoice. If mistakes are made or processes take too long, the
customer will not (and should not be forced to) pay. This information
is not only vital for the finance department, but for all departments
involved in the process, including planning.
To manage cost within a transactional relationship, the only thing you
can do is manage departmental budgets. And once in a while the spe-
cific process undergoes an external benchmark. Within a more collab-
orative, joint-value process, cost-effectiveness is measured by an overall
total cost of owner ship (TCO). A competitive comparison on cost,
price, and margin (estimated if there is no precise public information)
has more meaning than in internal budget variance analysis.
The bottom line, however, is cost from the customer perspective.
Local optimizations may lead to various service organizations visiting
customers, each performing their own installation process for a specific
product or service. However, the customer must be home multiple
times, and may even be faced with multiple charges for at-home visits.
Although this represents revenue for each product division, the key
question is if this revenue is “healthy,” as it represents unneeded costs
for the customer. An operationally excellent triple-play installation
process minimizes the customer cost.
Function-point analysis is a technique used in IT application devel-
opment as well as in the automotive industry. Every activity (program-
ming in IT, or assembly in automotive) is evaluated on its complexity
and is tagged with a number of function points. The higher the com-
plexity, the more points. Telecoms would do good to perform such
analysis on complex installation processes as well, to better manage the
ease of doing business. It helps to identify local optimizations, and
design overall processes with lower complexity. On the managerial
level, in joint-value relationships, the ease of collaboration could be
measured by tracking to which extent resources such as capital, staff,
materials, facilities, and information are shared and reallocated dynam-
ically between the various departments.
In many organizations, finance professionals frown on double count-
ing outcomes. However, in a joint-value relationship, all involved