Operational Performance Analysis

Analyzing Operational Performance

Analysing operational performance is important for changing management data gathered from a project into useful information. This information can then be used for making management decisions and informing future actions. It is essential to constantly review the operational performance in order to find ways for improvements, to see if the team is on track, predict future expected outcomes and make plans as a result of the analysis.

The analysis can be regarded as a learning process and particularly a good operational analysis will assist the business to:

• Evaluate how the projects are performing concerning the project outcomes accomplished and the resources provided.

• Evaluate the capability of the project to reach its goals in the planned budgets

• Examine if the major risks have changed and if they are handled efficiently.

• Classify issues and opportunities in financing activities of the project

• Evaluate if human capacity is developed as needed

A good analysis process has specific attributes, as it:

• Integrates operational certainties of the front line with the priority of the leadership.
• Takes maximum advantage of internal experts and external perspectives
• Presents a way to have an objective evaluation of the gap in the environment and the typical description of ‘what good seems like.

There are five crucial success factors for analyzing operational performance. They are as follows:

1. Verify the top-level metrics of performance
2. Make use of a template that explains the various levels of performance for different functions
3. Involve the organization from the beginning
4. Prioritization of opportunities
5. Define an execution method

Operational analysis tools

Some of the operational analysis tools are as follows:

• Process flow diagram

Process-flow diagram, Pixabay.com

This diagram is commonly used for continuous improvement. It shows everything happening in a process, and it should be finished before starting the improvement process. This preliminary diagram is essential in order to understand what is done in reality and it provides a document that can be used for communicating the process changes.

• Histograms

Histogram, Pixabay.com

A histogram is a simple method for displaying diagrams. It shows the frequency of various measurements and displays their distribution.

• Pareto charts

Pareto chart, Flaticon.com

A Pareto chart is a bar and a line graph, in which separate values are displayed in descending order with the help of bars and the cumulative total with the help of the line. This chart immediately identifies the important events that might be the cause of the problems.

Data analysis and performance operational metrics

In the current competitive market, every business is in search of an advantage over its rivals. Teams are moving more rapidly than they ever did, projects are increasingly becoming more complicated, and customers expect to receive more products at low prices. All these factors add up for the managers who are trying to find ways to analyse data, track and enhance their performance. This point is where metrics­, particularly operational metrics have their role. Companies must assess their successes and identify areas that need improvement.

What are operational metrics?

Operational metrics are the main performance indicators that let the company see a project’s present stage in real-time or in more detail by the hour/day/week/month. This is crucial as these operational metrics provide a closer look at whether any team or system is moving forward on the right track and let the company take immediate actions. This will lead to the prevention of smaller problems before they get out of control. Operational metrics support in managing people and processes in order to achieve the full potential of all the teams. Some of the metrics are as follows:

Cost per click

The need to develop particular metrics and trace their effectiveness shows valuable outcomes for a marketing campaign. With a comparison of various campaigns in the cost per click section of the strategy, it will be easy to identify the one that was the least costly and go deeper in order to know the details.

Rate of absenteeism of the employees

This is an essential metric as it focuses on the key workforce actions to be taken to develop a successful human resource strategy i.e., the number of sick employees, missing work, or skipping, which can portray the effect this may have in the long run.

The average time between failures

This is an important operational metric for the software development department. It is measured as the mean time between fixing failures of the product. It is a significant metric to measure the reliability of the product. The higher the time between failures, the greater is the reliability of the product.

Average time for repairing

The average time for repairing is the meantime it may take the company to repair its system. This operational metric comprises the repair time and the testing time that might take for getting the project to fully function again. These metrics can be useful to keep the team moving fast and in an efficient manner.

Average time to respond

This metric is the average time it may take in recovering from a failure and is measured from the point when the issue was first notified. This metric may particularly be beneficial when it comes to security concerning the product or the customer’s information. It is valuable to measure the response time and the success of the team to react to any possible threats.

Flowchart of Operational Metrics, StudySmarter

Use of data in decision making and planning

Handling the operations of an organisation needs the management of extensive resources such as human, financial and physical and to use them as efficiently as possible in order to accomplish the objectives of the organisation. Hence, it is required to develop methods to determine the efficiency of resource utilization. Organisations use data to help them in decision-making. So as to get the highest use of available resources, it may be essential that from time-to-time resources are diverted from/to a project in order to obtain the maximum advantage.

The table above shows how different forms of data help in decision-making.