Open Standards Benchmarking Collaborative (OSBC) Advisory Council Overview

1. Open Standards Benchmarking Collaborative (OSBC)Advisory Council Overview American Productivity & Quality Center

2. Table of Contents • The Need • The Objectives of the Open Standards Benchmarking Collaborative • The Approach • Common Framework: APQC Process Classification Framework • Common Repository • The Structure: APQC, Advisory Board and Working Groups • Time line

3. The Dynamic Landscape • Hyper-competition puts a premium on enterprise performance and innovation through value-added activities • To compete, innovation of business processes is becoming as vital as innovation of products. • Increasing globalization and balancing growth with cost control challenge the commonly accepted an narrow wisdom on what constitutes “excellence” and best practices. • All types of organizations are integrating processes across – and outside -- their enterprise, requiring them to seek out dozens of sources of data to understand how their processes compare to peer groups and best-in-class • Organizations are seeking assurance that the measures and data they use are the best, and will evolve to support the important emerging activities and innovations critical to the 21st century

4. Problems with past efforts to provide process data to guide improvement and decision making • Process measures and benchmarks are often non-existent, proprietary, use idiosyncratic measures, and lead to sparsely populated databases making real comparison difficult • Executives trying to make a decision often don’t feel comfortable that the data tells them what they need to know or what world-class performance looks like in comparable organizations • The scramble to get data is burdensome and costly to all involved • Duplication of data collection doesn't contribute to a common repository or emerging insights • Databases may address one functional area, but don’t allow insights across the enterprise and business model

5. The Open Standards Benchmarking Collaborative Value Proposition • Organizations can focus on improvement, not data collection • There will be commonly agreed-to measures for evaluating and improving processes • Reduced time and costs to organizations • Consistent data and measures will allow for cross-industry comparisons and facilitate performance benchmarking • Trend data will enhance ability to research the drivers of strategic and process performance • Flexibility to add innovative and emerging measures as marketplace shifts warrant • Data will be safeguarded by APQC, a neutral and credible third party, with award-winning benchmarking methodology

6. The Open Standard Benchmarking Collaborative Objectives • Establish an open universal standard for a process framework and performance metrics, created by industry for industry • Industry-standard set of processes and activities with corresponding key performance indicators (KPIs) • Standard measures developed by practitioners • Cross-industry, with industry-unique process areas and KPIs as appropriate • Data must measure all dimensions of performance (financial and non-financial) • Provide open-standard data for organizations to compare themselves against peer groups, to evaluate and improve their performance across enterprises and ecosystems

7. Components of the OSBC Approach • Standard process framework: APQC’s Process Classification Framework (PCF) • Standard measures for processes: Measures tied to the PCF • Common database (PowerMARQ): Data collected using the measures. Available for members and contributors to use for performance analysis and improvement.

8. The APQC Process Classification FrameworkSM (2004)

9. APQC’s database: PowerMARQ • Building the database of over 1,500 individual metrics and performance drivers covering 65 processes and functions • Data collected from Fortune 1,000 companies across a variety of industries and geographies • To date, over 800 surveys have been collected across the various process areas and industries • Metrics are validated, normalized, and aggregated before reporting • Database is refreshed continuously • 40% Americas, 40% EMEA, 20% Asia Pac • Participants received customized performance level report • Compare across multiple dimensions • Industry peers, geographic, relevant size, etc

10. The OSBC Research Approach • The APQC Process Classification FrameworkSM (PCF) will be the foundation for the standards framework and data collection. The PCF is: • A high-level industry-neutral enterprise process model, with industry views possible • Represents major processes and subprocesses • Organizations provide performance data to APQC, who will treat it as confidential and only share blinded and aggregated data. • Backed by the APQC Benchmarking Code of Conduct • APQC will provide contributors with blinded and aggregated performance data and reports to evaluate their own performance • The Advisory Council guides ongoing development of changes (in framework and measures) based on value for users • APQC facilitates the change process and maintains the Standards

11. The Structure APQC Stewardship Advisory Council Working Groups Working Groups Industry 1 Supply Chain Industry 2 F&A ETC. Industry 3 ETC. ETC. Industry 4

12. Advisory Council Responsibilities • The Advisory Council is cross-industry with global representation and senior-level involvement from APQC member organizations • Advisory Council members will: • Be APQC members • Act as public advocates of open standards, a common framework and repository • Be the voice of the market and advise on the ongoing development of framework and measures • Develop guiding principles • Establish and monitor indicators of progress, and provide quality assurance • Review recommendations of the Working Groups

13. Advisory Council: Criteria for membership Organizations • Cross-industry representation • Geographic diversity and global coverage • Mix of organizational structures and sizes • An APQC member Individuals • Thoughtful, dynamic senior executives with a global, big picture point of view • Influential champions of performance excellence in their own enterprises • Willing to endorse and encourage participation • Respected in their industry or sector

14. Aerospace Automotive Banking Chemicals Consumer Packaged Goods Electronics Financial Services Health Care Insurance Oil/Gas Pharmaceuticals Professional Service Public Sector Retail Service providers Software Strategy firms Telecom Transportation Advisory Council: Initial Industry Candidates

15. Advisory Council Members (June 24, 2004)

16. Advisory Council Benefits • Visibility as a forward-thinking organization, leading an important movement to advance productivity, excellence and growth worldwide • Association with industry-leading performance-driven organizations • Ability to influence performance data collection priorities, • Leadership in the evolution of new process frameworks and performance measures to benefit their industry and all sectors • As members of APQC, all employees of their organizations have access to APQC best practices, and high-level aggregated data and key performance indicators. The Advisory Council will receive briefings on key findings

17. OSBC Structure: Industry and topical working groups OSBC Structure Definition of working groups Deliverables Process Criteria

18. The OSBC Research Structure APQC Stewardship Advisory Council Industry Working Groups Process Working Groups Industry 1 Industry 2 Customer Service IT Market and Sell Industry 3 Industry 4 Supply Chain

19. Industry and Functional Working Groups 1.  Industry-focused groups • To address industry specific processes not currently in the cross-industry PCF • e.g., merchandizing in retail; account management in banking; exploration in energy, etc. 2. Topical, process, or functional groups • To expand the PCF and develop measures for data collection not yet underway • To continue to evolve and improve the PCF and measures in areas such as finance, HR, supply chain

20. Industry Vertical Working Group Participants • Approximately 15 industry representatives • Sponsor(s) • Industry and subject matter expert(s) • Advisory council member representatives (at their option) • APQC • Potential stakeholders such as associations or professional societies

21. Industry Working Group Deliverables • PCF customized to the industry language • Industry-specific framework or view of unique processes • Key performance indicators for targeted processes • Data collection instrument(s) and method • APQC would create instruments, collect, and house the data • Data for the OSBC common repository • Thought leadership

22. Sample Scenario Developing a “Working Group” Invite Working Group Participants Create initial framework and measures Determine Interest and Secure Funding Ratify framework and measures Collect Data Analysis and White Papers

23. APQC’s Role in OSBC Research • To maintain the Open Standards Framework and repository; to be the clearinghouse for enhancements and research • To collect, analyze and maintain the data and the common repository • To maintain the integrity of the process and the confidentiality of the data, including APQC’s existing data • To create and maintain the infrastructure to support the Open Standards Collaborative • To convene and facilitate the Advisory Council and Working Groups • Provide the Advisory Council and Working Groups with the voice of the marketplace • Provide thought leadership • To partner with other organizations to enrich the data and knowledge • To financially support the initiative through member fees and other sources of revenue related to the initiative and APQC’s mission

24. Data Collection Priorities 2004-1st QTR 2005 • PCF 4.0 Deliver Products and Services • (i.e.,supply chain) • PCF 8.0 Manage Financial Resources • (i.e.,finance, treasury and accounting) • PCF 6.0 Develop and Manage Human Resources • PCF 7.0 Manage Information and Knowledge • (i.e., IT) • PCF 2.0 Design and Develop Products and Services • PCF 3.0 Market and Sell • PCF 5.0 Manage Customer Service

25. About APQC • Founded in 1977, APQC is a member-based non-profit organization, serving over 500 organizations around the world • Its mission is to improve productivity and quality in organizations • As an internationally recognized benchmarking authority APQC provides best practice research, metrics and measures • Performance measures database provides more than 200 measures and metrics • APQC enjoys a 27-year reputation founded on integrity and the support of rapid innovation by researching best practices • Spearheaded the Malcolm Baldrige National Quality Award in 1987 • Established the International Benchmarking Clearinghouse to facilitate and improve the process of learning from best practices in 1992 • Helped launch Knowledge Management as a key business practice in 1995 • APQC’s Board of Directors is made up of 45 senior executives from corporations, education and government

26. What is an “open standard“? • Framework Standard: • Industry standard (credible/reliable) set of processes and activities with corresponding key performance indicators (KPIs) and value drivers. • The standard would be generic for cross industry application but would include industry unique process areas and KPIs where appropriate. • The standards would be the acknowledged reference model of processes and measurements widely recognized and used by organizations because of its excellence • Data Standard: • Data must measure all dimensions of performance (cost, productivity, efficiency, and cycle time) • Must have a diverse group of participants that provide data across industries and geographies • Robust collection and validation with ongoing updates and data shelf life aligned with the business function (e.g., finance 3 years, product development 2 years etc.)