IMPLEMENTATION OF KEPNER TREGOE METHOD IN SAP WITH COST ESTIMATIONS

It is essential to measure and monitor the performance of business.  However, having a focus on the wrong key performance indicator on your business is detrimental. Poorly structure KPIs are costly to obtain, difficult and also monitoring on a regular basis. The choice of KPIs needs to align with the main goals and objectives of the business, be attainable, and keep everyone on same pace and direction. The SAP BSCE, Prague is an organization that has been using the KPI method as its performance evaluation criteria.  

In measuring the company performance, the company focuses on measurement of certain factors that indicate success or the performance status of the corporation. The various key performance indicators like rework rate, service delivery, reputation and employee retention rate used in SAP BSCE that will be discussed in the essay. As a consultant, I highly recommend that the company improves the KPI method using the Kepner Tregoe Method. This essay mainly focuses on the critical evaluation of the performance of SAP SBCE through the use of KPI method and the actual degree of performance portrayed by its subsidiaries so as to tremendously improve the performance of the business in the economy (P.S & D.M - K-T, 2016).

To begin with, the application of the mechanism will enhance employee turnover in the business. Employee turnover is an effective criterion for measuring performance in various ways. In this company, the involuntary and voluntary rates of turnover will be used to determine employee and employer performance. When there is high voluntary turnover, it signals poor working environment that fails to motivate and engage contingent workers effectively, and the wages are below the market values. The employee retention rate is the ability of the company or employer to retain employees for longer. The financial factors are already successfully using KPI, and consequently, there have been no particular complaints on those issues, and since financial data could not be received, I could not be able to analyze or predict the results of KT implementation.

On service quality, there is need to compare the expectations and the actual performance of each employee. Using the KT method, I will measure the expected performance and the actual performance of each employee even from the subsidiaries.  The process will involve defining the decision statement of ensuring quality service to customers. Within this framework, my objective will entail defining all the strategic requirements for instance effective customer care attendants, the general collection of customers’ feedbacks as well as the use of restraints for the purpose of collecting the control system. With respect to that, I will use the table below in ranking these three objectives with respect to its corresponding weights. My recommendation will therefore be solving all the identified problems within these tree objectives as well as monitoring the quality of the system through the use of KT.

 

Objective	Weight
Want A	6
Want B	4
Want C	7

After ranking I will list the alternatives based on feasibility and assign a score to each alternative.

Objective	Weight	Alternative satisfaction	Weighted score
Want A	6	4	24
Want B	4	6	24
Want C	7	6	42

 

The total weighted score for the three objectives is;

         = (6*4) + (4*6) + (7*6)

       = 90

Therefore after considering the all the problems of each alternative of the three objectives in the table above, I will end up choosing the objective which tops the scoring. This is to mean that the result which tops from want A, B and C will be the precise alternative I will consider. In order to arrive at the precise objective, first consideration will be the objective which has the lowest alternative satisfaction is the one which I will consider. This will be objective A but since out of the three it has the lowest weight, objective B and C will be considered. Lastly, since the result of the weighted score of C is relatively higher than that of B by (42-24 =18), therefore the winning option will be from objective C hence it should be implemented (Welch, 2003).

 

Adverse effect	Probability	Importance level	Weighted score
A	4	7	28
B	3	2	6
C	6	5	30

 

 The table above comprises of the three adverse effects obtained from the initial three objectives. Therefore, it is just a weighted score of the three alternatives obtained in terms of their adverse effects.  Basically, the weighted score was obtained through multiplying the probability of each option with its importance level value.  In respect to that, the probability and as well as the important level figures are also obtained from all the values which were recorded from the options in the market for the recent past (Welch, 2003).

Having the three options (A,B, and C) will be essential in the process of making the best option that the organization needs to enhance its performance in the market. Effective implementation is likely to improve the profitability by around three percent. The estimated cost of implementing the system is about $250.000 based on the cost of system design and training of users going by the current charges in the market (Enterprise Solutions | IT Service Provider | Business Intelligence | Business Analytics Services, 2016). Satisfaction of customers will increase customer base and thus more sales. Based on historical data and exponential data analysis, $250.000 invested in entire organization will translate to 3 percent of the total revenue increment.  Projected revenue on implementation of new system is 97 percent times current revenue, which is the revenue that the company is currently making.

The current method of measuring the rework rate does not indicate the number of errors done by the employees separately from the local mistakes. The problem does not only occur at SAP BSCE but also at the subsidiaries thus the recording on the headquarters will not reflect the performance of the subsidiaries. The KT method will improve the measure of the rework rate by including the values from the subsidiaries and also the wider period. On the rework rate, I took the weighting from the KT table on which the potential score was counted and multiplied by 3.  The analysis and comparison of the rework rates at SAP BSCE and its subsidiaries varies widely. The employees and supervisors will be introduced to a new reporting system which will record all mistakes made and then used to measure the performance for local mistakes and another for employees. Switching to a new reporting system will cost around $245,000 going by the current rates in the market (Gupta et al., 2012). The process is likely to result in delays in the operations of the company.

The reputation of the SAP BSCE is not badly off, but it could require some improvement using the KT method. A higher and good reputation will establish and increase a loyal customer base. As a result, the SAP BSCE will gain a bigger market share, be more competitive with additional benefits of customers being willing to pay at higher prices, and good performance in the stock market. Using the KT method, I will use the KT matrix; the situational appraisal, the problem analysis, the decision analysis and the potential problem analysis to come up with research findings that can be used to improve the company reputation (Vliet, 2014).  The KT Matrix will provide the necessary aid in gathering and evaluating vital information that will be essential in making decisions in the company.

 

	Criteria 1			Criteria 2		Criteria 3
	Weight	Rating	Weighted rating	Rating	Weighted rating	Rating	Weighted rating
Quality of service	5	4	20	3	15	5	25
Employee retention	4	5	20	4	16	3	12
Rework rate	3	2	6	4	12	4	12
Reputation	2	5	10	2	4	3	6

Assign each aspect weights between 0 and 5 according to their current level or state in the company. Multiply the weights with the rating feedback collected from customers. The higher the score, the worse the state hence demand priority on implementation. From the table quality of service should be given priority in all the options.

The cost of installing the device will cost the company $375,000. It is the rate that is charged by most of the experts in the field. Following its effective implementation, I estimate that the company’s market base will increase by seven percent and profitability by nine percent going by the previous effects that the system has had on various companies in the market. 

The use of the method of key performance indicator can help the SAP BSCE attain its major goals and objectives. However, in the analysis of the corporations’ performance, I realized that the method is not very effective as it does not reflect the actual degree of performance of its subsidiaries. To ensure the effectiveness of the method, I recommend the KPI method to be improved with the use of Kepner Tregoe method. To achieve the better performance we use the KT method that will focus on the criteria including rework rate, service quality, and the reputation. The other focus areas match those used with the KPI method of evaluating performance.