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KPN is the leading telecommunications and ICT service provider in The Netherlands, offering wireline and wireless telephony, internet and TV to consumers, end-to-end telecommunications and ICT services to business customers. KPN’s market for mobile communications is extremely competitive, so accurate and timely information is of the upmost importance. Initially, the Business Balanced Scorecard (BBSC) was introduced using Microsoft Excel to satisfy this need for information. However, because of technical and practical restrictions of MS Excel, the search for a BBSC tool started. In Bizzscore, KPN found the perfect balance between ‘need-to-haves’ and ‘nice-to-haves’. After installation in September 2004 a short pilot period started. In December KPN started with a further roll-out. Bizzscore is now used by 130 users. Uniformity, efficiency, transparency and better use by the line organization, are just some of the realized benefits. “The Bizzscore Web Version is simply very good” according to KPN.
The Organization
KPN is the leading telecommunications and ICT service provider in The Netherlands, offering wireline and wireless telephony, internet and TV to consumers, end-to-end telecommunications and ICT services to business customers. At year-end 2008, KPN had more than 38 million customers across the Netherlands, Germany and Belgium. They include 31 million with a mobile phone, 3.9 million with a wireline, 2.5 million with broadband Internet access and 0.8 million with TV. The number of FTEs at KPN stood at 25,000 at year-end 2008, plus another 11,000 at Getronics. KPN made a profit of €2.6 billion in 2008 on annual sales of €14,6 billion.
The Cause
Competition in the Dutch market for mobile telecommunications is fierce. KPN Mobile operates in a knowledge-intensive industry. As a consequence, an overabundance of reports came into being. This created a clear need to return to selective, uniform and clear reporting methods. The Business Balanced Scorecard had been chosen as method for this ‘reporting rationalization’. A three-step-model was used to develop, select and define performance indicators. The core of this model consists of Key Performance Indicators (KPI’s) that were already reported to the parent organization KPN Holding. The second layer contains the indicators that were put forward by the Directors. The third layer holds the indicators which were brought up by the Management. There were a number of strict conditions the indicators had to adhere to:
- Number: a maximum of 20 to 40 indicators per scorecard.
- Accountability: managers should be able to act on the indicators
- Measurable: measuring the indicators had to be easy and straightforward.
Definitions and properties of the selected indicators were described in a KPI catalogue and grouped per manager. Targets on the BBSC were linked to the managers’ pay-for-performance scheme. Reporting on the BBSC took place in Excel.
The Challenge
When rolling-out the BBSC, it became clear that Excel is not an advanced reporting tool; additional macro’s had to be programmed in Visual Basic. The Excel-solution was dependent on a select group of experts, cascading KPI’s, such as returns, costs and employee numbers on the BBSC’s (both horizontal and vertical), did not work well, because all the necessary links between Excel files caused many problems, and so on.
The main objection, however, was that this hindered the use of the BBSC by the management. The BBSC was considered as something developed by the finance department instead, and not the instrument for line managers, while at the outset the main goal had been that the use of the BBSC had to lead to a better business management by the line management.
Because of these serious disadvantages, it was decided that web-enabled software had to be purchased with optimal support for the BBSC.
The Pilot
A number of suppliers were invited to give a presentation. Out of these suppliers KPN Mobile chose Bizzscore from EFM Software. Solutions from competing suppliers were considered add-ons of broader based systems, where BBSC was a static reporting tool. However, KPN Mobile reasoned that to maximize acceptance of the BBSC, flexibility in the KPI-definitions and calculation rules were an absolute requirement.
Bizzscore was a much better fit than alternatives; able to cope with the dynamics. Besides this, Bizzscore satisfied the requirement to realize direct links. Furthermore it proved to be a quick and easy-to-implement solution that required a relatively low investment. Finally the other tools had many ‘nice-to-haves’ whereas KPN Mobile was focused on the ‘need-to-haves’. In September 2004 Bizzscore Web Edition of EFM was installed in Groningen en The Hague on behalf of 82 initial users. The administrators were trained in the functional aspects of Bizzscore.
The intention was to implement three layers of 15 scorecards in total: a consolidated scorecard built up from two MT-scorecards, which were again subdivided into twelve department scorecards. In December 2004 the pilot was completed successfully.
The Implementation
During the implementation the number of scorecards was increased to 30; the number of users was raised to 130. Because a fourth underlying layer will soon be added to the existing three layers, the expectation is that the number of scorecards will increase even further.
According to Taco Titulaer, Manager Information Management, management of the tool does not require much time, because there is a broad group of people with knowledge of Bizzscore management. Managers have insight into their own scorecard and all its underlying scorecards. Reviews of the results take place via beamer-sessions in the MT-meeting. In this way, questions can be answered immediately by executing drilldowns on the screen.
The Business benefits
According to Titulaer there are a number of important points of added value resulting from using Bizzscore. Many points relate to uniformity; with regard to lay-out, definitions, targets, management, etc. Two other important benefits concern the efficiency of the reporting process and the transparency of the results. “We try to practice a maximum of rational openness”, so says Titulaer. “Availability via the Web is simply very good”. Finally Titulaer mentions as important benefit of the use of Bizzscore, is that there is less questions of two worlds, namely that of the line management and that of Finance staff. “Both are doing the same thing: the realization of the goals of KPN Mobile”!
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