The Indonesian Financial Services Authority has been using its QPR Metrics powered SIMPEL named strategy management system almost its entire existence. With SIMPEL the Authority justifies its existence and performance to all stakeholders and looks for new opportunities to guarantee an even better performance in the future.
The Indonesian Financial Services Authority was founded in 2013 by a merger of selected functions from the Indonesian Central Bank and the Ministry of Finance. The merger of financial supervision was executed based on the Balanced Scorecard (BSC) methodology.
The main function of the Indonesian Financial Services Authority (OJK) is to promote and organize a system of regulations and supervision that is integrated into the overall activities in the financial services sector. The Authority performs its regulatory and supervisory duties over financial services activities in banking, capital markets, and non-bank financial industry sectors.
OJK’s vision is to become a trustworthy monitoring institution that oversees the financial services industry to protect the interests of consumers and the public. It also aims to bring financial services, an industry that is a pillar of the national economy with global competitiveness as well as a capability to promote public prosperity.
OJK has several missions. It aims to realize the convening of all activities in the financial sector so that they are managed regularly. Its mission includes fairly, transparently, and accountably realizing a sustainable and stable financial system and protecting the interests of consumers and the public.
Sustainable strategy management system as target
The merging units used the established strategic management systems of their original organizations. Bank of Indonesia’s system was based on QPR Metrics, and built by QPR’s Strategic Value-Added-Reseller in Indonesia, GML Performance Consulting. GML also facilitated the development of OJK’s Strategy Map and Balanced Scorecard as well as implementing QPR Metrics.
The new organization tried to integrate the two existing strategy management systems into one. However, they wanted to have a system better than the existing ones – one adding value to the users. The employees also wanted to have the benefits as soon as possible. It was understood that OJK cannot improve its real performance if it cannot ensure that the new implementation is sustainable.
Before implementing the QPR Metrics powered strategy management system, data was collected manually. Also, all reporting was done manually. This was considered very painful, while there were more than 2000 employees, more than 60 units, and 35 OJK regional offices, compared to the present situation where the data collection and data performance reports are done electronically.
One downside of the manual data collection and reporting was, that OJK was not capable of monitoring process governance or performance management and started therefore to look for a system ensuring smooth processes and keeping everything under governance. It was understood that the system must be software powered.
Just a five-minute Balanced Scorecard presentation with QPR Metrics to both organizations’ CEOs was enough to convince them that QPR Metrics-based system is OJK’s tool of choice.
The Indonesian Financial Services Authority (OJK) is established in a bid to ensure that the overall activities within the financial services sector are implemented in an organized, fair, transparent and accountable manner, they are able to realize the financial system that grows in a sustainable and stable manner and are capable of protecting the interests of consumers and the society.
OJK employs around 2000 professionals and is currently in process of adding 500 more. OJK was founded in 2013 by a merger of selected functions from the Indonesian Central Bank and the Ministry of Finance. Its head office is located in Jakarta, in the Capital of Indonesia. OJK has used its QPR Metrics powered SIMPEL named Strategy Management System almost its entire history.
Mr. Dwi Kurniawan (on left), Director of Information System Strategy and Development from the Department of Information System Management, and Mr. Arifin Susanto, Deputy Director from the Strategic Planning Directorate at Indonesia Financial Services Authority when visited the QPR Software Head office.
“Out of the 200 KPIs, 50 were on red. With QPR Metrics our strategy office could explain the reasons by using the analysis view and dashboards, not to mention that the system was already then integrated into the budgeting system – and could easily be linked to more systems in the future”, explains Dwi Kurniawan, the Director of Information System Strategy and Development at OJK’s Department of Information System Management.
The decision to select QPR Metrics was supported by its fast implementation. And as the Bank of Indonesia was already using the software it was easy to benchmark that the QPR-based system was more comprehensive than the one used by the Ministry of Finance. Further, the good price-quality ratio, the support of QPR’s local partner PT GML Performance Consulting, easiness of use, and visually good-looking dashboards contributed positively.
KPIs based on the expectations of the external stakeholders
The new Indonesian Financial Services Authority strategy management system is known as SIMPEL, a local Bahasa language abbreviation for the performance management system, meaning “very easy” or simple – and not surprisingly pronounced like the word simple in English. Adaption of SIMPEL was supported by governance and management example: if there was a strategy-related request from the OJK Chief Executive Officer, it was communicated via the system.
“We had to create a system ensuring that our tasks and strategy are always implemented to meet our goals. We try to cascade our mission and vision into medium-term targets, into something that we are going to achieve in the next five years. For example, our aim to be a respectable financial system authority in Indonesia is achieved by integrating our supervision, issuing harmonized regulation, developing our financial system, as well as educating and protecting Indonesian consumers “, says Mr. Arifin Susanto, the Deputy Director of OJK’s Strategic Planning Directorate.
Each strategic objective has its own Key Performance Index (KPI) or IKU as called in the Bahasa Indonesia language. OJK has 21 KPIs, based on the expectations of its external stakeholders. These are turned into strategic formulations. The OJK Board of Commissioners approves them, after which they are communicated to the Indonesian Parliament. For example, financial stability is measured by using a financial index on the capital market and by capital integration. The stakeholders’ satisfaction with how the Indonesian financial system is regulated and supervised is measured with a survey sent to more than one thousand respondents annually.
OJK management receives their KPIs in the annual strategy meeting. Actions are assigned in this event. When the actions to their subordinates. The OJK supervisors sign an individual contract or agreement with KPIs with their subordinates. Individual performance metrics and bonuses are linked to the KPIs. The annual OJK bonus is based on OJK performance. management goes back to their branch offices, they communicate
Finding new opportunities with the forecast
Currently, the OJK strategy management system has almost 200 users in various units. Every Director and so-called KPI manager can periodically monitor their performance. KPIs managers update the measures once a month. KPIs are reviewed quarterly. OJK’s next improvement step is to link the unit measurement system to individual performance systems.
“We have got three benefits for the initial implementation of QPR Metrics. First, when doing the annual parliamentary report, we can show that we have a well-justified measurement using the Balanced Scorecard methodology. Second, we can communicate to all financial industries that our new organization has an integrated performance system which is better than before – it is not just a copy of the two old systems. Third, for our people coming with a culture of different systems, we have already one common system working”, lists Dwi Kurniawan.
OJK’s next Balanced Scorecard journey is to link unit and individual performance into QPR metrics. “We have to measure everybody fairly, we cannot give them the same performance means, a good and bad performer paid the same – this is an unfair approach. We tried to create a performance-based culture inside OJK so that everyone will be paid based on their performance and contribution”, says Arifin Susanto.
Currently, QPR Metrics has been integrated into OJK’s budgeting system. In the next phase, the aim is to integrate it into Human Resources and Risk Management systems.
Integrated supervision and education/consumer protection are the very reasons for OJK to exist. Those are the value-added why OJK is needed. To show the people that OJK is credible in supervising financial industries and protecting the consumer, it needs the Balanced Scorecard and QPR Metrics tool to explain to Indonesian people that OJK is well performed.
By using QPR, OJK now can justify its performance to all stakeholders, not least to the Indonesian Government and Parliament. With the QPR management system and SIMPEL the Indonesian Financial Services Authority can easily provide evidence that it is fulfilling its tasks.
For example, in 2014 OJK reviewed more than 21.000 consumer complaints out of which more than two-thirds have been resolved. In addition, OJK has harmonized cross-industry regulation by issuing more than 31 common financial best practices. Using QPR Metrics will also improve budget consumption: the allocated budgets are used for a purpose, and not left unused due to lack of visibility.
“Our advice to any other organization thinking to implement a performance management system is to buy QPR. There are cheaper and more expensive alternatives, but for an organization like us, QPR is the right choice, as it is very cost-efficient and fast to implement.”
– Dwi Kurniawan, Director of Information System Strategy and Development, Department of Information System Management –
“I would say that for a government office like us, it is almost impossible to be without using this kind of application and software. Otherwise, you cannot combine information and collaborate, especially in a country like Indonesia, scattered into many islands.”
– Arifin Susanto, Deputy Director, Strategic Planning Directorate –
Three things to make the strategy management system success
Dwi Kurniawan and Arifin Susanto both state that many organizations have failed in implementing Balanced Scorecard based management system as they have not been committed to it and did not build it on the technical solution.
“If you want to succeed, implement an integrated performance system. This is the most important tool to ensure that everything is well-measured, justified, and governed. There is also a need for 6 – 10 named people responsible to make it happen, the so-called Strategy Management Office, the SMO. They are responsible for planning, executing, and monitoring the strategy. It is a very effective unit to make sure that strategic management is running well”, says Dwi Kurniawan.
“Ensure also that the need for fast implementation is supported by the CEO. So, Management commitment is a must. We were lucky that the OJK Chairman is on the champion for Balanced Scorecard in Indonesia”, Arifin Susanto continues.
QPR Software Plc
QPR Software provides insight into business operations for successful strategy execution and operations improvement. QPR offers a comprehensive software suite and consulting services for modeling, analyzing, designing, and measuring operations, supporting agile business transformation. We are a global thought leader in business-driven enterprise architecture and process intelligence. QPR Software Plc was founded in 1991 and has its headquarters in Helsinki, Finland. As a publicly listed company, our shares are quoted on the NASDAQ OMX Helsinki Ltd.
PT GML Performance Consulting
QPR’s Strategic Value-Added-Reseller in Indonesia, GML Performance Consulting, is a management consulting firm specializing in helping organizations improve their performance through a better translation of their strategy. With highly experienced consultants implementing more than 300 Balanced Scorecards s in various industries in Singapore, Malaysia, and Indonesia, we could help your organization understand more about Balanced Scorecards. Depending on the size, complexity, and readiness of your organization, we could tailor-design the Balanced Scorecard implementation through an in-house workshop, full consulting, and automation.