Over the last few years organizations have seen their path to success buffeted by a series of external impacts. In addition
to the financial effects these external forces have also required new strategy and a need to articulate that new
strategy to reassure customers, shareholders and employees. Performance Management provides a set of methods for ensuring the execution
of strategy and reassuring stakeholders by communicating the strategy and providing rapid feedback on its execution.
The Value of Performance Management
Feedback and Course Correction In a changing economy businesses need more feedback than ever on their ongoing performance.
If customers are changing their buying process or the mix
of products or services they want - it is critical to know soon. The Business Intelligence (BI) tools of Performance Management
can also reduce risk by providing rapid feedback about the success of new strategic initiatives.
Most organizations spend more time and energy defining their strategy then implementing or measuring their strategy. Although industry analysts say that
about 25% of mid-sized organizations have some sort of Performance Management software our experience here in the Pacific
Northwest indicates a figure of closer to 10%.
Eliminating Spreadsheets The most common way to communicate objectives and measure progress is still the emailed spreadsheet.
But spreadsheets suffer from a number of issues.
- They have to be sent out. They are not by their nature a continously updated viewpoint. A spreadsheet represents information at a point in time.
That point in time is always in the past and may be too far in the past to be valuable.
- Spreadsheets are error prone. There are many statistics
available to show
the error rates. This makes the information they deliver not trusted information. We've done a number of projects involving importing
data from spreadsheets and can recommend design techniques and tools to reduce spreadsheet errors.
- A spreadsheet is a combination of data and viewpoint. It is too easy to blend the raw data with the particular viewpoint that the author
wishes to express. A real performance management tool separates the raw source data (drivers or past history) from the model viewpoint.
This makes it easy to question and discuss the viewpoint. Below is a screenshot from an IBM Cognos planning application showing
how the user is clearly selecting Headcount to drive the Front-end Supplies Cost for Store 01.
Alignment within the organization Over the last ten years there have been a number of business books and academic studies around the value of business alignment and focus. For our
mid-market clients we see this as a consistent and critical issue. As organizations grow they progress beyond the stage where they can
be managed by walking around. Many of our clients experience challenges in keeping all parts of the business in focus and aligned on the same objectives.
They also have a hard time managing the appropriate balance of focus between the short-term and the strategic.
It is easy for the different parts of a growing organization to be each working hard yet working at slightly cross purposes and decreasing the
overall performance as a result.