What CIOs Need To Know About Performance Management

by drjim on April 13, 2009

Companies Don't Need Business Intelligence Without Performance Management

Companies Don’t Need Business Intelligence Without Performance Management

Unless you’ve been asleep for the past couple of years, you’ve probably had a chance to read about the Business Intelligence (BI) fad that seem to have taken over the IT market.

The basic idea is pretty simple: use an application to crunch all of that complicated data that you’ve been gathering and present a simple dashboard to the CEO or whomever is making decisions. If the light on the dashboard is green, then the business is doing well. If its red, then he / she needs to make some changes. As with all such things in life, cool tools often turn out to have a downside.

It turns out that BI tools and the reports that they generate are IT centric. This means that the rest of the company agrees that they look cool, but they don’t find them as useful as we would like them to. It turns out that what they’d really like to have is performance management (PM) tools.

Performance management is defined by business needs and it provides the business’ decision makers with the data that they require in order to make the right moves in order to execute the business’ strategy.

PM shows up in a bunch of different places inside of the company. You’ll see it in the budgeting & financial processes (there it’s called “corporate” or “financial” PM). You can also find it on the operational side of the house. This is where BI is used to get more insights into supply chains, sales, customer service, etc.

I guess the easiest way to communicate the difference is to point out that BI is often about dashboards and scorecards. BI has been based on things that can be collected and measured. Where PM differs, is that it’s based on where the company WANTS to go.

This means that PM tools have to be created by consolidating  disparate data that is often stored in planning / budgeting spreadsheets. Then these planning activities and strategies then need to be transformed by both the business and IT into scorecards and key performance indicators (KPI).

The thing that sets PM apart from BI is that the information that IT collects to support a PM process is tied to a model or a framework for measuring performance. In finance, this model is the company’s budget. However, once you move outside of finance then IT and the business need to work together to create a budget that they can both live with.

Does your company currently use BI tools? Are they useful or are they just a set of pretty dashboards that sit around? Do you make use of performance management? Does your IT department work with the business to create performance management processes? Leave me a comment and let me know what you are thinking.

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{ 1 comment… read it below or add one }

Jay April 18, 2009 at 5:30 pm

I designed a web-based system to allow manager to develop and track tasks and workflows. The system was engineered to break down complex workflows into individual tasks, with pre and post conditions, and workload queues for staff members. Priorities were systematically assigned based on time and pre-condition criterion.

In general, the dashboard allowed managers to visually confirm and track tasks within their workflows. This enhanced their capability to stay ‘on top’ of the problems and communicate directly with the responsible parties.

But that wasn’t enough for me. I knew there were other features this type of system could offer and set out to illustrate the potential capabilities. With some modifications to the data model and transaction layers, I was able to represent entirely different sets of illustrations for perfomance tuning activities.

1. Breakdown tasks and times to complete.
2. Staff production levels on an individual basis for similar tasks.
3. Response times between inter-department activities.
4. Request for reports and system usage metrics.

We were able to breakdown tasks with completion date/times and discover bottlenecks or choke points existed. Staff production levels identified strong performers and weak ones so that we knew who needed more training and where to go for task efficiency modifications. Response times between departments enhanced our abilities to streamline requirements from different groups to decrease cycle times between departments. The requests for reports and system usage gave us ammunition to support positive culture acceptance and build momentum for more IT-related projects.

Jay

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