Five years ago the IT department was an island in the enterprise. Its role was to supply technology for staff to use and to make processes more efficient. IT purchase decisions were made by the IT manager or director. IT wasn`t seen as a strategic part of the business. It certainly didn`t have a role on the board, or even have to address the business user.
The dot-com boom (and bust), a changing economy and the maturing cycle of technology changed this. Purchases became a board decision with return on investment the number one criteria. Companies began to realise that technology had a much bigger part to play in gaining competitive advantage through improving customer service, driving efficiency and reducing costs.
The focus in 2004 on compliance with corporate governance regulations such as Sarbanes-Oxley, Basel II and the locally drafted guideline King II, has reinforced this even further. As a result, CIOs have become more business-focused, often setting the vision and direction for the company.
They are leaders in their own right, to the extent that the CIO or CTO sits on the board in many large enterprises.
Spreadsheets are no longer able to cope with the complexity of business requirements, or allow financial users across the world to work with the most up-to-date information.
David McWilliam, MD, Cognos SA.
Many of the developments in the use of technology revolve around better use of information - one of the three growth areas for 2005 according to a recent survey of IT spend in the Financial Times. While we`ve always had data at our fingertips, now it`s a case of how we analyse that data to identify trends, make predictions and track performance.
Too often there is a gap between the company`s strategic goals and day-to-day performance. Companies end up off track from where they want to be because they don`t have methods in place to monitor staff and divisional performance and ensure activity is contributing to overall targets.
This can be easily rectified. Enterprises looking to be the best in their field should consider three fundamental factors for measuring performance: visibility, predictability and accountability. Technologies exist to address all of these, none of which impact negatively on leadership time.
Firstly, fast, reliable and accurate reporting to understand performance. Being able to produce a management report quickly with `one version of the truth` and identify and address potential problems before they become real problems will avoid costly mistakes, or missed targets.
Second, having a scorecard, or dashboard, to closely monitor activity across the business will provide an up-to-date view of performance against pre-defined parameters. This is true to the axiom `if you can`t measure it, you can`t manage it`. If activity levels fall outside of these parameters, then an immediate alert to the division concerned means the problem can be identified and resolved quickly.
Third, the ability to plan and budget effectively to drive performance.
Spreadsheets are no longer able to cope with the complexity of business requirements, or allow financial users across the world to work with the most up-to-date information. Sophisticated software is required to truly manage financial performance, deliver transparency and accountability, and comply with corporate governance and financial regulations.
Overall, these provide the framework for corporate performance management (CPM). By attributing company targets to individuals or departments and aligning these with day-to-day execution, businesses can maintain tight control and fulfil, or exceed their aims.
So where do we go now? We`ve seen how technology is now critical to the way we do business. It can only develop further. Software will offer more functions. The Internet has enabled worldwide collaboration, in real-time, from any location. There is a trend towards standardisation, as companies look for more value from fewer vendors, in terms of cost savings through efficiency and easier management. Choosing one company`s technology to implement throughout the business allows all divisions to work from accurate data and produce consistent reports. This makes it easier for business leaders to track performance too.
Many companies have been managing and measuring company performance on an ad hoc basis for years, but are only starting to really focus on it and see the benefits of this approach to business now. The compelling nature of business to succeed can only mean that CPM becomes a staple food on the enterprise menu.
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