Making performance management everyone's business

Business performance today is under intense scrutiny from all sides, internally and externally.

Under this pressure, weaknesses in entrenched approaches to managing business performance are making themselves felt: established activities for managing performance are inflexible and disconnected; corporate strategy is not well understood throughout the ranks; and, as a result, execution suffers.

With corporate performance management (CPM) processes under-equipped, a whole-company approach to CPM is gaining favour. In effect, performance has become everyone's business.

Essential changes are under way. Performance-driven organisations are seeking ways to be more flexible so they can respond quickly and effectively to changing business conditions. Planning is extending beyond the domain of finance to enlist the input of other functions that are closer to the action. Annual budgets - essentially fixed performance contracts - are also giving way to rolling forecasts that enable faster responsiveness and more effective deployment of resources.

In addition, performance measures are being communicated more deeply throughout the organisation with scorecards and other means of monitoring performance that make strategy directly relevant to each employee.

Meanwhile, the ability to understand and assess what's driving performance every step of the way is being made available to all through business intelligence reporting and analysis.

All of these changes are enabled by technology that will help businesses reach the next level. While technology does not actually deliver business strategy, it enables alignment and solid execution, establishing processes for managing repeatable and predictable performance. In essence, it is only recently that all of the building blocks - the software, the infrastructure, the data - have been put in place to fully equip and enable performance management as a coordinated, closed-loop enterprise process.

These building blocks link the core functions of the management cycle - planning, monitoring and reporting - enabling performance-oriented enterprise planning activities with a degree of flexibility that enables an organisation to be responsive to changes.

Informed by broader perspectives of the business, plans can be adjusted to be more relevant within the day-to-day context of what's driving performance. Consistent, reliable information across the enterprise is essential, however - not only for linking performance planning, monitoring and reporting activities in the management cycle, but for accurately aligning execution with strategy. This requires a business intelligence system of reliable, current information about the business.

Thus equipped, people throughout the enterprise can identify changing business conditions and new opportunities as they relate to their part of the business. And they can make decisions and take action that is on-strategy.

Performance monitoring and measurement is central to keeping execution aligned with strategy, however. While words inspire, metrics communicate strategy and targets and provide the clarity people need to really drive performance.

Since what gets measured gets done, it's paramount that people are monitoring the right metrics - those that drive value, rather than monitoring lagging measures that reflect simply what's happened.

With Cognos business intelligence, plans and strategies can be defined and communicated as a set of interconnected performance indicators that are presented as dynamic scorecards that people can "drill into" to analyse what's behind a result that's not performing as it should. This not only gives each employee access to information that connects the company's strategic priorities to their own, it provides visibility into what needs to be fixed. It also fosters accountability that places day-to-day activities within the right performance context.

Performance management as a business practice may be as old as the first transaction. But as a technology-enabled process, it's a whole new order of business. The corporate performance management market is nascent and CPM solutions are seen to be young and untested. ERP vendors, infrastructure players and BI companies are all making big promises. Business leaders need to know where to place their bets.

Solid data from all enterprise systems is absolutely fundamental to feed the performance management process, but it is not the end game. It's how people use information to plan, monitor and understand the business that enables corporate performance management.

Addressing these needs is a natural evolution of business intelligence. To do CPM well, organisations need a solution that is data-neutral, meaning it leverages all corporate data, regardless of what system it sits in. But that's just the price of admission. To get down to managing performance, a CPM solution has to give every employee ready access to reliable, consistent information. It needs to let people assess how their part of the business is measuring up against set targets; and it must provide the means to make adjustments and feed lessons learned back into the strategic planning process.