<-- Back to full color view
2011 Performance Management Wish List
Originally published January 12, 2011
Rather than try to predict what might happen in performance management in 2011 and then have readers critique my predictions at the end of the year, I have compiled a list of what I would like to see happen in 2011. I’ve developed this wish list based on our ongoing research and interactions with end users of performance management and business intelligence solutions, combined with a few decades of experience in this category. With that as an introduction, here is my 2011 wish list for performance management.
- More focus on the holy grail of performance management
Performance management has many components. Implementing each provides its own benefits. Performance management can, for example, help you fix a broken budgeting process, shorten the month-end and close, or provide easier access to information via a dashboard. However, to receive the full benefit of performance management, you need to implement elements of the three major areas it encompasses—strategic, financial, and operational: the holy grail of performance management. Very few companies are doing this today. Why? The first reason is that most of them lack a roadmap and vision for what performance management can do for their organization. Without this, they end up putting out fires. Usually this means replacing a painful and error-prone spreadsheet-based budgeting system or adding a dashboard to provide intuitive company-wide access to information locked away in a data warehouse. The second problem is that other than the largest of the vendors, it is difficult to find a product suite that encompasses all of these areas. Most companies are looking to avoid having to integrate yet another series of systems.
My wish for 2011 then is that more vendors expand their suites with the missing elements and that more organizations broaden their performance management view beyond just their current short-term focus. (To give your opinion on achieving the holy grail of performance management and see what others are saying, visit BPM Survey Central.)
- Back to basics in software purchase decisions
How do big organizations select software for million-dollar plus performance management projects? With one-eye closed and both hands tied behind their backs! That's at least how it appears to me. Working with many organizations throughout the year, I am shocked—almost on a daily basis—at how poorly this process works. More often than not, performance management software is either purchased from a vendor already in house (such as an organization’s ERP provider), or from a performance management vendor that the key decision maker worked with at a prior job. This is usually done without examining the alternatives. The result is likely to be a product that falls short of meeting the current company's requirements, or simply costs more than they would have spent if they simply took their heads out of the sand.
We follow 100 or so vendors in this software market category. Each has its own strengths and weaknesses. There is no magic bullet. Organizations need to evaluate several vendors to find the one that is the best fit for their business requirements, technology platform, and budget. To do this, they need to do something else that is sorely lacking: develop a set of written, detailed requirements. Most companies have a high-level idea of what they need, perhaps filling one side of a page. This is not nearly enough detail to determine which vendor is the best fit. The few organizations that do try to conduct a proper evaluation process often go about it the wrong way. They start the process by sending out an RFP. First of all, how do they know who to send it to? Secondly, the questions are usually so generic or off base (borrowed from an RFP for a different system) that the answers provide no help in distinguishing between vendors. Even if the right questions are asked, most vendors have someone who responds to these RFPs, and it is that person’s job to figure out how to answer yes to everything.
For 2011, I would like to see companies go back to the basics: develop a detailed set of business requirements, identify a number of vendors that are potential fits, and then have the identified vendors provide custom demos so they can be evaluated on specific criteria unique to your business. Even if you end up choosing the vendor you were thinking of initially, this process will ensure that everyone else understands why that vendor was selected and will support your decision. (To help make this wish a reality, we have recently introduced a new no-fee vendor selection service to help organizations get started down the right path. You can learn about it by visiting our website.)
- Consultants focusing on their unique strengths
When asked if they have a particular capability, most consulting companies respond by saying, "Yes, of course we can do that” or “I don't see why we couldn't do that.” That's fine except when the capability they are being asked about is not really part of their core skill set. Consultants (other than pure staffing firms) are really selling expertise. You can't possibly be expert in everything. If consultants misrepresent their capabilities, land the job, and then fail to meet expectations, their reputations will be tarnished. This can hurt their future business potential and leave that customer with a negative impression of the industry as a whole, and I can attest that it is very difficult to sell services to a company that has been “burned” by other consultants in the past.
In the case of performance management, this skill set overreach usually occurs in two areas: implementation and business intelligence (BI). Implementation consultants usually have a depth of expertise with one or two vendors and their products, and they get paid to customize these products for individual customers. However, that doesn't stop some of these consultants from representing themselves as experts in vendor selection, which requires a broader knowledge of the vendor landscape than they possess (they, of course, almost always recommend the vendors from which they can earn implementation fees) or key performance indicator development, which requires an ability to understand and guide corporate strategy. Even if they could do these things, there are firms that focus exclusively in these areas and could do a much better job.
In the case of business intelligence (BI) consultants, there are some looking to jump on the performance management bandwagon. Performance management is really a set of key business processes supported by technology. To help an organization with a performance management initiative, the ideal consultant will have a strong mix of business and technology expertise. Second best would be a consultant with a solid business background. Pure technology consultants who, for example, are expert in data warehousing, data quality, metadata management, report and query tools, etc. have a role to play but fall short when it comes to taking a leading role in performance management projects. This hasn't stopped some BI consultants from undergoing an overnight transformation and rebranding themselves as performance management experts.
My wish for performance management consulting in 2011 is that everyone focus on their strengths. That, after all, is why companies enlist the help of consultants. There is more than enough work for everyone and all have a role to play. Let's just make sure it is the right role.
These three wishes may be asking a lot of end user organizations and the performance management industry. If they were to become reality though, the market at large—including end users, software vendors and consultants—would benefit.
SOURCE: 2011 Performance Management Wish List
Recent articles by Craig Schiff