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Achieving the Holy Grail of Performance Management

Originally published March 21, 2011

In my article "What is the Holy Grail of Performance Management," we looked at the significant benefits of achieving the “holy grail” of performance management – the integration of strategic, financial, and operational performance management. This article examines the inherent challenges and some strategies to address them.

This year's BPM Pulse Survey 2011 found that slightly less than half, only 49%, of organizations were attempting to implement and integrate all three key aspects of performance management. Financial elements (budgeting, forecasting, reporting) were the focus of 32%, operational analytics were a priority for 13%, and only 6% were focused on the strategic aspects (long-range planning/modeling, key performance measures). There are several reasons the majority of companies are shying away from pursuing the approach to performance management that we believe provides the biggest payback.

Challenge #1: Comprehensive Vision

Most companies implementing performance management tend to have a razor-sharp focus on a particular pain point. It can be something as straightforward as improving reporting or as complex as overhauling the entire budgeting process. Focus is usually a good thing, but that is not always the case when it comes to performance management. In those companies attempting to fix the budgeting process, someone in finance (usually the CFO or VP of finance, planning, and analysis) is put in charge of the project. When a new budgeting system is up and running, that person’s goal has been accomplished and he or she considers the performance management needs met. Similarly, if enhanced or more self-service-oriented reporting is the goal, someone in either finance or IT takes on the project and drives it to completion. Again, with the particular needs met, performance management is considered to have served its purpose.

What's needed to achieve the holy grail of performance management is someone more senior who can lay out an overarching vision for performance management throughout the company. While the aforementioned projects will still take place and probably have the same leaders as before, there needs to be someone in the company who can string all the required performance projects together into a greater whole. Someone from senior management needs to play this role.

Challenge #2: Executing on the Vision

If challenge #1 has been met and a senior executive has laid out the vision for performance management, it still needs to be turned into action. You know that the executive is not going to stay involved in day-to-day management of the process over the months and years it may take.

What is needed then is a fairly detailed 3-5 year road map laying out the specific execution steps required to deliver on the vision. This should be created early on while enthusiasm is high and the senior executive is willing and available to get involved. The road map creation sessions will also help you develop another important element required to implement comprehensive performance management – a cross-functional team. To develop the road map and ultimately implement a project of this magnitude successfully, a cross-functional team with senior representation from all the major functions and business units needs to be formed. IT and finance need to jointly lead this group. While senior management lays out their vision, the members of this team need to define the actions required, in priority order, for the next several years. It will then be the responsibility of the various team members to go back to their departments and execute on the action items assigned to them.

Challenge #3: The Technology

In years past, technology may have been the single biggest reason companies did not pursue a complete performance management solution. It was just too technically complex. There were very few vendors that provided all of the required components. Integrating pieces from several different vendors was a nightmare.

While there are still technical challenges today, the vendors have come a long way. As you would expect, some of the largest vendors now offer everything you would need to implement strategic, financial, and operational performance management. One caveat here relates to the fact that some of those pieces may have come from acquisitions that are not yet fully integrated. There are some newer and small vendors that are focused on comprehensive performance management and have built unified solutions from the ground up. In addition, most of the best-of-breed vendors have recognized the need to work well as part of a broader solution and have dramatically improved and streamlined their integration capabilities. Technology should not be the barrier to achieving the holy grail that it once was.

Challenge #4: The Culture

Once you have the vision, the road map, the team and the technology, you should be all set, right? Wrong. There is a very important piece often overlooked by technical project managers – the culture. You can implement the best system technically, but if it is underutilized, feared, criticized, or simply fails to accomplish its goals, well then it's a failure. This can happen fairly easily with a comprehensive performance management system. Its primary goal is to improve the bottom line (through strategic alignment, performance incentives, and other means). If people don’t buy in, if they think it measures the wrong things, if they don't trust the data or if they feel it unfairly impacts their compensation, you could have a revolt on your hands.

The key is to set the right expectations, provide a way for everyone's voices to be heard during development and, most importantly, create a performance culture. This will involve senior management and perhaps some outside expertise around change management. A comprehensive performance management system does much more than just automate or streamline a process. It should dramatically impact the way most employees look at the business and perform their jobs. The right environment needs to be in place before a major system of this type is introduced.

There are, of course, other challenges, but these are the major ones. You may be wondering at this point if it's all worth it. The answer is an unequivocal yes! A comprehensive performance management solution can help turn around under-performing companies and help good ones do even better. What company doesn't want to see an improved bottom line?

  • Craig SchiffCraig Schiff

    Craig, President and CEO of BPM Partners, is a pioneer in business performance management (BPM). Craig helped create and define the field as it evolved from business intelligence and analytic applications into BPM. He has worked with BPM and related technologies for more than 20 years, first as a founding member at IMRS/Hyperion Software (now Hyperion Solutions) and later cofounded OutlookSoft where he was President and CEO.

    Craig is a frequent author on BPM topics and monthly columnist for the BeyeNETWORK. He has led several jointly produced webcasts with Business Finance Magazine including "Beyond the Hype: The Truth about BPM Vendors," the three-part vendor review entitled "BPM Xpo" and "BPM 101: Navigating the Treacherous Waters of Business Performance Management." He is a recipient of the prestigious Ernst & Young Entrepreneur of the Year award. BPM Partners is a vendor-independent professional services firm focused exclusively on BPM, providing expertise that helps companies successfully evaluate and deploy BPM systems. Craig can be reached at cschiff@bpmpartners.com.

    Editor's Note: More articles and resources are available in Craig's BeyeNETWORK Expert Channel. Be sure to visit today!

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