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How to Increase Your Performance Management Risk, Part 2

Originally published August 15, 2007

In Part 1 of this series, we began our look at practices that could jeopardize the success of your performance management project. That article examined the inherent risks in only evaluating a single vendor. This article reviews the challenges associated with “going it alone.”

Doing Performance Management on Your Own

The time and costs associated with business performance management (BPM) projects vary widely based on the particular areas of focus, company size, number of users, number of source systems, etc. However, it is safe to assume that a typical initiative can take from 3 to 12 months and cost anywhere from $100,000 (software and implementation services) to over $1,000,000.

No matter how you slice it, this is not a minor project. It is also not a back-office system being worked on in an independent silo. Because performance management will ultimately touch every department in the company, there are usually representatives from all key business units on the team. Due to its strategic importance, several senior executives will also be involved. Quite often, this includes the CFO, CIO and, in some cases, even the CEO. Due to the level of investment and visibility, this potentially can be a career make-or-break project for the project manager.

As a company-wide initiative requiring tight cooperation between the departments, particularly IT and finance, and the additional need to interface with numerous systems, the potential pitfalls are many. Add to this the fact that there are more than one hundred vendors vying for your business – many of which make it difficult to separate aggressive marketing from reality. In this environment, it is highly likely that some mistakes will be made. The question really is how costly (in time and/or dollars) these mistakes will be. In the most extreme cases, the performance management system will be a failure. Our annual BPM Pulse survey data indicates that about 13% of companies needed to redo their performance management systems after a false start.

In spite of all of this potential risk, some projects are being done today without tapping individuals with current, hands-on experience in business performance management. The reasons are many – the most common being a misplaced sense of pride. A company may look around and see that they have dozens or hundreds of smart people available to work on the project. They are fully confident that they can handle any challenges. The key, however, is business performance management experience. You do need to utilize many of those smart people, but you also need to pair them with someone who has specific and current knowledge of performance management.

Avoiding the Pitfalls

You need to add an expert to your team to fully leverage your team’s own capabilities and sidestep any potential pitfalls. If you look at some of the largest companies with thousands of smart people to call upon to assist with their performance projects, you will find that many have hired experienced employees directly or engaged outside experts for performance management. Why? They simply want to get it right. It is too costly to get it wrong. The complexities already discussed as well as the unique balance required between business and technical needs make performance management a challenge.

Many companies also remember their enterprise resource planning (ERP), supply chain management (SCM) or customer relationship management (CRM) experiences. In many cases, although they eventually ended up where they wanted to be, it took a lot longer, cost a lot more, and was much more painful than it needed to be. Everyone, in effect, was a pioneer, doing ERP for the first time, learning as they went. They are trying to avoid repeating those mistakes with business performance management by bringing in someone who has been through multiple business performance management projects and knows what to do and what not to do to achieve success.

Other reasons that companies go it alone relate to ego and costs. You may have an IT manager that has run numerous back-office systems projects for the company quite successfully in the past. It may not be obvious to him why he needs help on this project. Well, business performance management is not like those other projects. It goes deeper and wider into the organization and technology infrastructure than most other systems and has a sizeable business and corporate strategy component. An IT project manager trying to handle this on his own may tend to treat this as a data warehousing type project and not address the key needs of the businesspeople.

An independent third-party expert can bring both business performance management experience as well as relief from internal politics and territoriality to the table. We have seen business performance management projects stopped dead in their tracks by stalemates between IT and finance. An impartial expert focused solely on the success of the business performance management project can help cut through some of these types of issues.

Some companies have hired new employees specifically to run their business performance management projects. These people tend to be either senior businesspeople or experienced project managers. It is also important for them to have specific performance management experience. It actually is a good idea to hire someone internally to take the lead because, in most companies, the people most appropriate to lead business performance management projects simply can’t free up enough time to focus on it. However, they may still need to leverage additional business performance management expertise if they don’t have it themselves. Unfortunately, coming back to ego and costs, these people are the least likely to engage outside help because they believe “that is what I was hired to do.” Well, the reality is they were hired to make business performance management a success, not to try to do it all themselves.

The Strength of Experience

For business performance management, as in many other things, you can’t beat experience. (Have you recently ridden with a newly minted teenage driver?) To help ensure your project success, you either need to hire employees that have significant and up-to-date experience with multiple business performance management projects or engage a third-party expert for the project duration. If politics or your budget won’t permit that, then you need to make yourself that expert. This is not accomplished by just attending webcasts and reading white papers, but rather by attending industry events to learn from your peers, attending detailed vendor training (non-sales) classes and purchasing in-depth research from a reputable source.

In the final article in this series, we will look at the challenge of working with performance management tools vendors versus packaged application alternatives.

  • 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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