Sunday, July 27, 2008

The Payoff of Pervasive Performance Management

Business Week published last week, in its White Paper' section of Research Services page, a good report called The Payoff of Pervasive Performance Management.

According the report, BusinessWeek Research Services launched a research program in early 2008 to determine the views of senior business and technology executives on whether widespread use and dispersal of performance management and business intelligence tools lead to tangible financial benefits such as increasing revenues, shareholder value, and customer loyalty.

Performance Management is a framework for organizing, analyzing, and automating business methodologies, metrics, processes, and systems that drive business performance.

Pervasive Performance Management brings transactional systems and analytic systems together to provide more information at the point of decisions.

The highligted results of the research program are:
- Two-thirds of senior executives whose companies use performance management say it has a positive effect on shareholder value.
- Organizations exercising world-class enterprise performance management, including widespread dispersal of the tools, enjoy 2.4 times the three-year equity market returns of typical companies in their industry.
- The broader the distribution of business intelligence and performance management tools, the higher the potential return on the investment.
- A successful performance management program realizes that not all employees need to view data in the same way—or to view the same data.
- The biggest return on investment can come from extending performance management to front-line workers, like telemarketers and collections staff.

Conclusions and Recommendations of the reports are:

According to surveys and interviews, pervasive performance management is providing clear value to both the top line and the bottom line. Spreading this technology successfully throughout a company depends on adopting the following best-practice techniques and philosophies:
- Create a culture of accountability as part of the deployment of dashboards and balanced scorecards.
- Go for the fast win, gaining support and user adoption, and demonstrating a clear ROI.
- Focus on infrastructure, data quality, and governance. Slow systems with dubious data are quickly abandoned.
- Take a pruning blade to your KPIs. Most companies overwhelm workers with too many metrics.
- Hail to the Chief: High-level executive sponsorship is crucial.
- Provide compelling information to every level of employee, appreciating that what is compelling changes from user to user.
- Do not think about just providing information; also give clear guidance on actionable steps to take with it.

This is a good report about the Return on Investment (ROI) on companies that are using the concepts of Performance Management effectively.

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