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Performance Management

Performance management is a term that gets thrown around with abandon. Some people use it interchangeably with Business Intelligence; others give it more of a financial management angle. It doesn’t really matter which definition you use; as long as your organisation is using its intellectual, management and data assets as well as possible to achieve corporate goals.

CDP thinks of performance management as business intelligence with a financial edge. To put it another way you can regard performance management as business intelligence with forecasting, budgeting and targets added on. Its aim is an attempt to cover the questions that are most often asked in an organisation:

How are we performing to target, forecast or budget?

Why is our performance good, poor or indifferent?

What should we be doing differently, such as reallocate resources to areas of need, to make things better?

The key word is performance. To measure any type of performance we need to compare actuals with something else; a benchmark, a target, a forecast or a combination of these. Peter Drucker said that, if you can’t measure it, you can’t manage it. What this means in practice is that you can’t manage performance unless you have a goal.

How, why and what are the big questions, but what they all have in common is that they all require good data and information to answer them. They can’t be answered adequately with gut instinct or inspired leadership; they need information. Some of that information exists in the general ledger, HR systems, ERPs, operational systems, data warehouses and other systems.

There will be forecasts, budgets and targets in various places within most organisations. Some of it might be in corporate wide systems, but in many organisations this information is spread around via spreadsheets and bespoke systems. They often require intensive management; spreadsheets wars. Pulling this information together is frequently a gargantuan task, requiring great expertise, persistence and resources. Even then, the complexity means that there will be a level of inaccuracy. This complexity comes with other issues:

It is common for forecasting & budgeting systems, based on spreadsheets, to be the creation of a small number of MS Excel experts.

An over reliance on the person, or people, who created the system, when issues occur. This means that the organisation is obliged to have, sometimes expensive, contingency plans when resources are unavailable due to accident, leave or resignation.

Documentation of the system needs to be comprehensive and current.

There are often complicated ways of getting this data into operational or data warehouse systems.

The task of contacting the relevant people to complete the forecast, budget or target can be time consuming and frustrating, as it is done via the email system and involves spreadsheets.

The use of products, such as the IBM Cognos performance management software, is beneficial to an organisation as it means that there is a way of doing budgeting and forecasting that has been standardised and is not reliant on anything that is unnecessarily bespoke.