Continuing at BI 2010, Jon Hill spoke on the combination of BI and Performance Management. Jon reiterated the constantly changing environment and the tendency of companies to spend large amounts of money on data infrastructure without thinking through the way this investment will make a difference. In one extreme example he had seen one company spend $30M on a BI system that had just 8 users! It is not enough, he says and I agree, to formulate a strategy, you must also execute it. Performance Management systems should focus on providing the information environment that will allow you to monitor and manage this process. He had some great survey results:
- What companies want, but don’t get
Change/uncertainty included in the process, integration of finance/planning with operations, not enough support for scenarios, not enough linkage to actions and programs.
- What they get but don’t want
Strategies not linked to implementation, not transparent, budgets don’t reflect plans and objectives
Considering the stages in developing performance management systems, Jon argues that companies spend too little on assessment, a little too much on selecting their approach, far too much on monitoring and far too little on execution – sounds right to me, too much monitoring and not enough management.
To combine BI and Performance Management, he says, focus on decisions. To provide real value information must support the selection of actions that lead to positive outcomes. Absolutely! He also focused on the value chain of Data, Information, Actions, Outcomes.
Like me, Jon divided decisions into strategic, tactical and operational decisions and reminded the audience that they must know what kind of decision they are focused on. If we are using KPIs or strategy maps to manage the direction of our company we must understand the decisions we must make to deliver on this strategy, to affect these KPIs. We must ask "so what" and we must understand who makes the decisions that matter and focus on helping them do so.
To link BI and Performance Management then, you need to:
- Build a strategic framework
How is you information going to be used, what is your information culture so you can identify actionable information and be realistic about effective delivery
- Clarify your operating framework
Organization model, resources, governance, data and technology management. Where is the value?
- Define core information
Some metrics cross organizational layers, some definitions are constant. But others vary between organizations (marketing v manufacturing). Find the core information that drives the common metrics.
- Get some quick wins
Don’t wait for perfection, show business value quickly. Don’t lose track of the strategic view but keep moving and iterating.
Great presentation from Jon.