Business Performance Management and Business Intelligence for Managers
Citation preview
For Business Intelligence Managers
25/06/2014 J.Gretzitz 2 THE ORIGINS OF PERFORMANCE MANAGEMENT
Performance Management originated as a broad term coined by Dr.
AUBREY DANIELS in the late 1970s to describe a technology (i.e.
science imbedded in applications methods) for managing both
BEHAVIORS and RESULTS, two critical elements of what is known as
performance
25/06/2014 J.Gretzitz 3 A formal definition of PERFORMANCE
MANAGEMENT, according to Danielss: A scientifically based,
data-oriented management system that consists of three primary
elements - Measurement, Feedback and POSITIVE REINFORCEMENT
DEFINITION
25/06/2014 J.Gretzitz 4 Performance Management (PM) - Includes
activities which ensure that goals are consistently being met in an
effective and efficient manner Performance Management can focus on
the performance of an organization, a department, employee, or even
the processes to build a product or service, as well as many other
areas Also known as a process by which organizations align their
resources, systems and employees to the enterprises strategic
objectives and priorities
Performance Management (PM) can be defined as a set of
management processes supported by information technology (IT), that
help to improve the Management, Strategy execution and Decision
making in organizations Performance management processes help
companies define STRATEGIC OBJECTIVES, measure performance, analyse
and report performance as well as align people and culture
25/06/2014 J.Gretzitz 5
Performance Management is what organizations do to become more
successful and stay ahead of their competitors. In fact, managing
performance is the most critical task of any executive or manager
If performance management processes allow organizations best to
define and communicate their strategies, measure, report and
monitor progress in order to manage and improve business
performance 25/06/2014 J.Gretzitz 6
Towards better decisions making Performance Management can also
be defined as a set of management processes, that help to improve
the strategic decisions people make every day THE QUALITY OF THOSE
DECISIONS THAT WILL SEPARATE SUCCESSFUL COMPANIES FROM THE REST
25/06/2014 J.Gretzitz 7
Performance Management is therefore a modern term for a set of
management approaches that enable organizations to DEFINE and
EXECUTE their strategy, and to MEASURE and MONITOR performance in
order to inform strategic decision making and learning Towards
better decision making 25/06/2014 J.Gretzitz 8
Towards better decision making Basic performance management
model integrates processes for DEFINING strategic objectives,
MEASURING performance, ANALYSING performance and REPORTING and
REVIEWING performance ALIGNING PEOPLE AND CULTURE All of these are
focused on PERFORMANCE IMPROVEMENT which is the CENTRAL PREMISE of
performance management See Figure below: 25/06/2014 J.Gretzitz
9
25/06/2014 J.Gretzitz 10
Beyond People Management and Performance Monitoring The
following processes and terms are often associated with performance
management: STRATEGIC PLANNING, performance measurement and
monitoring, BUSINESS INTELLIGENCE, analytics, people management,
reporting, financial planning & budgeting, forecasting, data
warehousing, risk management, project & programme management,
business process optimisation, knowledge management, dashboards,
scorecards, metrics and key performance indicators 25/06/2014
J.Gretzitz 11
25/06/2014 J.Gretzitz 12
Modern performance management approaches bring together these
key aspects of management to form an INTEGRATED APPROACH 25/06/2014
J.Gretzitz 13
Performance management was sometimes narrowly associated with
either People Management (e.g. performance appraisals and dealing
with underperforming individuals) or Performance Monitoring (e.g.
collecting and reporting of performance indicators) To avoid this
confusion, new terms such as EPM, CPM or SPM have been created
Beyond People Management and Performance Monitoring 25/06/2014
J.Gretzitz 14
Integrated Performance Management Organisations that are
serious about managing performance will move beyond the basic model
shown in the figure above and INTEGRATE IT WITH OTHER KEY BUSINESS
PROCESSES See Figure below: 25/06/2014 J.Gretzitz 15
25/06/2014 J.Gretzitz 16
In order to gain maximum benefits from performance management
initiatives organisations need to ensure they ALIGN AND INTEGRATE
PROCESSES including: financial planning and budgeting, project and
programme management, people management and rewards, performance
reporting, risk management as well as BUSINESS INTELLIGENCE AND
ANALYTICS A INTEGRATED PROJECT MANAGEMENT, as shown bellow:
Integrated Performance Management 25/06/2014 J.Gretzitz 17
25/06/2014 J.Gretzitz 18
Enterprise Performance Management Basics Using the basic
strategic performance management model, organisations start with
defining their strategy, then move on to measuring performance,
then use these indicators to analyse performance in order to
extract insights and make BETTER INFORMED DECISIONS WHICH LEAD TO
ACTIONS AND PERFORMANCE IMPROVEMENTS Lets briefly look at each of
the following steps: 25/06/2014 J.Gretzitz 19
Strategic Planning This step involves creating a business model
and strategy (either corporately or for a business unit) State of
the art tools that are commonly used here include Balanced
Scorecard Strategy Maps and value-driver mapping Informed by
strategic analyses organisations identify what strategic objectives
they plan to accomplish and how they plan to accomplish them
25/06/2014 J.Gretzitz 20
Performance Measurement and Monitoring Here organisations
design key performance indicators (KPIs) to measure and monitor how
well they are delivering on their strategic objectives Most
important is to ensure that metrics are relevant and meaningful
Many fall into the trap of measuring what is easy to measure
instead of what will provide the best insights 25/06/2014
J.Gretzitz 21
25/06/2014 J.Gretzitz 22
25/06/2014 J.Gretzitz 23
Business Intelligence (BI), Analytics and Modelling In this
step organisations use their performance data and metrics to
analyse performance This step is all about creating a solid
evidence- base to inform decision making Examples of analytics, BI
and modelling approaches include marketing and sales analytics,
customer analysis or click stream analysis 25/06/2014 J.Gretzitz
24
Reporting & Reviewing Performance In this step
organisations translate the insights gained from their performance
information into management reports and dashboard and put the
review processes in place to act on the data It is all about
evidence-based decision making facilitated by the performance
review processes Leading edge organisations put in place
performance improvement meetings to create a dialogue about
performance leading to JOINT DECISION MAKING 25/06/2014 J.Gretzitz
25
Aligning People and Culture In this final step organisations
ensure the people, culture and leadership approaches are Focused on
performance improvement It is about creating the soft elements of a
high performance organisation to ensure the performance management
processes actually lead to improved performance This means
organisations have to close the knowing- doing gap and act on the
insights gained and decisions made in order to generate real
performance improvements 25/06/2014 J.Gretzitz 26
Integrated Enterprise Performance Management More advanced
performance management approaches integrate with other key
management processes Here we briefly look at some of those
processes in turn and explore the need for alignment 25/06/2014
J.Gretzitz 27
Financial Planning, Consolidation & Budgeting By
integrating your budgeting and financial planning with your
corporate objectives and priorities you ensure that the financial
resources are spent on the things that actually matter the most
Some of the leading organisations are now able to update their
budgets and forecasts on the fly, based on a continuous inflow of
both financial and non-financial data 25/06/2014 J.Gretzitz 28
Project and Programme Management Projects and programms needs
to be aligned with the corporate objectives and priorities in order
to ensure that efforts are focused on what matters the most The
activities (projects and programms) need to be prioritized based on
strategic needs and therefore have to be aligned with the strategic
performance framework of an organisation 25/06/2014 J.Gretzitz
29
People Performance, Rewards and Recognition For most
organisations their people are their most valuable and most
expensive assets In the end it is people who deliver the projects
and implement the strategic plans By aligning budgets and projects
with the strategic performance framework you have made major steps
towards alignment 25/06/2014 J.Gretzitz 30
However, by further aligning reward and recognition systems as
well as personal performance management processes to the
performance framework you can create a tight integration between
what matters the most and what people perceive as important
ALIGNING REWARD AND RECOGNITION SYSTEMS 25/06/2014 J.Gretzitz
31
Risk Management The management of risk is too often narrowly
focused on just financial risks or the disaster risks to buildings
and infrastructure While these are important, they are not enough
The performance framework has identified the key drivers of future
performance 25/06/2014 J.Gretzitz 32
25/06/2014 J.Gretzitz 33 One of the KEY DRIVERS for business
success is managements ability to effectively manage the
performance of individuals and teams Managing performance is driven
by the gap between where our people are now and where we want them
to be!
(e.g. staff with the right competencies, corporate reputation
or key partnerships) and it is therefore important to assess and
monitor any risks in relation to all your performance drivers in
order to achieve alignment between your risk management and what
matters the most for future performance THE KEY DRIVERS OF FUTURE
PERFORMANCE 25/06/2014 J.Gretzitz 34
25/06/2014 J.Gretzitz 35
25/06/2014 J.Gretzitz 36 Set the standards and agree goals,
targets and expectations Manage the quality of the work Measure and
monitor that work on a regular basis Develop your people through
coaching, mentoring and training Select the right tools, techniques
and resources to achieve the above THE 5 MOST CRITICAL DRIVERS
Performance Reporting, Dashboards and Scorecards Relevant
performance information is not only crucial for better decision
making and performance improvement, it is also a requirement for
most organisations to demonstrate to external stakeholders and
regulators that they have delivered desired levels of performance
and that they have complied with rules and regulations 25/06/2014
J.Gretzitz 37
Sales Performance Management INTEGRATED SPM SOLUTIONS allow
organisations to use any of their data to produce and deliver
reports, dashboards and scorecards for their stakeholders
internally or externally 25/06/2014 J.Gretzitz 38
25/06/2014 J.Gretzitz 39
Business Intelligence and full analytical integration By
aligning and integrating the above processes with the performance
framework organisations create an invaluable set of data which they
can use, in an integrated way, to inform decision making For
example, the information on value driver analysis, customer
relationship management, financial forecasting, and risk logs can
be used to challenge, test and revise corporate strategies
25/06/2014 J.Gretzitz 40
25/06/2014 J.Gretzitz 41
Performance Management Technology The full level of integration
between performance management and other key management processes
can only be achieved with the SUPPORT OF TECHNOLOGY Corporate
Performance Management (CPM) or Enterprise Performance Management
(EPM) software suites create a systematic and integrated approach
that links corporate strategy to core processes and activities
State-of-the-art software systems support strategic performance
management activities by (see Figure above): a) bringing the data
together into one single database b) providing integrated analytics
and business intelligence capabilities c) integrating applications
to create a tightly aligned and integrated approach to corporate
management 25/06/2014 J.Gretzitz 42
Bibliography Key Performance Indicators (KPI): The 75 measures
every manager needs to know (Financial Times Series) - by Bernard
Marr (Jun 24, 2012) The Intelligent Company: Five Steps to Success
with Evidence- Based Management - by Bernard Marr (Apr 5, 2010)
Strategic Performance Management - by Bernard Marr and Dina Gray
(Apr 20, 2006) Source query: The Advanced Performance Institute
(API) at http://www.ap-institute.com/Performance%20Management.html
25/06/2014 J.Gretzitz 43