Breakthrough Performance Management:
Tying Performance Metrics to Business Strategy
By Robert L. Clay, VP, Global Marketing, CorVu
Key market forces -regulatory, competitive, and economic-are driving dramatic change for virtually all businesses today. Since most organizations have largely squeezed costs as much as possible, they now face significant pressure to grow the business and improve visibility. As a result, companies are looking to technology to help drive profitable growth.
Performance management software, which is designed to manage and monitor business performance, holds the promise of helping businesses drive profitable growth. But the traditional approach to performance management (focused exclusively on performance metrics>) has not served as a mechanism for driving growth. That's because there's more to performance management than metrics, dashboards, and scorecards.The problem for most organizations is that there is a fundamental disconnect between corporate strategy and day-to-day activities. Strategy, initiatives, resources, and risks are discussed at the executive level, but day-to-day activities and performance metrics are not connected to them. As a result, organizations can measure performance but they can't manage it.
The key to breakthrough performance management is tying performance metrics to business strategy. It's not just about performance metrics, it’s about tying performance metrics, initiatives, resources, and risks to strategic objectives.
Doing this, however, is a non-trivial task. It represents the most important project management effort that an organization can undertake. It cannot be managed effectively with desktop tools like Excel or PowerPoint. At the same time, it's outside the design intent and scope of ERP systems, planning tools, and business intelligence tools. It requires a comprehensive system for managing strategy-related processes - it requires a Strategic Management System (SMS).
Breakthrough Performance Management comes from coupling the capabilities of a Strategic Management System with robust performance metrics, including KPIs, custom reporting, graphical analysis, dashboards, scorecards, and automated data access. Combining these key technologies allows organizations to tie performance metrics, initiatives, resources, and risks to strategic objectives in a closed loop.
There are three critical system requirements for breakthrough performance management:
- Purpose-Built Application
- Comprehensive Management Framework
- Scalable Architecture
A purpose-built performance management application that ties performance metrics to strategy enables organizations to move beyond measuring performance and begin managing performance. By managing performance, companies can successfully execute strategy and drive breakthrough results. While most technology investments are all about reducing costs and inefficiencies, breakthrough performance management is all about driving growth. And while most technology investments struggle to calculate ROI justifications, breakthrough performance management is measured in multiples, not percentages.