Performance Management

Overview

The definition of performance management (PM) has remained consistent since industry analysts Gartner Research introduced CPM in 2001.

"CPM is an umbrella term that describes all of the processes, methodologies, metrics and systems needed to measure and manage the performance of an organization." (1)

Despite this stability in definition, PM as a practice has evolved greatly since 2001.

Many companies from the Global 3500 and major public sector organizations have embraced the vision of PM. They understand the value of enabling and engaging everyone in an organization to manage the organization's performance. They are deploying technologies and solutions to make that vision real.

These organizations understand how PM can help them answer their fundamental business questions:

• How are we doing?
• Why?
• What should we be doing?

Scorecarding, business intelligence, and planning and consolidation technologies answer these questions. The questions connect; PM requires they not be stand-alone elements. Knowing what happened, without finding out why, is of little use to the business. Knowing why something happened, but being unable to plan and make the necessary changes is likewise of limited value.

See an expanded version of the PM technology platform.

Cognos is now complementing its solid, integrated technology foundation for PM with a whole-product approach. The company is pursuing this evolution with partners and thought leaders. Together, these groups are defining the "sweet spots" for PM-where a PM methodology can have highest impact. They are also developing and offering the pre-built solutions that can take advantage of those sweet spots. This whole-product approach of a PM System comprises:

• Technology Platform: through integrated capabilities and underlying services.
• Solutions: that cover departmental, industry, and enterprise-wide performance management needs.
• Best practices: through the Cognos Innovation Center for Performance Management.

Value

Make the organization's priorities everyone's priorities

A PM system automates and preserves senior management intent-making the organization's strategy and priorities everyone's priorities. It provides these three core values:

• Information delivery-Understand the business
• Performance oversight-Manage the business
• Performance effectiveness-Improve the business.

Information delivery
Underpinning PM is the communication of information and strategy. Not just one-way, and more than two-way, rather, in multiple directions. Information delivery provides everyone with the information and strategic context they need to do their work. It's about getting the facts and making informed decisions. With a PM system, you can deliver direct access by decision makers throughout the organization to consistent, actionable information. With information delivery, you have helped everyone understand the business.

Performance Oversight
Performance oversight provides senior decision-makers with the levers they need to optimize the business. A PM system delivers an aggregate view of operations that allows management to optimize current practices, within established constraints.

Effective systems of controls, accountability and measurement through metrics, inclusive planning, and timely reporting ensure management can discharge its oversight requirements.

With oversight, you help decision-makers manage the business. Through information delivery, you have put everyone on the same page. Oversight lets you distribute accountability and responsibility and transparently see the results.

Performance Effectiveness
Performance effectiveness is about executives having all necessary information when they make long-term decisions about the strategic direction of the company. It is also about strategic planning, removing constraints, and helping the executive level set new targets and goals. "Any system you want to be fast and pervasive must be automated," says Rob Ashe. This is key to PM's ability to deliver value.

With effectiveness, you give management and senior executives an automated, systemic means to improve the business. People are aligned, people understand their responsibilities, and with effectiveness, you can move the company as one entity towards its future goals.

Why Corporate Performance Management Now

In its report, "Drivers and Challenges of CPM", research firm Gartner outlines a number of factors driving the requirement for PM now.

• Sarbanes-Oxley Act and other legislation and practices mean management must report immediately to stockholders issues that will materially affect performance.
• Such immediacy is not possible without well-organized processes and well-implemented information systems such as PM.
• As world economies poise for growth, we must evaluate risk at the same time as opportunity. This complex analysis requires a decision-making platform.

• Traditional budget processes are broken and need review and reform. They are slow, expensive and disconnected from what drives the business.
• Spreadsheets are adequate for personal productivity but not as part of a critical business process.
• Ponderous annual budgeting cycles have completely lost relevance. A highly responsive planning and control cycle is now essential.

• Budgets are often focused on outcomes and not the drivers of the business.
• Such budgets do not anticipate the impact of unexpected business events.
• Information does not flow effectively among departments and individuals for coordinated decision-making.
• People cannot access available and relevant information to make the best business decisions.

• Organizations invested in enterprise resource planning (ERP) systems to make key operational processes more efficient.
• However, ERP systems were not designed to answer business questions. They were designed to capture transactional data.
• Although ERP vendors offer some business intelligence capabilities, you require the easy-to-use, purpose-built, and multi-vendor capabilities of a true decision-making platform.