Software // Information Management
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10/29/2008
04:43 PM
Mark Smith
Mark Smith
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In an Economic Maelstrom, How Bad is Your Performance Management?

It's obvious to everyone that we are in turbulent times as economic challenges rattle the globe. The question is whether the post-mortem analysis and diagnosis of the causes and symptoms of this mess will focus on the right areas and help minimize future failures... Let's be honest. Organizations have not managed their businesses using systems to understand current performance and risk in a common, enterprisewide fashion.

It's obvious to everyone that we are in turbulent times as economic challenges rattle the globe. As I have been reading in The Wall Street Journal and The Financial Times, it's clear that the finger pointing and rescue packages for large businesses will continue for some time. The question is whether the post-mortem analysis and diagnosis of the causes and symptoms will focus on the right area and help minimize future failures. Will the determination be that management processes failed and information was not put in place to provide the right level of notice to prevent the recent financial services industry meltdown?

Let's be honest. Organizations have not managed their businesses using systems to understand current performance and risk in a common, enterprisewide fashion. Without such an approach, the appropriate changes to business plans to minimize impacts on shareholders and the workforce can't be implemented. Frankly, the current environment shines the light on the lack of performance management and business intelligence. My take is that the lack of management processes, with analytics and information coordinated from across the business, has led to our current quandary. Business management in the financial services industry has failed the world by not heeding the need for enterprisewide decision-support systems for managing performance and risk.Unfortunately, the impact now goes well beyond Wall Street and associated banking and insurance industries and is now creating havoc in industries like retail, automotive, consumer goods, telecommunications, government and others. How will these industries manage performance in a slowing economy and difficult times? Will organizations instrument decision support to enable performance management in time to avoid another collapse?

Over the last two years, our research across thousands of organizations suggests there is a complete lack of maturity in the use of information and technology to support performance management processes and to enable true business intelligence. The reality is that organizations have a myriad of disparate silos of data in what Microsoft has proclaimed "Excel Hell" or what I refer to as the spreadsheet quagmire. With few or no dedicated systems that operate across business management in finance, operations, sales, manufacturing and corporate planning teams, companies are running blind, as disparate information is probably not accurate or timely or, even worse, not actionable.

Over the last seven years I have seen a lack of focus and competency in performance management and business intelligence for managing and operating business. The investments in IT have been focused on executing business through transactions and infrastructure for networking. Even after spending billions of dollars on technology, we are still operating with the most primitive environment to manage business effectively. I have seen many of the CIO surveys that rank BI as a top priority, but based on our research and assessment of the maturity of IT organizations, organizations are not making the required investment in technology and people to support these business needs. Complete lack of collaboration across business and IT on this topic has resulted in a very bad situation that requires drastic measures.

After 30 years of evolution from decision support to performance management and the advancement of technology for business, executives and management are not leading efforts to streamline critical investments. Much must change to lead and set an example of how a well-run business should operate. Until organizations can market and communicate how they run their business with performance management processes and business intelligence technologies, there is much that must be done to operate effectively and efficiently.

Be skeptical of your current efforts in BI and performance management. Do you lack the investments needed to understand and optimize performance to meet the risk challenges of today's business environment? I would ask the tough questions on your program and plans to apply information and technology to support the business.

Let me know your thoughts.It's obvious to everyone that we are in turbulent times as economic challenges rattle the globe. The question is whether the post-mortem analysis and diagnosis of the causes and symptoms of this mess will focus on the right areas and help minimize future failures... Let's be honest. Organizations have not managed their businesses using systems to understand current performance and risk in a common, enterprisewide fashion.

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