Move in Sync

Understand the Deluge

Using BI to understand historical performance has never been more important, thanks to today's data deluge. Management by exception is a big factor behind the rising popularity of dashboards, which deliver information, but also prioritize it relative to the organization's objectives and the viewer's agenda. Most organizations that have delivered data via reports are now building dashboards to alert users to exceptions to expected performance levels. More advanced BI dashboards let users drill down to analyze the exceptions in greater detail and determine the proper course of action.

Functionality, scale, customization, the existing infrastructure and budget are the major factors dictating your approach to implementing dashboards. Business Objects Dashboard Manager and Cognos Metrics Manager compete mainly on functional depth and degree of integration with other BI technologies. Along with colorful performance gauges, these tools supply collaboration features that can relate discussion, action and logging with metrics. Integration with standard BI reporting, ad hoc analysis and OLAP functions let you extend dashboards for root-cause analysis.

Many dashboards have been built with software not specifically written to create dashboards — BI software is a good example. Organizations have deployed reports as dashboards via browsers; within the reports you'll see gauges and hyperlink drilling capabilities. Others have developed interactive visualization components (using, for example, Hyperion's Intelligence Dashboard Builder) that let users make sense of what's contained in underlying multidimensional or relational databases. The key is to deliver an integrated view of information, especially essential data that exists outside the tactical boundaries of the employee, manager or business function.

Software providers will surely respond to your chief requirement: to give developers tools to configure, customize and deploy dashboards rapidly. Interest in using BI to guide operational improvements begs for the inclusion of collaboration and prioritization features, and it's natural to ensure better integration with Microsoft Office and other packaged applications used by front-line workers. Vendors will also introduce data integration capabilities to deliver a broader — and, if necessary, real-time — view of customers, products and other objects of interest.

Optimize the Cycle

Assessing the future well is key to PM's optimization phase. Planning, forecasting and prediction, however, can be complex and time-consuming, so many companies proceed without integrating these steps into the cycle. Increasing competition in industries such as retail and gaming — where knowledge about market share and profitability per customer offer decisive advantages — suggests that these features will soon become an expected part of PM.

Cognos, Hyperion, SAS and SAP are leaders among vendors offering both planning and BI software. Their focus is on improving predictive analytics, generally based on developing models to represent possible future scenarios. Industries to watch for further integration of predictive models into operations are banking, financial services, transportation, retail and energy.

As predictive modeling heads for the mainstream, it will find its way into business processes and management scenarios where it hasn't been common. Two vendors to watch are Fair Isaac and KXEN. Fair Isaac's Enterprise Decision Manager eases automation through rules and model-driven decision-making. AIG TradeCredit.com, for example, worked with Enterprise Decision Manager to expand its credit-risk system into the midmarket to serve companies that lack the budget and personnel resources to have their own sophisticated analytics and custom expert systems to guide decisions about credit worthiness. KXEN's differentiator is speed; it contends that its core mathematics for data mining are better suited than commonly used algorithms to building predictive models rapidly.

Align and Conquer

The align phase of the PM cycle is about managing execution. In this phase, organizations improve the communication of strategic direction, track execution against planned objectives and uncover opportunities to automate processes. To communicate strategic direction, you must articulate the plan to all stakeholders. Tracking how well the organization is doing to meet objectives comes through smart use of performance metrics. Dedicated PM or business activity monitoring software could ultimately automate such tracking.

Many organizations use a scorecard methodology in the align phase. Where dashboards merely track performance, scorecards are tied to benchmarks and define levels of success. Scorecard methodologies can require significant changes to your organization beyond technology, but they play an important role in PM precisely because they force different behavior.

La Suisse Insurance used PM dashboards and scorecards to manage its sales force and align it with corporate objectives. The company was losing up to $50,000 per salesperson per year by continuing to give monthly allowances to salespeople who weren't performing up to standards, says senior manager Gabriel Fuchs. Working with Spotfire DecisionSite, the company gained multiple views of sales performance — by salesperson, branch, region and so on — and it can do quick analyses and comparisons against strategic targets.

"Before, losses went on for months," Fuchs says. "Now we can eliminate the negative accounts and help struggling salespeople we value get going in the right direction right away."

Scorecards and Software

The Balanced Scorecard methodology set out by Robert Kaplan and David Norton is the best known scorecard methodology, but a variety of methodologies exist. Supporting the methodologies with software is demanding; products must help users articulate strategy, define goals, track performance, communicate with participants and automate processes.

Innovations recently have emerged, including feature extensions for collaboration, integration with analysis software and Web user interfaces. Cognos supports both dashboard and scorecard functionality in its Metrics Manager product. Pilot Software's PilotWorks melds scorecarding with initiative management features, which tie strategy to operational and tactical implementation by establishing ownership and accountability. And Business Objects integrates task management and threaded discussions into its Performance Manager software.

ERP or BI?

PM demand is attracting BI and ERP vendors. Neither segment has pushed far ahead, but because BI software provides much of what PM requires--and what ERP vendors have not typically provided--a BI vendor could ultimately take the lead. Certainly, SAP and Oracle/PeopleSoft have PM solutions you should consider. While BI providers lead the way, their platform offerings are by no means complete.

Whether from a BI or ERP vendor, the trend is toward integrated products that can cover several phases of PM. Vendors will add features for collaboration and information integration to address operational demands. For now, PM still depends on software originally intended for other purposes, but it will evolve quickly as it emerges from its BI and ERP beginnings.

Eric Rogge is VP and research director for Business Intelligence & Performance Management at Ventana Research, a research and advisory services firm. Write to him at [email protected].