Companies have used quality programs and data-intensive process management to improve processes such as procurement and order fulfillment on an ad hoc basis, Hammer says. Now it's time to turn that attention to the management process, relying on metrics and data in decision making through what he calls "analytic performance management."
There are two reasons this concept can take hold now, Hammer says. First, in the last year, the IT tools for providing the right information to the managers who need it have reached the quality needed to make that possible. Second, managers have had enough experience with other quality programs, such as six sigma-a continual process-improvement regimen practiced at companies such as General Electric Co.-that they're ready to accept the value of following a process.
Regarding tools, Hammer says information systems in the past have been too passive, built by technologists who focused on providing access to information in customer-management or financial systems. "There's a presumption that a businessperson knows what they want to ask. That's a fiction," he says. Managers need information pushed to them and decision-making guidance.
He offers the example of getting rid of unprofitable customers or poor suppliers. All companies know they have many of these, but they're afraid to take action because they're not sure which ones are hurting and which ones are helping. Focusing on key metrics and using that as the basis of decision-making could change that.
The CIO can play a prime role in spreading this idea throughout a company, Hammer says. Since IT staffs are comfortable with data and technology, the IT department is a logical role model for applying metrics to management decisions.