A company which defines strategy followed by targets and success indicators – is on the right path to success.

This is the foundation, and now we have to measure performance. What is the right indicator for that? How can we perform the measurement? How should we present the results?

In the last decade it seems that one answer is quickly becoming the most applicable one for all these questions: software solutions which implement the Corporate Performance Management (CPM) approach. These software solutions belong to the BI family which includes a variety of perceptions, tools and applications, allowing organizations to produce business insights out of the data which resides in their computer systems, and present them in clear, easy and focused way. In the case of CPM software solutions, the outcome is a display of indicators, their current values, target values and performance level. All this is done for the organization to know whether it is keeping up with its objectives during a defined period and by organizational unit.

A little history: in the beginning of the 90’s Robert Kaplan and David Norton have developed the Balanced Score Card approach for organization’s target performance measurement. Their objective was to find an alternative to the measurement methods that were then in use and that were based, mainly, on measuring success according to accounting parameters. This means, that the organization was measured only according to the bottom line of the P&L balance. Every unit in the organization was measured according to its contribution to the profit. The two men suggested adding other indicators as parameters, such as: customers and suppliers satisfaction, employees’ satisfaction and organization’s progress in qualitative parameters such as accumulation of organizational knowledge. Along with the development of this approach, CPM systems became managerial tools with which the organization was able to focus its objectives and goals and translate them into operational activities. When these systems work well, the objectives defined properly, a process for collecting information is defined, results are controlled and conclusions are distributed – they can, among other things, assist in translating and implementing vague objectives into action items.

To implement this approach, every strategic objective has to be translated into a practical one, followed by a description of the means to achieve it.

For example, a strategic goal may be “customer retention”. It can be translated to “reduce customers churn”. The indicator can be 5% customer churn a year. The means to achieve it can be: customer retention programs, pricing policy changes, enhancement of retention team etc. Later the success in achieving these goals will be measured by determining concrete indicators such as the percentage of customers who accepted the retention offer and did not leave.

At the stage of translation into practical objectives, computer systems that can support such processes get into the picture, specifically in the part of computerizing the indicators’ results and presenting them. These systems are based on BI software tools and technologies. They make intelligent use of the data which exists in the organization and in some cases they also use data which does not exist in the organization.

 The implementation process comprises of three main stages: first, study the business requirements of the data organization and the data which exists in the various organization’s systems. At this stage we have to determine whether the existing data is sufficient in order to address the objectives that were defined. Next is the implementation phase. Implementation is based on the assumption that “you cannot improve what you cannot clearly measure”. Accordingly, at this stage we have to apply calculation and presentation of indicators which can be measured and quantified, according to the defined objectives. In parallel we should also verify that this data can be retrieved from the organizational databases in a structured and regular way. It is important to insure that the data is relevant for the indicators, and that it can be displayed appropriately. Example indicators may be: ROI, meeting sales targets, customer satisfaction, customers’ service responsiveness, employees’ absence, ad campaigns effectiveness etc. The data can be measured in comparison to the past and also in comparison to other players in the market. Later there will be an initial application of the software, which include scaling and adjustment required to insure that the system is fulfilling its destination. The final stage is the transition to end users. The system is presented to the company’s employees who are intended to use it and the ways to optimize the system’s usage are determined. Following a feedback process to the presented data the application can be fully activated and used continuously.

An additional aspect is the incentive – a clear policy of setting objectives and follow up performance allows managements to apply incentive programs for managers and employees, according to clear, measurable and transparent parameters. In this way action can be achieved quickly and tactics and strategies can be changed with rapid implementation throughout all organizational levels.

One of the final outcomes of these applications is a kind of display board – a Digital Dashboard, as it is usually referred to in the industry. This Dashboard displays in a concise and efficient, yet graphically pleasant way the indicators and the results that the organization achieved in each of them. The data can be also displayed in an organizational portal through which the employees will be exposed to the data relevant and authorized for them. And so, in addition to the efficient measurement of data, which is mainly corporate management’s interest, the employees can be exposed to the company’s strategy and goals.

There are various companies which provide CPM tools. The most leading and famous of which are: Business Objects, SAS, Panorama, Cognos, Microsoft, PBViews Oracle etc.

Ness-Gilon BI is a leading consulting company with vast expertise in the area of designing CPM processes as well as in turn-key implementation of the solutions. Ness-Gilon has successfully implemented many similar projects in a variety of companies and sectors, while using the most advanced technologies and tools. In addition, Ness-Gilon consulting team escorts the organization in the process of defining the business objectives and building the organization’s value map subject to its strategy. Performing meetings with senior management and conducting workshops for managers in order to reach a consensus as to the goals, the indicators and the measurement methods.

Summary

Implementing a corporate performance management policy is quickly becoming a necessity for most organizations, specifically widely spread and complex ones. But recently for mid-size companies as well. Connecting the organizational performance management with incentive and rewarding programs, enables corporate managements to quickly implement new strategies in organizations who count tens of thousands of employees, in a transparent, decent way which encourages excellence.