Finding the “Metrics that Matter”

A few weeks back, I had an opportunity to view some of the emerging performance management tools in the marketplace, and in particular, where they saw themselves headed. That experience caused me to reflect a little bit on these “new” performance management tools, and what really differentiates them as “best of breed”.

There are literally tons of related tools and systems out there, many of which have historically evolved as part of an Enterprise Reporting System. More often than not, these tools were largely driven by the financial part of the organization, and hence were built upon a financial reporting foundation. That, in and of itself is not so bad, but all too often these systems left gaping holes in the areas most important to operations and line management.

Enter the new breed of performance management systems.

The tools in this class of PM systems (PerformanceSoft, Cyndrus ADS, and PilotWorks for example) have gone well beyond the financial reporting game, and have really delivered a far more powerful and universal solution- one that supports the entire organization’s performance reporting needs. It is not my intent here to endorse one or the other (although I have my opinions), but rather point to some distinguishing characteristics that make these tools unique, beyond simply their “universal” application.

The, first and most important of these features is found in the tools’ foundation itself -the Performance Management Architecture. Most of these systems require management to start with their strategic plan, and align around it. The plan, and its corresponding objectives form the basis for everything else that follows. Everything else “cascades” from it, and is linked directly to it. Nothing is measured or tracked unless it has a direct feed to one or more of the organization’s top objectives.

The second distinguishing characteristic is what I call the “connectedness” of the system. Some might refer to this as “drill down” capability. In essence, what this means is that the user can, at any point in the system, probe deeper into what is driving a particular strength or weakness of a performance indicator or measure. For example, they can define what comprises a particular metric, what inputs are most responsible for current performance, which initiatives are being deployed to strengthen it, and how those initiatives are progressing. Each of these “levels” can be accessed through any of the others, producing a rich tapestry of “connected” information in terms of performance drivers and inputs. This puts the executive in a great position to lead, being able to “virtually” move up, down, and across the organization on demand…enabling her to really understand and manage the most critical of performance drivers.

The third differentiating feature of these systems is the flexibility and adaptability each of them possess. There are two aspects to this flexibility. One relates to how the data is fed into the system. In most ERP environments, the data feeds are “hard wired” , and often require programming to make any significant changes to those inputs. With these new performance management systems, however, inputs can be easily added, deleted, or manipulated directly from an administrative panel, often without a significant amount of external programming. With the advent of “web services” and other data publishing protocols, these features will become increasingly important to system administrators and users.

The other aspect of flexibility relates to the level at which the organization can deploy the technology. Not every organization has the appetite for “complete” drilldown capability, nor is it really necessary. For one organization, getting down to an individual turbine blade on a particular aircraft might be important to one of its strategic objectives, whereas another organization is comfortable just reporting at the level of regional operating budget. In each case, the system is flexible enough to be deployed at whatever level makes sense today, but adapted as internal needs and/or process changes arise.

Taken together, these features- the strategic architecture, the connectedness of these systems, and their flexibility and adaptability- help create an environment in which the organization focuses on doing the “right things right”. Every initiative, project, and metric are PUT TO THE TEST of whether they support the overarching objectives of the business. And with that level of focus, the organization can achieve levels of alignment never before thought possible.

So as you look at your internal metrics and performance indicators, ask yourself do you really have in place the “METRICS THAT MATTER”. Implementation of systems like these can really instill the discipline needed to realign and sustain your performance improvement initiatives, often at far lower costs that their ERP counterparts. If nothing more, take a good hard look at how these systems work. Even if you don’t purchase or implement, the evaluation process will give you a much needed perspective into where your performance management process should, and could be headed.