Performance management systems can get IT noticed, says
Michael Coveney.
In today's tough economic climate, the IT department
should be focusing on helping the board to make quicker and better
decisions regarding strategies to overcome not only poor investor
returns but also the challenges of the International Financial
Reporting Standards and the increasing emphasis on corporate social
responsibility.
The role of technology is to support management but, unfortunately,
it is often the other way around. Part of the reason is that the
processes involved in managing performance - planning, budgeting,
forecasting, consolidation, reporting and analysis - are often
implemented as discreet systems using different technologies
maintained by different departments. The result is manually
intensive processes to stitch together the different technologies
and data that give multiple views of performance.
In an ideal world, every employee would know their role in
fulfilling the ambition of the company. But in reality there is a
"disconnect" between organisational strategy and its ability to
execute. Most companies rely on the budget process to implement
some kind of strategic intent, while reporting actual results helps
monitor success.
These traditional systems based on budget versus actual reports are
inadequate for managing performance - these systems act
retrospectively as they only tell you the results of what happened
in the past but give little or no indication of what needs to
happen to achieve strategic goals in the future.
High performers typically have single systems for developing,
communicating and monitoring plans that are deployed across the
organisation. Each manager can see their area of responsibility and
how they affect overall success. These systems invoke the processes
of planning, budgeting, forecasting, consolidation, reporting and
analysis based on events and exceptions, not just a date on a
calendar.
Performance management systems such as these convey strategy as a
"cause and effect" picture based on real actions. They warn when
planned actions are not being implemented or are unlikely to help
realise strategic goals.
IT directors need to champion these systems as they can be used to
help define, set and communicate clear strategies and allow the
board to know if their plans are being executed in real time - not
just at the end of the financial year. This kind of software can
help to bridge the gap between strategy and execution, providing
control at board level and giving employees knowledge,
accountability and motivation - everyone knows the results of their
actions.
The IT department would then be the tool which binds the company
together towards a clearly defined strategy and the board will no
longer need to drive the business by viewing performance in the
rear view mirror.
Michael Coveney is director of strategy
management at enterprise software firm Geac
