Give your board the facts

Performance management systems can get IT noticed, says Michael Coveney.

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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

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