That some organizations are highly satisfied with and reap significant benefits from their Business Performance Management (BPM) efforts while others are dissatisfied and gain marginal or no benefits, was a central finding of Measuring and Managing Performance, a recent global survey of over 3000 organizations by the Advanced Performance Institute and Actuate. But what separates the top-performers from the also-rans? Our analysis uncovered seven critical performance factors, which can be collectively viewed as the “inside secrets of top performers.”
Factor 1: Buy-in and Ownership
As with any management initiative, if there is no ownership and buy-in for BPM from the top then it will fail. But senior leadership support is not the full story. Our analysis found that there often is buy-in at the top but little at the bottom of the organization. As figure 1 shows about half of the respondents see top-down buy-in with little buy-in at the grassroots. Nine percent reported a complete lack of buy-in and 21 percent reported pervasive buy-in.
This indicates that BPM is seen as a top management initiative and viewed with suspicion at the grassroots, along the lines of “senior management is checking on us.” Moreover, the grassroots often disagree with the measures and analysis performed or feels that the consolidation and scoring exercises are flawed, but are too disconnected to discuss the problems because they’re not part of the strategic measurement effort.
Poor buy-in at the grassroots level is caused by a lack of engagement in the design and communication of the BPM approach as well as a lack of trust in the data quality or in how the data might be used. A closed-loop system where everyone understands the rationale of the BPM approach and has access to the data reaps the most benefits.
Factor 2: Motivation for BPM
Implementing BPM for the right reasons is another “secret of success.” The most successful implementations are those where BPM is introduced voluntarily by the company to improve its decision-making and generate new insights and understanding that drive performance improvement. If it is introduced because of external needs to report (often the case in government organizations where central government or regulatory bodies force the reporting against targets) then there will often be resistance. But resistance is often internally driven, where maybe internal quality departments or senior management teams are seen as forcing performance reporting and measurement
Our research finds that only about one-third of companies implement performance measurement and reporting for the right reasons. Another third sees it more as an internal pressure to report upwards and demonstrate performance. This “Big Brother” controlling approach should be avoided
Factor 3: Integration of Operational and Strategic Approaches
Next up is the alignment and integration of strategic and operational metrics. Measuring and Managing Performance found that companies who only use KPIs to measure and report operational performance report low levels of benefits. By the same token, companies that have strategic KPIs but don’t align them with operational metrics also report low benefits. But those companies that take an integrated approach and who align strategic and operational KPIs with Strategy Maps or Mission and Vision Statements report the highest levels of satisfaction and benefits. This is simply “joined up,” thinking.
Factor 4: Integration of Performance Measurement and Analytics
Another factor that is fast becoming a differentiator is the level of integration between traditional KPI measurement and analytics. While KPI measurement is more static, with a focus on high-level indicators to monitor performance against high-level goals (the ‘how well are we doing against our plan?’ question), analytics is more dynamic, using wider and larger data sets to challenge the business (the what, why and how questions). Those companies that reported that they combine approaches such as KPIs and Balanced Scorecard with Business Intelligence and analytics generate more benefits in the form of richer and more comprehensive business insights.
Factor 5: Time-Focus of BPM
Traditionally, performance data was used to report historic information – for example, financial performance of the last quarter or results from a staff survey. Our survey finds that this still holds true for about one-third of companies.
More sophisticated approaches allow companies to track performance much more in real time, creating a more integrated approach where measures are consolidated and reported as things actually happen. Eleven percent of survey respondents primarily use data to focus on real-time performance, whereas about half see it as a mix between historic and real time.
Due to sophisticated or predictive analytics tools, companies can now also use their data to look into the future. Through their BPM efforts, the top performers are primarily concerned with the next quarter and what is required to improve performance in the future, which is true of seven percent of respondents.
Factor 6: Data Quality
Ensuring a high standard of data quality and so avoiding the “garbage in, garbage out,” syndrome is another of the “inside secrets of success.” If we want good insights that lead to improved decisions that drive future performance then we need data we can trust. There is no point putting in place sophisticated performance reporting and shiny dashboard solutions if the underlying data is not reliable.
However, our research finds that data quality is still a major issue in the also-ran organizations. Whereas just 10 percent of respondents reported that they have a well-governed data quality management, almost half that they have only reactive data quality management (i.e. they’re looking at areas where data quality has become an issue). A further 15 percent said their data quality management is undisciplined, leading to poor or varied data quality.
Factor 7: BPM Technology
The proper exploitation of technology is the final of our seven secrets of success. Technology to support BPM activities has evolved massively over the past few years. Initially the focus was on storing and reporting performance information using databases and dashboard solutions. Today’s sophisticated solutions need to do everything, combining integrated BPM platforms with the ability to perform predictive and big data analytics, along with root-cause analysis on past and future data, – all to enable companies to visualize performance in interactive graphs and reports delivered to mobile devices over the Internet.
However, most organizations are some distance from doing this. Sixty one percent of companies use office tools such as Microsoft Excel and PowerPoint as their main tools to report and analyze performance (and report the fewest business benefits and user satisfaction levels). The greatest benefits/satisfaction levels are reported by the 10 percent that use integrated performance management and analytics software. But note, our experience shows that solutions that support a continuum of needs work best, allowing organizations to embrace performance measurement at a level they’re comfortable with, gradually moving away from simple reporting towards predictive analytics.
BPM has come a long way from the days when easy to find (but often unreliable) data was captured, reported through marginally valuable KPIs and from which “rough guesses,” of likely future performance could be made. With Big Data analytics and data management generally becoming a core capability in leading organizations, it is our firmly held belief that integrating KPI measurement with powerful analytics will be “the next big thing,” in the BPM space. It will change everything. Measuring and Managing Performancefinds that top performers already know this.
I hope this was useful? As always, I am keen to hear your views on this topic. Please share any comments, ideas and suggestions below…
Finally, here is a slide-deck that summarizes the main points:
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