How Business Intelligence Becomes Performance Management

Below is a continuation of the transcript of a Webinar hosted by InetSoft on the topic of Current Trends in Performance Management. The presenter is Mark Flaherty, CMO at InetSoft.

Mark Flaherty (MF): Something like performance management is fairly strategic. You need to have business support, but literally the ownership has to be by senior management. It’s not something that an individual in the bowels of an organization can start to implement.

So much of business intelligence is about building a data warehouse and giving users a tool. That’s all well and good, and for InetSoft, that is a successful sale, and the enterprise might actually get some value right away. But the question is does it really move the business forward?

What are the users looking at? Maybe we’ll give them a dashboard. What should be in the dashboard? I don’t know, whatever the users want in that dashboard. Is there a cause and effect relationship associated with what’s in the dashboard? Well, often not. What is it we’re actually tracking? That’s why planning, for instance, is a real critical piece.

Let’s explain it in a slightly different way. One kind of model to explain this is the “management system.” Any management system, it doesn’t have to be based on technology, has four things in it. There are four things that a management system actually does.

Management Sets the BI Strategy

Management conceives the vision, they set the strategy. They set the goals and objectives for the organization. They execute as an organization against those goals. And finally they evaluate their performance.

The problem in so many organizations is that different management activities get disconnected. It’s very typical that people have been executing against a strategy which is no longer in place. Our strategy might not have been fully vetted. So that the goals and objectives that have been created are nonsensical. They can’t actually succeed with that strategy as it was defined.

So performance management can be injected in there. So in between the notion of setting the strategy, goals, and objectives, there is a vetting process. So use modeling to actually vet the strategy to come up with multiple scenarios so that when we do set the goals, they are actually practical.

In between the goal-setting and execution, that is where you have to make a real commitment, and that’s where planning plays a critical role. So you fortify that commitment process with a planning solution. So there are two ways right there, by the way, that are unique to performance management that are not really business intelligence. So the modeling capability that is used in between the vision and goal setting and then the planning solution that is implemented between the goal setting and the execution process are unique to performance management.

From there you actually use more business intelligence capabilities. So in between the execution phase and the final evaluation, you’re constantly tracking and monitoring your performance so you can tune your execution. That’s where business intelligence with dashboards for analysis and monitoring come in. And in between the evaluation phase and incorporating your learnings or findings and adapting your strategy, you need to do some in-depth analytics.

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That’s the more traditional forecasting or predictive analytics as well as things like data mining. So there is a piece that is more business intelligence as it relates to the management system, and then there is a piece that is more performance management, and you couple them together.