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August 21, 2014

Performance Management for Government

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Government agencies are under increasing pressure to demonstrate that they are making effective use of taxpayer dollars. At the federal level, the Government Performance and Results Act (GPRA), the Clinger-Cohen Act and Office of Management and Budget mandates require agencies to track their performance against predefined goals, report the results to outside entities including Congress, and ensure that performance meets expectations.
In addressing this need, agencies face three challenges:

  • Information is not actionable. Information is most useful when it enables strategic and operational decision-making in time to make a material impact on results. Existing systems typically track lagging indicators, such as financial performance, and the information is often outdated by the time it is rolled up and reported to management. Thus, management often is unaware of problems until it is too late to act.
  • Information is widely dispersed across multiple systems. This makes assembling a "big picture" view of how the agency is doing a difficult, error prone, manual effort that is often too slow to identify problems in time to fix them.
  • Business definitions are inconsistent. Different departments within the same agency sometimes have different definitions of key terms or measures, resulting in inconsistent and sometimes conflicting assessments of agency performance. This, in turn, can cause departments to pursue conflicting goals.

An enterprise performance management (EPM) solution can help organizations overcome these challenges by:

  • Measuring performance drivers as well as outcomes to help management identify potential problems in time to intervene effectively.
  • Ensuring that decision-makers have access to the most current information rather than forcing them to work from weeks old, manually compiled data.
  • Facilitating information sharing across departmental lines and organizational levels.
  • Integrating information from multiple sources within and outside the agency into a single, consolidated view of the agency's performance.
  • Creating consistency between business objectives and measures of success, so the entire agency moves toward a common set of goals.
  • Providing each user with a customized view of the information he or she needs while protecting sensitive data and meeting security and privacy requirements.

Such a solution provides the tools a government agency or department needs to monitor its performance, analyze past performance data to identify trends or troubleshoot specific performance issues, and take action to ensure that future performance meets the organization's goals.

Performance Management in Action: An Example

A deputy director of a military logistics agency opens her dashboard on Monday morning to see a yellow indicator next to one of her largest programs. The indicator is a warning that the program is likely to miss a critical schedule milestone, causing its schedule variance to trend sharply upward. Another key performance indicator (KPI) shows that the project's actual cost is still within budget. However, she realizes that if the project misses its milestone, costs will rise rapidly. Clicking on the yellow indicator, she opens a display of graphs of past performance, projections based on current trends, and other pertinent information about the program, including the contact information for the manager responsible for keeping the program on schedule. She decides to discuss this problem with the program manager.
Meanwhile, the program manager has already received an alert warning about the problem on his mobile device. When he receives the deputy director's call, the program manager informs the deputy director that he is already aware of the problem and is working to resolve it. His dashboard shows a red indicator, which he clicks on to see detailed information. This identifies the problem as an unusually high failure rate during a key component's live-fire test. He attaches an annotation to the schedule report, which the system sends to the project manager as an alert on his mobile device.
The project manager identifies the problem as a shipment of defective parts and resolves the issue by working with the supplier to get a rush shipment of working parts, updating the project manager and deputy director via annotations entered into the schedule. Because of the timely action taken by each of the players before the missed deadline becomes a crisis, the program's delivery date is not affected.

Obstacles to EPM Success

Scenarios such as this, which illustrate how agency personnel can use EPM capabilities to monitor program performance, analyze root causes of performance problems, and resolve them proactively, would seem to make EPM a "no brainer". However, the results of EPM initiatives are not always so successful. Several obstacles stand in the way of those who wish to use EPM to monitor and improve organizational performance. These include:

  • Difficulty in reaching consensus on business definitions and measures of success. In any organization, separate departments or even individual employees may use their own unique business definitions and methods of measuring performance, creating confusion and misalignment. Aligning business definitions and discarding those that do not promote the agency's overall strategy is a difficult process that requires inter-departmental communication and compromise.
  • Difficulty identifying actionable indicators of future performance. Agencies need to use actionable, leading indicators wherever possible to support timely action to influence outcomes. Identifying leading indicators of performance is a challenge requiring a thorough understanding of the agency's business processes and performance drivers.
  • Difficulty integrating data sources. The data needed to support an EPM solution may be scattered among multiple, incompatible systems and spreadsheets, and in some cases may not be available at all from existing systems. Integrating existing data and suggesting ways to obtain currently unavailable information require a thorough understanding of the business as well as data integration technologies.
  • Difficulty keeping the EPM solution current. An EPM solution has to evolve with the business. KPIs must be reviewed periodically to ensure they remain relevant. EPM solutions that stagnate due to a lack of ongoing assessment and improvement will ultimately fail.

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