Every year, technology research firm Gartner surveys 1,500 CIOs. For the third year in a row, the firm’s 2008 survey revealed that business intelligence (BI) applications are the top technology focus for CIOs.1 At first glance, this may seem strange given the consolidation activity in the BI industry.
Bob Kaplan and David Norton, the creators of the balanced scorecard (the most commonly used performance management system), recently commented that “breakdowns in a company’s management system, not managers’ lack of ability or effort, are what cause a company’s underperformance.”2,3 They define a management system as the “integrated set of processes and tools that a company uses to develop its strategy, translate it into operational actions, and monitor and improve the effectiveness of both” and point out that “the failure to balance the tensions between strategy and operations is pervasive… with various studies published in the past 25 years indicating that 60 percent to 80 percent of companies fall short of the success predicted from their strategies.”4
So why are CIOs spending so much time and energy on BI? These technologies are the platform for communicating, managing and measuring strategic, operational and tactical performance. The issue is that although organizations are spending a lot of time and money on implementing and evolving these systems, the systems are still failing to meet the needs of companies to accurately assess the drivers of strategic outcomes.
Systems that enable a process to link the measurement and management of drivers to outcomes are the next generation of BI and performance management technologies.
Why the Management Process Fails Today
BI technologies are implemented to support management processes. In order to explain how these technologies will evolve to address the next-generation management process, let’s examine an example of a best-in-class process.
Since the balanced scorecard has emerged as one of the most commonly accepted management processes, a company that uses this system will be the subject of the management process example. In this case, an investment management company has implemented the balanced scorecard system. In this system, a strategy map is a one-page visualization of the company’s strategy; each “bubble” on the map represents a company objective.
A strategy map is divided into four perspectives:
- Financial: "What will we have to achieve for our shareholders to view us as successful?”
- Customer: "To achieve my vision, how must I look to my customers?”
- Internal process: "To satisfy my customers, at which processes must I excel?”
- Learning and growth: "To achieve my vision, how must my organization learn and improve?”
The financial and customer perspectives are measured as outcomes. In other words, the success of these objectives is measured by transactional, generally historical, data that comes out of a general ledger or some kind of accounting or financial system. The internal process and people perspectives are drivers. This means that the achievement of these objectives is tracked by quantifying “fuzzier” measures. This driver information is usually not contained in any centralized system, but rather sits on an employee’s desktop; in a content management or document management system; on a portal or intranet site; etc. This content is almost always inaccessible to today’s BI platforms.
So what happens in practice? If this investment management firm is using specific measures to track success against the objectives on the strategy map, the company usually does a great job of providing data for its leadership team on outcomes. When looking at the strategy map in a monthly management meeting, the CEO will get great summary information as to where the company stands against the financial objective, “Increase assets under management” (out of the company’s financial systems) or on the customer objective, “Provide high quality experience” (customer satisfaction survey data from the call center or retail locations).
Where the management process falls down both from a process and BI system perspective is what happens when the organization tries to report on driver information. For an internal process objective such as “advance strategic account management,” the BI system does not translate the text in the customer records fields in the customer relationship management (CRM) system to determine if account managers are making the right number of “touches” in the field with their key accounts, and does not measure the sentiment of a voice-to-text record from the call center to determine if a customer from a specific account is happy with their account team. For a learning and growth objective like “develop next generation of leaders,” the BI platform does not link to data about how much training the young leaders’ program has conducted, since this sits on the training manager’s desktop.
