Four Steps to Effective Performance Management

By following a four-step process, organizations can embark on an effective performance management journey that begins with reporting and adds more core BI capabilities for enterprise-wide integration.

By Leah MacMillan

Increasingly, companies are shifting away from segmented business intelligence (BI) initiatives toward a more pervasive, all-encompassing performance management (PM) strategy for driving overall organizational success. In line with this trend, IT departments now need to define where deployment of a successful PM solution begins in their organization and how to establish the proper infrastructure to manage and support deployment across various company divisions and users on a global scale. As a core component of PM initiatives, reporting is often the first area organizations address and is an effective starting point as companies make the move from process automation to business optimization.

When it comes to building a PM solution, rather than trying to deploy a full-blown solution in a single go, start small, build on success, and gradually construct a solution that is carefully planned and deployed. One of the most common, proven ways to implement PM in this way is through reporting -- a core capability that provides the insight from critical data that is needed to answer fundamental business questions.

By following a four-step process, organizations can embark on an effective PM journey that begins with reporting and adds more core BI capabilities for enterprise-wide integration. The end result is the establishment of a high-performing and successful PM solution that is able to unlock the business value of information across the enterprise.

Step 1: Addressing Initial Needs

The first step is to address the basic reporting needs in one or more selected departments -- particularly an area of the business with the strongest need, the greatest payoff potential or whose information or performance champion is in place to drive the initiative. It’s important that IT work to balance the value of meeting new business requirements with the downside of adding another technology to an already diverse IT infrastructure.

This step requires a thorough product evaluation to ensure that any solution implemented addresses immediate and future needs. By addressing these initial reporting needs IT can improve organizational operations and performance, identify a full range of report types, and develop a self-service reporting system.

It also gives IT the opportunity to establish a common business model and a single, proven, Web-services-based service-oriented architecture that helps expand the reporting solution.

Step 2: Driving Insight through BI

In the second step of the reporting-led PM roadmap, IT delivers the reporting solution to more users and adds sophisticated BI capabilities. Delivering a successful solution to a business problem is best achieved through a partnership between IT and the business unit. While IT understands the technology, infrastructure, and data sources, the business partner understands what data insight is needed to deliver actionable information. Together, business and IT provide strategic value far better than either could accomplish alone, jointly driving increased visibility and improving overall business performance.

At this second stage of the roadmap, IT also expands reporting capabilities to display information via business and executive-level scorecards and dashboards. Scorecards give an organization the ability to display key metrics to the business audience, helping to align teams and tactics with strategy, communicate goals consistently, and monitor performance against targets.

In addition, IT should add deeper analysis capabilities so business users can drill down and nest information to see trends, causes, or effects. By extending the reporting infrastructure to other data sources, organizations gain the ability to determine additional insight into the ‘why’ behind business performance at the appropriate level of detail for each organizational layer.

Step 3: Extending BI Across the Enterprise

The third step in the reporting-led PM roadmap is leveraging the reporting solution as the foundation for enterprise PM. Many organizations do this by standardizing processes and technologies, and by making BI available to users in a variety of new ways.

Standardizing on Proven BI Technologies: When choosing a reporting and BI standard, IT needs to consider the vendor (“Are they leaders and innovators in BI and PM?”) and the solution (“Does the solution provide the capabilities needed by all of our business users?”). After choosing a solution, IT replaces multiple systems with a smaller number of proven solutions. The total cost of ownership is reduced thanks to lower maintenance, support, and training costs.

Building a BI Competency Center (BICC): Many organizations have found it useful to create a BI competency center that brings representatives of the business and IT communities together to promote BI expertise and best practices throughout the enterprise. A BICC provides tangible benefits, including a lower cost of ownership, faster and easier understanding and adoption of effective BI and PM practices, and the ability to enforce proven standards across the enterprise.

Reaching More Users with BI: Business users want BI to fit into their working lives—to integrate with company portals and search capabilities, to be accessible using mobile devices, to work within process flows and other applications. Proper training results in faster acceptance of BI technology and processes, shorter learning curves, reduced support costs, and a faster payback when implementing the solutions.

Following these guidelines, IT can ensure that decisionmakers throughout the enterprise know how the organization is doing and why. Furthermore, it puts them in a strong position to address the final step on the roadmap and advance business processes through PM.

Step 4: Advancing Your Business through PM

In the final step of the reporting-led PM roadmap, organizations build strong and continuous links between all aspects of corporate performance -- including resources, processes and initiatives -- and align them with corporate strategy. Organizations can do this by using scorecards to communicate the right information quickly to the right people; gathering information from front-line personnel to identify opportunities and align resources with objectives; and identifying key performance gaps in time to put alternative strategies in place and act on them.

These and other integration processes are only possible when enterprise reporting and BI solution is anchored by strong planning, budgeting, and forecasting, ensuring that everyone in the organization shares the understanding needed to drive stronger performance and achieve competitive advantage. This, in turn, means organizations can allocate resources to match corporate objectives, seize opportunities as they are identified and ensure that operational execution is consistent with overall corporate strategy.

Reaching Your Destination

The reporting-led PM roadmap provides a step-by-step, proven method for implementing a PM solution using reporting as the catalyst. Following the roadmap enables organization to achieve a number of benefits, including:

  • Bringing planning, forecasting and budgeting capabilities to their reporting solutions, so that business users understand what they should be doing to drive better business performance
  • Aligning strategic objectives, operational plans, people and activities throughout the organization to drive better performance
  • Turning masses of data from disparate sources into actionable information that can be used to measure and manage performance in ways that drive success and differentiate organizations from their competition
  • Transforming their business through reporting-led PM, making the organization efficient, competitive and well-prepared for the future.

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Leah MacMillan is the vice president of product marketing at Cognos, an IBM company. You can reach the author at

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