Averting Data Scatter in Performance Measurement Programs

Many companies experience the roadblock of data scatter when trying to develop their performance management program. But corralling your systems and people to come up with systematic process and approach for extracting the right metrics is often a...


3. Unlock the Potential of Existing Systems
Another inhibitor is that many companies are not fully leveraging and exploiting the technologies they do have. This is especially true when it comes to ERP systems. Many organizations are excited about the prospect of acquiring the latest business best practices when implementing an ERP system, but in the process of making the systems overhaul, customized business practices that are understood by the organization and encoded in the legacy system are not transferred into the new system. At the same time, a new set of business practices are encoded without an equivalent organizational performance measurement overhaul. The result: Users often work around the system to get their job done, creating incorrect and incomplete transactions.

A new opportunity to unlock the potential of existing systems is heralded by the Sarbanes-Oxley legislation. Data scatter will be a barrier that organizations must overcome for their financial function to measure performance. Chief financial officers and presidents in manufacturing and financial services are leading the charge to adopt holistic performance measurement tools, processes and methodologies. The organizational performance measurement champion needs to leverage this wave of change to document how systems are integrated into the business processes.

The key is to first partner with finance, and then go beyond financial data and change performance measures to align with the organizational strategies. With clearly stated business objectives, detailed transactions can be identified and audited to ensure completeness and accuracy. Detailed transactions only need to be systematically gathered if they support the creation of measures of success. As the business defines its targets, it will need to ensure that actual measures can be calculated. Through Sarbanes-Oxley compliance, existing systems have to be unlocked and can be used to find the underlying reasons for missing targets.

4. Leverage Technology to Enhance Your Performance Measurement Program
Organizational culture, especially finance and accounting, must be leveraged in order to create value through performance management tools with drill-down capabilities to transactional data. These tools can support the many things that need to be measured while aggregating up to strategic measures that tie to financial performance.

In order to define the summary-level view that business leaders need, start by partnering with finance to create one measurement tool. Performance measurement programs are typically financial budgetary metrics with additional best practice process and strategic metrics. Finance may already be reviewing the performance management process for compliance.

Performance management solutions should be automated to ensure their completeness and accuracy. Organizations are revising performance expectations and have a need for solutions that can more frequently roll in new targets and actuals. In order to ensure the quality of data, work with finance to create an audit trail. Information that is not based on an online source system should be avoided, as it creates breaks in automating summary-level views. In order to manage the scatter of data, create an integrated data repository to manage detailed transactions that support the metrics that business leaders have defined.

Summary

While IT solutions can greatly enhance a company's productivity and reporting capabilities for its performance metrics program, it is far better to defer decisions about IT spending until key elements of the performance measurement program are in place. This approach will address the difficulty of combining disparate data into a "single version of the truth" to which all people agree and trust.

However, once a company has the basics down, investing in technology can greatly improve the efficiency and ease with which it extracts and uses data in its performance measurement program. Unlock the hidden potential of IT systems to collect, organize and manage detailed data while measuring everything that has been agreed upon with a good summary-level view for the corporation.

SIDEBAR: Make vs. Buy Decisions

To help overcome data scatter problems, a company can either turn to in-house efforts or use formal software packages. The IT leaders need to determine their capacity to develop solutions or to integrate new packaged solutions. A performance management system may be one of the few remaining chances to develop a competitive advantage based on a company's unique business practices.

If a company has already bought packaged solutions, most systematic processes are common to anyone who owns the same software. Further, packaged software is often the source of data scatter. However, it should be noted that packages can often speed up the implementation of new capabilities.

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