On Three Perspectives of Performance Management

Not too long ago, I was challenged by someone who was adamant that Microsoft Office SharePoint Server (MOSS) 2007 was all that organisations needed for decision making, particularly in light of its Business Intelligence feature set. The main questions I receive from customers attempt to reveal how adding PerformancePoint Server 2007 to their existing operational environment (ERP, CRM, POS) can enable performance management for their businesses. Being a Microsoft BI advocate I normally point out, in both cases, the importance of a consolidated data tier, one which centralises operational data from a number of sources into a company-wide "single version of the truth". Unsurprisingly, I discuss SQL Server 2005's "BI Services" as the means to refine raw line-of-business data into useful information.

Lately, when I reflect on performance management as a business discipline, I find that my thinking has changed somewhat.

Consider the following value propositions:

The Data Management value proposition
A known quantity in of SQL Server 2005 "BI Services" in terms of centralising and surfacing structured data as KPI values and other measures to BI applications

The Information Management value proposition
Involving, through MOSS 2007, the optimisation of document and content control (un/semi-structured information) with human access and workflow/business process interactions.

As always I tend to relate in terms of Microsoft technology, but feel free to substitute specific technologies mentioned with those you work with...

If performance management really intends to align corporate strategy with information, people and processes, then both "data management" and "information management" capabilities need to be considered-- simply proposing a PerformancePoint & SQL Server solution in support of Strategy Map and KPI shape business requirements is not enough for a performance management initiative.

The art and science of performance management has many incarnations spanning well over 100 years of industrialisation and automation, arguably starting with the formal positioning of Scientific Management (1911), which reflects the ideas and concepts put forth by Frederick Taylor (1856 - 1915). Taylor built on earlier companies-as-machines metaphors, and introduced time-and-motion studies which attempt to uncover optimal performance in work processes (both human and early machines). In the Information Age of the 21st century, the theme of aligning technical and human domains with strategic direction can be found in a number of performance management methodologies:

Performance Pyramid (McNair, Lynch & Cross, 1990)
The Performance Pyramid approach views organisation as having four interdependent levels, specifically: corporate management, business unit, processes germane a given parent business unit (such as those geared toward customer satisfaction or market share) and operational goals which support a given process. At the operational goal-level, values such as time and quality are determined at different frequencies and used to meet management requirements at higher levels.

Note: some publicly-accessible references to the Performance Pyramid only cite Lynch & Cross

Effective Process/Performance Measurement (EP2M) Model (Adams & Roberts, 1993)
EP2M also views an organisation as having four taxonomies of measurements: top-down measures which are used to manage strategy and change, bottom-up measures which consider human action and the outcomes of ownership and accountability, internal measures which are used to improve and sustain both process efficiency and effectiveness, as well as external facing measures geared towards markets, customers and suppliers.

Balanced Scorecard (Kaplan & Norton, 1992)
Probably most familiar in business circles these days, the Balanced Scorecard is a framework that can be applied (and modified if necessary) to suit critical perspectives of a given organisation. Typically four perspectives are employed: financial, customer, internal process and learning and growth. Each perspective represents a high-level collection of relevant key strategies, objectives and KPIs, and, is often represented visually with tools like the Strategy Map.

In each the methodologies listed, process and human factors (and, strangely, the number four) play important roles in organisational performance. It is becoming an increasingly accepted practice in business to consider such factors, alongside traditional financial measurements, in order to arrive at a more complete organisational picture. It follows that both factors become passive organisational elements subject to measurement, and, active elements for organisational communication and collaboration across performance management cycles.

Indeed, it would seem that effective performance management comes about at the intersection of corporate strategy (fleshed out by a suitable performance management methodology), data management (providing structured data for decision-making) and information management (representing unstructured content, semi-structured processes and sometimes pretty complex people). Moreover, encouraging the use of MOSS 2007 alongside SQL Server 2005 and PerformancePoint would probably prove more valuable in the long-run (albeit more expensive, unless Windows SharePoint Services 3.0 is considered) to a performance management initiative.

Thanks for reading! How would you rate the value of information management in performance management?

- Adrian Downes