IT is in a unique position to convert corporate strategy into operational processes and more closely measure business performance and progress toward strategic goals. Business intelligence is one key way to do this. But it will take the CIO, or IT head, to push IT into this strategic role, and one of the first steps is to establish a performance management council headed by IT, according to a Gartner Inc. analyst.
Nigel Rayner, a research vice president at Gartner, explains that a performance management council brings together the heads of business units to define key performance metrics and how they should be measured, managed and implemented.
To begin your pitch for a performance management council and embrace IT's role in supporting business strategy through BI, CIOs need to:
Make the right pitch to the CFO or other C-level executives. Rayner explained, "Imagine going to a CFO and saying, 'We're forming a Business Intelligence Competency Center. Do you have someone that can join us?' The CFO will probably give you a junior person just out of college. But if you say 'We are forming a performance management council,' the CFO will say, 'I'll be on that,' and that's because it's not an [IT] system sell; it's a council that's going to help him do his job better.
"You can also approach this by saying, 'Look at our BI strategy … we have assets we're not using, silos of disconnected performance management with spreadsheets. We could do a lot better here and we could help manage it more effectively,'" Rayner said. "But this approach depends on how good your relationship is with the management team."
Once the C-levels are on board, meet with business units. Get their buy-in and explain that a performance management council is needed to define what the company should measure in terms of performance. Performance measurement processes and metrics are often ill-defined, giving IT the opportunity to step in to develop a common, cross-departmental language.
Rayner said he often sees IT being charged with creating an executive dashboard that centralizes hundreds of metrics from different users and different departments. "Some metrics have a different meaning from group to group, or have similar definitions but different names … that is a classic situation where IT can make sense of it all with a performance management council," he said.
Find out which systems business users are using to measure performance. Ask human resources staff members how they track workforce planning or ask how the management team handles strategy execution. Most are probably still using spreadsheets or manual processes, even though you have a BI system in place that is begging to be used to help facilitate performance management, Rayner said. "The head of sales isn't going to come to you to see how they can better use the data warehouse or ETL tools," he said. "It's up to you to explain [technology] systems benefits in terms that business users can identify with."
That's what Chad Erman is doing at Southwestern Energy Co. in Houston. He is on course to evangelize the company's Cognos business intelligence and performance management software, but it is a gradual learning process for business users.
"We've spread the word to several departments, and they have fully embraced business intelligence [tools], but we still have several departments that think in terms of reports and excel spreadsheets," Erman said.
Cognos is a way for his team to give business users a familiar interface -- Excel spreadsheets -- and get them to think about their key performance indicators (KPIs) and what performance-related questions they want to answer, with IT worrying about the back-end processes, he said.
"We are the ones finding that data to support their KPIs and identifying the processes or lack thereof," Erman said.
Take the underlying business methodology, such as a business scorecard, and embed it into the underlying systems. "There should be a metric framework of [the company's] KPIs which effectively represents your strategy map, and those KPIs need to be defined and managed in one or more data repositories and in turn be part of your business intelligence infrastructure," Rayner said.
Dashboards and strategy mapping software are foundational technologies for Robert Kaplan's Balanced Scorecard. The scorecard is often a part of an organization's business intelligence strategy and is a corporate strategy methodology that measures performance from several perspectives, such as finance, customer, internal business processes and employee learning and growth. It also aligns business units with corporate objectives.
"Corporate strategy often fails because it not communicated to employees … only the executives are in on the strategy, and the strategy is not linked to performance management processes," Kaplan said. "These are all areas, and primarily with learning and growth, [where] IT should have a prominent position."
To figure out where IT fits into the overall corporate strategy, Kaplan is point blank: "The CIO should go to corporate headquarters and ask what role they have in this strategy and how they can help implement it," he said.
To make strategy a continual process within IT, the CIO or department head should hold a monthly meeting that does not talk about the operations side of the house. "If you try to talk about strategy in regular meetings, you will never get beyond putting out operational fires," Kaplan said.
Let us know what you think about the story; email: Christina Torode, Senior News Writer