First, let's briefly discuss the confusion about what Performance Management is. Some view it as a human resources department's method aimed at employees; it is actually intended to be enterprise-wide in scope for the organization as a whole. A misperception is that PM is viewed far too narrowly -- as just a bunch of dashboard measure dials plus better financial reporting. It is much broader and includes robust integration of typically disconnected managerial methodologies and the IT systems that support them. PM works even better when its methodologies are imbedded with all flavors of analytics, such as segmentation analysis, but particularly predictive analytics. This is because most organizations are shifting from a managerial emphasis on control to anticipatory planning -- to take actions proactively rather than be reactive after-the-fact.

Regarding how PM can help during an economic downturn, Marcus Sprenger, a consultant with Avanade, in his article Surviving Economic Downturns with Performance Management and Business Intelligence Solutions. Marcus states:

"The problem with the typical business responses to harsh economic conditions, however, is that they don't always go far enough -- and are often influenced more by immediate business pain than longer range planning that can help a business not only get through the rough period, but also emerge with stronger processes in place. ... In fact, (business intelligence and enterprise performance management) solutions can not only help a company ride out hard economic times, but also put it in a better position when business picks up again. They can help improve discrete processes as well as the overall corporate culture, resulting in short-term gains and long-term, foundational benefits."

A key term frequently referenced in Sprenger's article is the term "integrated." Too often business methods like scorecards, profitability reporting and analytics are implemented in isolation of each other. There is synergy when they are unified. The good news is the 1990s hype that information technologies are the ultimate solution is finally matching reality. That is, with business intelligence (BI) and Performance Management software deploying the power of BI, organizations can actually do what they have always wanted to do – anticipate, react and respond. Today data collection, cleansing and transformation into usable information are feasible to support superior decision making.

Many organizations jump from improvement program to program hoping that each new one may provide that big yet elusive competitive edge like a magic pill. However, most managers would acknowledge that pulling one lever for improvement rarely results in a substantial change – particularly a long-term sustained change. The key for improving is integrating and balancing multiple improvement methodologies and spicing them with analytics of all flavors. In the end, organizations need top-down guidance with bottom-up execution.

What steps can the business owner take to implement or better integrate Performance Management strategies for long-term success?

Business managers regularly ask, "How do we get started and get long-term sustained success and payback?" As mentioned, affordable technology is no longer a barrier. The key is to not view the methodologies that comprise the Performance Management framework as complex systems but rather as modeling techniques. One does not need to start with excessive detail; the initial models can be at higher levels, such as at product families, customer segments, and only a few strategic objectives in the strategy map with a dozen or so key performance indicators – the vital few rather than the trivial many. A proven implementation method for accelerated learning is with rapid prototyping with iterative re-modeling where you make and correct your model design errors early and often, not later when it is costly to make changes.

Organizations that are enlightened enough to recognize the importance and value of their data often have difficulty in actually realizing that value. Their data is often disconnected, inconsistent, and inaccessible resulting from too many non-integrated single-point solutions. They have valuable, untapped data that is hidden in the reams of transactional data they collect daily. A Performance Management framework unlocks that value.

How can you advise clients on this to improve their business?

Forward this article to your clients to read. Follow up with them and ask, "What did you learn? What concerns you about what was said in this article?" The result is the beginning of a dialog.

GARY COKINS, CPIM, is an internationally recognized expert, speaker, and author in advanced cost management and performance management systems. He is a Manager of worldwide performance management solutions, with The SAS. Gary received a BS degree in Industrial Engineering/Operations Research from Cornell University in 1971 and an MBA from Northwestern University's Kellogg School of Management in 1974. His latest book is Performance Management: Finding the Missing Pieces to Close the Intelligence Gap. He can be reached at 919-531-2012 or gary.cokins@sas.com.