Mar 30, 2008 (02:03 PM EDT)
Gartner BI Summit 2008: Q&A With Howard Dresner
Read the Original Article at InformationWeek
You're appearing at the Gartner BI Summit along with Dr. David Norton in a presentation on "Performance Management: Yesterday, Today and Tomorrow." What's your key message on the "today and tomorrow" part?
It's that the problem with performance management is not technology, it's culture, it's organization and it's skills. It's about the commitment that the organization has to transparency and accountability. We humans don't want to be transparent and we really don't want to be held accountable. So if you think about what senior management has to do to affect enterprise performance management, it's all about changing that culture and saying, "from this day forward, we are going to be accountable to the strategy, and we're going to be transparent. There will be no more hoarding of [information] because we like to protect ourselves."
Some say the market is really 95-percent focused on financial performance management, so what do you mean when you use the term "enterprise performance management?"
Well, financial performance management is where it starts. I don't think that's a bad thing; the problem is when that's where it stops. Financial performance management brings in a solution by finance, for finance. You want financial information? They'll say, "we'll generate a report for you, but you can't have access to the system or to the data." Once again, that's human nature. That gives them a distinct advantage over their peers within the organization. Now if they evolve beyond that, then you start having performance management by finance but for everyone, and it starts moving across the enterprise to sales, manufacturing, HR and so on.
Where you really want to get to is the notion of enterprise performance management, which is financial performance management, supply chain performance management, sales performance management — everybody having access to this sort of facility in a very integrated way. Most organizations just aren't there yet. Some organizations have achieved enterprise performance management, but they are not large enterprises. Large organizations have multiple cultures, and they've typically had acquisitions over the years, so they may have multiple systems, approaches and definitions. I won't say it's impossible, but it's extraordinarily difficult for large organizations to achieve enterprise performance management.
How is it that smaller organizations can succeed?
Because of the span of control. In smaller or midsize organizations, you can't hide. A good friend of mine works in the hospitality industry, and she is effectively the CIO, but she doesn't call herself that. She says, "I'm really a marketing person," but she drives, manages and directs all of the IT initiatives. She is also completely aligned with the business. There is no such thing as saying, "I'm in IT, and I'll get back to you." It doesn't work that way. If you were in a meeting with these guys, you would not be able to easily pick out who is the business person and who is the IT person.
What do you mean when you say "you can't hide?"
It's about alignment; IT can't have its own culture. It's one culture in a small or midsize company — it's the company culture. Everybody knows what everyone else is doing and whether or not they are performing and delivering the goods. When you look at a very large organization there is a very distinct IT culture. They talk about alignment with the business and sometimes they may mean it, but it's just another thing on the list. What they're really going to be measured on is running the backbone and email and ERP and CRM. Somewhere on the goal sheet it says, "we need to align with the business," but A, they don't know what that means, and B, they don't get dinged for not doing it, so they have their own distinct culture.
The difference within an SMB is that those people get in the room and they work it out. There is no such thing as "get in the queue and we'll get around to it when we get around to it" because IT does not have a separate mission.
There's a presentation at the Summit on the convergence of the other BPM, business process management, with BI. What's your take on that and how does it get back to business performance management?
I call it enterprise performance management to avoid confusion with BPM, but, yes, process is part of things. You can't ignore it. I talk about "the management system" in my new book, The Performance Management Revolution. When you get down into execution, process management is a big part of that system because you don't execute without processes. You have to measure those processes for their effectiveness and it's all about tuning and making execution of the strategy effective. When you get back into the rest of the cycle — looking at strategy, vision and goals — process is part of the input to understand how well you performed. So process management doesn't overtake the management system; it's part of it.
What about the whole idea of embedding BI and performance management into business processes? Isn't that one way BI and performance management become more pervasive?
There are two ways to look at BI as it relates to process management. One is analyzing the processes themselves; which processes are creating the bottlenecks and which are operating effectively and efficiently? How can we improve those processes or add processes. The other way to embed BI is to actually change the logic, inform the users or make the process itself smarter. In other words, use intelligence to do evaluation and to invoke different logic based on the outcome. That's a little bit more futuristic, but I don't think anyone is really doing it.
Some of the mega vendors that acquired big BI vendors are talking about decision support — BI in the context of applications and business process.
Yes, that's wonderful marketing isn't it? Who wouldn't want that? But you're not going to see that any time soon. How do you integrate BI into processes in an intelligent way without hand crafting it? We could demo something and say "isn't that really cool?" But how do you generalize that facility? How do you make all processes smart and learning? I don't know the answer to that. You could hand craft anything you want, but to make it a general facility sounds like a lot of work to me.
Is it more realistic to expect BI embedded in applications rather than business processes?
Applications, yes, because then you can make it much more explicit... I think where we find "embedding" is in things like call center applications, where you have a user who is sitting there talking to a customer and, based on what's going on during that call, it makes different recommendations. In those sorts of applications there's a tremendous amount of intelligence being employed and it most certainly is embedded. But it's very specific to that function rather than a general facility.
What's your message about performance management in the future?
I think the "tomorrow" part is really about the cultural evolution of the organization. As I said earlier, it's about the transparency and accountability that you need. It's going to require a newer, fresher approach to how we do business. Technology is an easier decision and it's a decision you can control, but it's not going to fix a broken organization. That's about the organization and the people.
Are there any pragmatic steps you would recommend?
Yes, shoot the CEO [laughs]. Seriously, when I was at Gartner we talked about things like competency centers; that certainly helps. It also helps if you have a forward-thinking CFO who talks to the CEO. That's probably your best step forward — trying to take what has been successful in finance and expanding on that. People say, "well performance management is not just about finance." Well, jeez, everyone cares about what's going on in finance, right? So that's not a bad starting point. Start with finance and expand to sales operations. Why? Because sales ops people are finance people, too. That's how you start expanding your portfolio.
At the end of the day, we've got to do this stuff because we need the transparency and we need the accountability, even if that's uncomfortable. This is human psychology 101. The technology is relatively easy. If we can solve some of these human and organizational issues, the technology will get resolved.