It was 4 Years Ago Today...The Performance Guys Started to Play...

They've been going in and out of style,
But they're guaranteed to raise a smile,
So may I introduce to you?
The act you've known for all these years...

The Very First--Performance Guys---Colummmmmmmmmmn...

Yes, kids, it was four years ago today that two young lads from Business Objects set out to change the world of performance management. Armed with a T-1 line, a computer, and hearty dose of sarcasm and cynicism, the first Performance Guys column was penned for DM Review.

We'd like to think we've matured in the last four years, but who are we kidding? We'd also like to think that the performance management market has matured as well. We don't know if we're kidding about that, but we'll let you decide after you take a stroll with us down memory lane and revisit (or for 99.999999% of you, visit the first time) our take on performance management back in early 2004.

(ed.--note that there were originally 7 myths, but in typical Morrissey fashion he felt he needed to edit me down)

The Five Myths of Performance Management

You can’t drop a quarter without hitting some sort of performance management project these days. Everyone I every industry is struggling for better performance. If that’s the case, why is it that so many of us are still confused about what performance management is? Is it due to endless process reengineering by your in-house consultants or because you can’t get at the data? Is the sales team demanding a new dashboard?

Frankly, we’re confused by all the confusion, and hope to use this monthly forum (gratuitous thanks to DM Review) to help you wade through the fog and FUD that is performance management and give you some practical advice on how to proceed within your organization. So let’s start out this first column with us trying to explode some of the most common myths we’ve heard about performance management, and why your organization “can’t” do it—

Myth #1: Performance Management is too new and won’t stick in the marketplace. This is a great first place to start. The truth is that term performance management, or “EPM,” “CPM,” or “BPM,” or whatever software vendors are calling it today, is in fact relatively new—just over two years in fact since our friends at Gartner came out with their first magic quadrant on the market. What’s not new, however, is what performance management is trying to do for your organization—that is, align people with goals and objectives so that you’re all dancing to the same beat. Ever have an initiative to improve customer retention? How about employee development? Surprise!—you’ve been doing performance management. It’s not new it all—it’s what you’re already doing today.

Myth #2: It’s a technology problem. Wow, does this one get a lot of play from people who are dragging their feet on getting started on performance management initiatives. Usually (by the way) from people who stand to lose something or get exposed if such an initiative moves forward. So really quickly—do you have a data warehouse in production—or several? Does your company have access to its own CRM, SCM, HR, Financial, or ERP data base? Are you producing reports for your business users on topics like customer profitability today? Ta dah, all of these things come about as a result of technology. The systems are there, so relax. Focus instead on how you get the information OUT of the system. That’s not a technology problem, it’s a project management challenge.

Myth #3: A Balance Scorecard is the Answer. Now don’t get us wrong, we’re big fans of Kaplan and Norton, and everything they’ve done to advance the discussion. Plus, they throw a mean conference party if you ever get the chance to go. However, because companies don’t understand what performance management actually is, many have latched onto the concept that if they just adopt the Balanced Scorecard system, all their problems will be solved. Actually nothing could be further from the truth. Too many companies are using Balanced Scorecard as a crutch, when they should be using it as a cornerstone from which they really attack the key factors in making their business more productive and successful. Truth be told, it’s hard for many companies to fit all of their key objectives into the four main pillars that Kaplan and Norton espouse. Does it mean BSC won’t work for you? Absolutely not. But BSC is a part of a performance management initiative, and just that.

Myth #4: You know what a KPI is. A lot of the breezy talk about performance management assumes that the IT teams are fully versed on key performance indicators, or KPI’s. We’re guilty ourselves of speaking with so many acronyms pertaining to business needs and pay little attention to whether or not these are terms and metrics that a) you understand, and b) you can help us report on in our systems today. The fact is that just showing a VP of Sales the total number of customers gained this month is not a KPI. It’s nice to know, but not a KPI. Why isn’t it? Because there’s no context to the number, that’s why. Who cares how many customers were gained this month? A better question—how many net new customers do we have this month vs. plan? See the difference? KPI’s require some background information, and they need to be measured against a goal. Just regurgitating the numbers does little for the business user—but giving them context gives them the knowledge they need to make the tough decisions.

Myth #5: A New Planning System solves the Problem. This one will hit close to home for some of our vendor brethren, but it’s not a slam against them—per se. It’s actually more in tune with myth #3 above—it’s a crutch. Now, if you’re using some mainframe legacy system that you had to band-aid together to make it Y2K compliant, we feel your pain, and have some folks you can call. But one of the hugest myths in performance management is that everything starts with a plan or budget. And that’s just not the truth. Planning and budgeting are certainly involved and a big part of performance management. But as so many companies are discovering today, it’s about more than just that, and thinking you’ve got performance management beaten once you sign the P.O. for a new planning system misses the mark. If you don’t have good processes, methodologies, and a way to link your high level objectives with your tactical goals and metrics, no one can save you, not even the best planning system on the planet.

Well, that about puts a wrap on the first column. We hope we’ve helped get the discussion started on performance management, and we’re looking forward to continuing with this next month.

Not too bad actually. While certainly myth #1 has gone by the wayside, EPM is certainly in the mainstream, we still actually see the other myths quite often out in the marketplace. And thank God for that, or else this would be a really boring blog...

On to the next four years and beyond!