Product Review SAS SPM Strategic Performance Management

8th October 2006


Introduction to strategic performance management

What should businesses measure?

Visualising the strategy

The performance dashboard

The scorecard

The performance portal

Leveraging SAS® technology



Business strategy represents the pinnacle of management thinking in an organisation. It encapsulates the organisation's ambitions, its longer term objectives and governs the way in which its people, technology and other assets are marshalled to deliver business success for its shareholders and other stakeholders.

Yet despite its overwhelming importance in setting the direction of a business, aligning its resources and behaviour, it is often one of the most neglected and poorly communicated of management processes. All too often, strategy remains 'locked up' in PowerPoint presentations and complex spreadsheets rather than forming the basis of an actionable and dynamic plan that is used to change organisational behaviour and deliver a step-change in business performance.

For over half a century, academics and business schools have created a succession of methodologies and management frameworks designed to transform organisations and extract exceptional performance, but very few have withstood the test of time. Balance Scorecard, Six Sigma and EVA have all made a valuable contribution to management thinking, but without the accompaniment of suitable and affordable technology implementation has been fraught with difficulty and met with patchy success.

However, the tide is turning. In recent years, the fusion of business intelligence tools, financial and analytical applications together with underling data management tools and technologies to form a broadly based business performance management (BPM) platform has provided a firm basis for the next wave of strategic performance management (SPM).

Leveraging the wider capabilities of a modern performance management environment, business information can be transformed from a mere record of historic performance to a store of information that can be used to monitor performance, analyse trends and reveal insights into future performance so that management can alter course as appropriate and execute its strategy.

Although strategy development can be carried out in relative isolation, communication to the widest possible audience in the company is fundamental to the desired outcome. In other words, an organisation cannot do justice to even the most finely honed strategy unless the broader business understands the strategic goals and management at all levels, from the 'coal face' to the boardroom, appreciate the part that they need to play in its delivery. It is this alignment of the entire organisation with the business strategy that is crucial to success.

So visualisation, collaboration and communication are at the heart of strategic performance management and this white paper explores how solutions, such as SAS® Strategic Performance Management (SAS® SPM) and associated platform technologies can assist the modern organisation to develop its strategy, communicate its objectives and align its resources to bring about the organisational change that will deliver business success.

What should businesses measure?

In general terms, businesses tend to measure too many KPI's (Key Performance Indicators) so that performance management loses its focus and the cause and effect relationship between different KPIs is obscured by too much detail.

The adage "What gets measured gets done" is a well established and generally proven management principle, so clarity around performance measures is essential. Yet for many organisations it can bring about contradictory and bizarre behaviour. Businesses of all sizes are peppered with examples of dysfunctional and even adversarial behaviour because performance encouraged by, say, a management bonus and remuneration system in one area, conflicts with the method of measuring and rewarding performance in another. For example, an inventory manager may be incentivised to keep stock levels to a minimum, whereas a purchasing manager in the same company may be eager to buy stock in bulk, in order to take advantage of volume discounts. So identifying the interrelationships between KPIs is vital to delivering an intellectually robust performance management environment.

Existing methodologies, such as Robert Kaplan and David Norton's "Balanced Scorecard" attempt to put some shape on the types of measures that organisations might employ. For example, their popular methodology, seeks to balance four sets of performance criteria, namely; financial measures, customer metrics, learning and growth measures and finally, internal processes. But the Balanced Scorecard and other management frameworks for performance are constantly under pressure as businesses become susceptible to increasing numbers and types of measures brought about by regulation and compliance. The drive for non-financial measures in particular is growing in areas such as corporate and social reporting (CSR), environmental reporting and employee disclosures.

All of this underlines the need for a much more cohesive and cross-functional approach to performance management where performance across the organisation is more transparent and employees are aware that actions in one area can have consequences in another. Clearly, this also has implications for the way in which performance is evaluated and rewarded and so the implementation of an SPM environment needs to take account of the possible cultural and people issues that could arise as a result of a more challenging performance regime.

In addition to cross-functional dependencies, KPIs need to be vertically aligned so that there is an unambiguous link from strategy, right down to operational performance measures at the lowest level of granularity. Each successive layer or role type should be monitored against the KPIs which are relevant to its function and role, safe in the knowledge that their KPIs are consistent with the overall business strategy. In this way, management can ensure that behaviour, actions and business decisions at every level of the organisation are aligned with the strategy.

Visualising the strategy

Assembling performance measures into a coherent and robust arrangement is a challenging and complex task which, in a strategic setting, usually embraces the entire organisation. Capturing all of the relevant KPIs, eliminating redundant measures and resolving interdependencies between the remainder is demanding and the output of such an exercise is often difficult to visualise. Creating, a so called "Strategy Map" which documents the interrelationships is the starting point for an SPM project and where SAS® SPM makes an immediate contribution as it allows management thinking to be captured as the strategy develops. Highly visual strategy maps allow relationships between, objectives, projects and KPIs to be illustrated and supports collaborative working as management strive to confirm the integrity of the inter-relationships between different measures in different areas.

SAS® Strategy Map

SAS Strategy Map

In SAS® SPM the components of the strategy map are completely user definable and can therefore support any reasonable strategy description regardless of the methodology employed. Users have virtually unlimited flexibility to describe objectives, projects, programmes and performance measures using terms that fit the organisation's culture and language

One of the special advantages of SAS® SPM is that it allows relationships between KPI's to be modelled in the same tool that is used to create the live application. Few vendors provide this level of modelling capability with the result that business managers are often 'forced' to employ standalone flow charting systems; paper based solutions or elaborate spreadsheet based models to capture their strategy. Not only are enterprise-wide relationships more difficult to visualise in these types of solution, but they not amenable to a modelling approach. After all, strategy development is by its very nature an iterative process which combines business science, flair and creativity in almost equal measure. So it is important that different business scenarios, strategies, objectives and underlying performance measures can be modelled and debated.

SAS® SPM's strategy map uses flowcharting style graphics to depict KPIs, and stylised icons and formatting can be used to create a highly individual description of corporate strategy which helpfully can be used to communicate the strategy to a wider audience.

Once the strategy map has been refined and confirmed, it can be incorporated in the live system and unlike a spreadsheet or standalone flowcharting system, there is no need to re-enter data. For analytical users, the strategy map forms an important perspective on the performance management system. Familiar traffic lighting of KPIs not only informs the user of good, bad and on target performance but instantly allows an analyst to appreciate its impact on related KPIs, objectives and projects.

The performance dashboard

Whilst the strategy map provides a window on performance suitable for analysts, strategy setters and senior managers it is probably too elaborate and involved for general distribution and use. Instead, the performance dashboard has become accepted as a much more suitable way of communicating strategy 'down the line'.

The principle behind a dashboard is that it should be easy to understand so that line managers and other staff have immediate visibility of the KPIs relevant to their role and function and can assess instantly whether performance is on target or within an acceptable range.

Dashboards make extensive use of familiar dials and charts that colourfully convey the status of performance at a glance, rather like the fuel gauge in a motor vehicle. Like the strategy map, SAS® SPM uses traffic lighting to denote good (green), amber (acceptable) and red (bad) performance. The criteria which determine what constitutes good, acceptable and bad performance is completely user definable and can be described in percentage terms or absolute values. Performance bands can be established for the whole company or defined separately for each dashboard and individual employees can set their own personal targets within the overall boundaries defined by the company. A clever touch is that the range of values need not start at 'zero', so that performance dials can be re-calibrated to depict ranges of performance more evenly across the dial rather than showing say, bad performance, as a tiny red sliver at the extreme end of the dial.

The exact information shown on the performance dashboard is a matter of choice. The system administrator decides whether performance is being measured at, for example, the level of an objective, project or KPI and has the choice of displaying target, actual, current performance and status, i.e. below, above or on target. Similarly, the performance dials can be viewed in different time periods.

The scorecard

Another way of depicting performance using SAS® SPM is to use the more 'traditional' scorecard approach, with performance set out in grid style and icons, such as coloured arrows, or other user selected icons to denote the status of performance. Whereas the emphasis of a dashboard is to instantly communicate performance for a limited number of measures in an eye catching way, the scorecard is designed to promote deeper enquiry and analysis.

The exact layout of the scorecard is totally user definable and can draw on the full multi-dimensional capability of the underlying database. In this way it is possible to look at different performance measures, in different time periods and for different slices of the organisational hierarchy and other dimensions. It is also possible to review historic performance of say, actual against target for any given measure as a graphical display.

SAS® SPM Scorecard with historic trends

SAS SPM Scorecard with historic trends

But performance management is about gleaning insights into future performance and guiding decision making rather than simply looking at historic performance through a rear-view mirror. In the first instance, the scorecard allows users to monitor the status of current performance by highlighting under or over achievement and on target performance, but the challenge is then to determine what is driving current performance and what can be done to deliver above target performance or bring below par performance back on track.

The starting point is the drill-down capability of the scorecarding system which allows the user to follow KPIs down the hierarchical organisational structure revealing the performance contribution made by business units lower down the tree. It is also possible to drill across the hierarchies to look at performance in different dimensions. The SAS® SPM system provides visual cues, flagging where acceptable performance at one level may be masking poor performance lower down the structure.

Crucially, during drill down the system shows the interrelationship between the performance measures in a tree like structure. The user can see the associations between, say, KPIs, and other measures such as projects, goals and objectives and start to form a view about how performance in one area is affecting performance in another.

In many instances it is likely that a number of different performance measures contribute to an overall goal and a system derived summary or total may not make sense. For example, for a mobile telephone company, the objective to reduce customer churn on a particular tariff may be influenced by the number of complaints and the number of free minutes offered by competitors. Adding number of complaints to minutes makes no sense so SAS® SPM offers the capability to define hierarchical roll-ups based on user defined formulae. So in this example, customer churn may be derived from 40% of the status of complaints and 60% of the status on free minutes, to derive a weighted contribution to the overall objective.

The performance portal

SAS Portal is the place where different views on performance can be brought together. The main objective of the portal is to present a highly personalised view of performance that allows the user to focus on the measures that are most relevant to their role and stimulates further enquiry where necessary. The portal is totally user definable and if desired, can combine dashboards, scorecards and strategy maps depending on the user's skills and role within the organisation.

SAS® SPM Performance Portal

SAS SPM Performance Portal

Like an aircraft cockpit, the information displayed allows the user to assess immediate performance but it can also be used to highlight adverse conditions through a series of alerts. Business rules established in SAS® SPM can be used to trigger exceptional (good or bad) performance outside of prescribed limits defined by the organisation so that the action can be taken. Adding to the overall assessment of performance, the portal can list recent comments appended to performance measures within the SAS® SPM environment. The portal can also draw more widely on other information sources within the SAS® Financial Intelligence Suite and from document repositories and hyperlinks.

Regardless of the format of the portal, the information the user sees in the portal, or on a drill down derived from the portal, depends on their security permissions set up by the system administrator.

Leveraging SAS technology

An effective strategic performance management environment is highly dependent on appropriate enabling technology. Methodology, process and applications can help define the information requirements and codify best practice within the organisation but a suitable technology platform is essential for marshalling a wide range of data sources and distributing relevant dashboards and scorecards to end users over the web.

Almost by definition, a performance management process will touch every functional area of the business if it is to be truly aligned with corporate strategy and it therefore draws on a large number of data sources. Fortunately, this is an area in which SAS has unparalleled expertise. Extracting, transforming and loading information from multiple information sources is handled by the SAS ® Data Integration Serverwhich is a component of the SAS ® 9 Enterprise Intelligence Platform. This wizard driven product allows the data fields of the source and target systems to be defined and for business rules to be developed which determine how information is to be 'mapped' between them. Using the ETL tools, an automatic process can be established for bringing information say, current 'year to date' actuals, from an underlying ERP system, or FTEs (Full Time Equivalents) from an HR (Human Resources) system into an a SAS® SPM scorecard. Once the process is set, there is full control to ensure that the data is brought across completely and accurately. However, if the metadata, i.e. the structural data is changed inadvertently, (perhaps a new cost centre is added to the HR system) then the ETL layer will trap the change and provide audit reports warning that data might be rejected and why. Once established, the ETL process provides a highly effective, controllable and repeatable method of pulling relevant data into the SAS® SPM environment without manual intervention.


Developing a strategy and communicating its objectives to guide the behaviour of an entire organisation is a complex business. The message needs to be consistent, but presented appropriately so that individuals drawn from across the business understand the strategy, the performance measures that are relevant to their role and the impact that their performance might have elsewhere on the business.

In recent times, the regulatory drive in the US and Europe, for more management commentary and disclosure means that companies need to be prepared increasingly to explain their strategy, current and expected performance to a variety of external stakeholders as well.

In order to meet these combined needs for more effective strategy execution and explanation of performance, the processes of developing and delivering strategy needs to be more thorough and supported by more robust processes and systems. In the past, it was difficult to join up the thinking and processes because a coherent approach to the required business applications and enabling technologies did not exist. In large measure, organisations relied on separate spreadsheets, scorecarding and dashboard initiatives which were difficult to populate with data, maintain and distribute to end users.

Competent strategy solutions are still few and far between, but SAS® SPM represents a notable exception, providing support for the whole strategy process. Strategy maps support the creative and iterative task of developing strategy allowing management to record and visualise intricate interdependencies between key performance drivers and the delivery of the organisation's objectives. Other visualisation techniques such as dashboards and scorecards support a wide range of management methodologies and allow the performance measures to be communicated in a way that is relevant and ensures that end users' focus on performance is strategically aligned.

In depth analysis using trending, drill down and multidimensional enquiries allows business analysts to understand the trends and factors affecting current and future performance allowing management to take advantage of exceptionally good performance or to remedy under performance. Furthermore, SAS' enabling technologies underpin all of these processes bringing together data sources from across the SAS® Financial Intelligence Suite and other applications where necessary, in dependable and repeatable processes.

But it should be remembered that strategy setting and delivery is not 'an end' in itself but part of a dynamic process or feedback loop in which insights into current and future performance inform the development of strategy in subsequent years. It is this mission which SAS® SPM and its enabling technology platform is comprehensively designed to support.

About FSN Publishing Limited

FSN Publishing Limited is an independent research, news and publishing Organisation catering for the needs of the finance function. The report is written by Gary Simon, Group Publisher of FSN and Managing Editor of FSN Newswire. He is a graduate of London University , a Chartered Accountant and a Fellow of the British Computer Society with more than 23 years experience of implementing management and financial reporting systems. Formerly a partner in Deloitte for more than 16 years, he has led some of the most complex information management assignments for global enterprises in the private and public sector.

Whilst every attempt has been made to ensure that the information in this document is accurate and complete some typographical errors or technical inaccuracies may exist. This report is of a general nature and not intended to be specific to a particular set of circumstances. FSN Publishing Limited and the author do not accept responsibility for any kind of loss resulting from the use of information contained in this document.