Despite the many millions of dollars that have been invested in the development and implementation of performance management systems very few organisations seem to deploy them convincingly. The market has matured considerably in the last five years yet performance management vocabulary is still very limited and the real craft of performance management is far from fully developed. Gary Simon, FSN’s managing editor takes a critical look at a new perspective presented by Frank Buytendijk in Oracle’s new “Journal of Management Excellence”.
Buytendijk is one of the industry’s veterans (Gartner, Hyperion and now Oracle) and one of its best thinkers. OK – his present paymaster is Oracle but Buytendijk does not push product. As a strategist working for one of the world’s largest software houses (if not the largest) he is left alone to think through the issues of the day apparently unencumbered by the need to sell software. So his contribution is worth listening to.
I’m slightly envious since he has time to do what good strategists should be doing – looking outside of his organisation and asking what is happening, who are my stakeholders, how is the market shaping up, what will influence my company and so on. So what insight does he and his colleagues in the Global Business Unit for Business Intelligence and Enterprise Performance Management (a disappointingly verbose name for a group that manages to express itself so succinctly elsewhere) bring to the table?
The answer is challenge. For too long the discipline of performance management has been comfortably compartmentalised around a traditional view of applications such as, strategy, budgeting, planning, scorecarding and reporting. It may be the way that task oriented finance professionals are accustomed to viewing the world but how well does this nomenclature reflect the way that we work or our aspirations?
Buytendijk has an interesting take on this. He compares the process oriented view of transaction systems with the comparative void that pervades the world of management information. On the one hand people wax lyrical about “Quote to Cash” and “Purchase to Pay” cycles but where is the equivalent description of the core financial processes that make up the performance management cycle?
Don’t expect rapid results. It took years for management thinking to move from a functional perspective of transaction systems to a more process oriented view, but the shift in mind set has had a profound effect on productivity. The ability to reach across functional boundaries such as, Sales Order Processing and Credit control and replace them with “Quote to Cash” has had a radical effect on process design and organisational behaviour, freeing individuals from the shackles of modular accounting systems whilst enabling greater productivity and a more fulfilling user experience.
Yet for performance management the potential remains untapped. Whilst we have become accustomed to compelling diagrams of performance management cycles that present a seamless process, the benefits on the ground have often been illusory. All too often, performance management lies moribund, constrained by a silo mentality and lack of management involvement and direction.
It seems that performance management has been robbed of its purpose, mechanised and monitored to death but taken out of context. Why are we doing it? Buytendijk and his colleagues might not agree but the front page diagram on their new quarterly magazine “Journal of Management Excellence” expresses a refreshingly novel view. Traditional strategy development is re-positioned in the phrase “Gain to Sustain” – I wonder how many man hours that took! But it’s more than clever prose. It encourages the behavioural change that is needed. It recognises that organisations depend on multiple stakeholders such as employees, customers and even environmentalists and acknowledges that meeting their needs is the crucial first step to creating value in your own organisation. “Investigate to Invest” (I assume Frank ran out of rhyming couplets) encapsulates the market perspective and the need to understand the market dynamics affecting the business – an outside-in viewpoint that has to be married up with an inside-out perspective.
Wooden, static, business modelling becomes animated under the process step “Design to Decide”. “There are many different strategic options that you have for shaping your organization and to identify the business model and the best stakeholders within this business model to maximize your success,” says Buytendijk. “Would you like to innovate and grow by introducing new products yourself, or should you find partners? If you need to downsize, do you divest a business unit or reduce capacity throughout the business? Which activities do we outsource, and which activities do we keep? These questions cannot be answered by calculating the return on investment, but by aligning them to what the market needs,” he adds.
So is Buytendijk playing with words? Is this the same old meat but with a new gravy? It’s easy to make the accusation and of course a 26 page journal is likely to cover some old ground but language is a powerful medium, capable of inspiring as well merely informing. Buytendijk and his colleagues are moving the debate on to the next level, coaxing us to challenge what has become the norm. It’s nicely summed up in the over-arching expression “Strategy to Success” – it reminds management of its true goal rather than “Strategy to Desk Drawer” which has been the fate of many performance management initiatives in the past. Nevertheless, the effort required to redefine these stubborn processes should not be underestimated – but at least the debate has started. The sooner we start thinking more about the process and what we are trying to achieve, rather than the underlying applications and technology, the better off we will be.
