FSN: Technology alone does not solve BPM problems

Technology alone does not solve BPM problems

31st October 2005
Far too many organisations think that implementing a scorecarding application on gleaming technology is a guaranteed route to true enlightenment and better performance management. However, in the wrong hands, information technology can lead to the collection of too much data, the application of too much analytical effort and, ironically, poor performance because the measures that really matter are overlooked. Gary Simon, FSN Managing Editor visited, the FT's offices to hear Cranfield's Professor Andy Neely and the Pearson Group talk about best practice performance management.

There seems to be an automatic assumption these days that information technology solves all problems connected with performance management. The Balanced Scorecard has become the latest 'silver bullet' with which management is going to banish all corporate ills. But Professor Andy Neely, of the Cranfield School of Management is quick to point out that there have been successive silver bullets since the mid 1950's. "What happened to 'Business Process Re-engineering', 'Total Quality Management' and 'Six Sigma'," he challenged, when speaking last week at the FT's offices in the Strand at an event sponsored by Hyperion.

Neely was making the point that there is an awful lot more to the challenge of improving performance management than simply arming people with shiny technology and a brand new management ideology. According to the Professor, one of the problems is that technology encourages the proliferation of performance measures and inundates management with data. In a semi-serious way he pointed out that London Underground has 3,000 key performance measures including a "litter" measure which is apparently important because excessive paper waste discarded by careless passengers represents a serious health and safety risk. But is it really a Key Performance Indicator?

Organisations apparently have an overwhelming desire to quantify things and the more technology that is at their disposal, the more likely this is to happen. "The latest technology allows you to slice and dice seemingly without limit but managers are supposed to be busy managing and having endless ways of slicing and dicing is not helpful," says Neely.

Dennis Horner, Managing Director at Atos Consulting agrees. He told FSN, "You have to consider what you are analysing and why, particularly if the underlying data is inconsistent and non-standard. Technology will give you loads of data but you have to decide what is really important," he says. "one organisation I visited recently had around 200 KPI's and a team of 10 people to manage it. They couldn't see the wood for the trees. Technology is an enabler but it can also be a hindrance if it leads to information overload."

The way that technology encourages the measurement of everything can lead to bizarre behaviours and unintended consequences. Neely tested his hypothesis on the gathered audience by challenging delegates to come up with possible ways of managing hospital waiting lists within government targets. It didn't take long for someone to say that patients should be allowed to die as well as the more acceptable solution of referring them to another consultant who would inherit the burden of the waiting list. But most of the audience could relate to the idea that their measurement and reward systems can give rise to dysfunctional behaviours. For example, most people have witnessed 'turf issues' of one sort or another as managers argue over who is credited with a sale or who is responsible for a customer problem. Inevitably, such situations lead to wasted effort and resources. A situation that could be avoided if the measurement system did not force people to compete.

"It's a matter of balance and concentrating on the items that really matter", says Neely. "If the RAF can fly a complex fighter using five key dials in the cockpit display why can't a business use a limited number of KPI's?"

Technology itself can also encourage undesirable behaviours. The current trend to workflow and control can lead to management by email. Neely, recalls a recent software demonstration where a salesman suggested that a cost centre manager who failed to meet a budget target automatically received an email from his supervisor admonishing him for bad performance. "This irresponsible and unthinking use of technology is likely to de-motivate staff and is unlikely to engender improved performance. Performance management systems should be the start of a dialogue for improving performance and you don't achieve this by sending an email and going off to have a cup of coffee", says Neely.

Thankfully, not all performance management systems are implemented in an unthinking way and although Neely appeared fond of taking a side swipe at elements of the IT industry that push a technology solution for its own sake, he recognised its importance as an enabler of good management processes.

The Pearson Group, which owns the FT, Penguin Books and Pearson Education amongst other businesses, is an example of how one can make a success of a performance management system, if technology is applied and implemented in the correct way.

Pearson's performance management software is based on a centralised and web based Hyperion HFM solution. It had to be readily configurable, permit data to be captured easily, accommodate complex business relationships and span the continuum of operations and analysis required in a complex group. However, Noel Gorvett, Group Business Systems Manager for Pearson paid close attention to the change management issues of introducing a new performance management and group reporting system.

The change management programme identified 'power users' or 'evangelists' from the business who could help and encourage other users. All of the users were gathered into one room for some of the initial education and Gorvett ensured that all of the training that was delivered jointly with Hyperion was tailored to the Pearson application. "We wanted users to relate the standard training to their particular business issues, terminology and Pearson language."

Gorvett also made all of the training materials available on-line as part of the application and followed up all training to ensure that he received relevant feedback and that the support given to users was adequate. "We really listened to the users," says Gorvett. The implementation team also worked very closely with Pearson's IT groups to ensure that all of the interfaces to underlying ERP systems and other aspects of infrastructure and support were in place.

One particularly noteworthy success is Pearson's use of the "Hyperion Workspace" facility which provides a common user interface to the performance management applications. "It's a one-stop shop which allows users to get at all of their reports and personalised analysis across all of the applications through one log-on," says Gorvett. End users apparently appreciate the simplicity and ease of use of the interface. "People are really embracing the system and not just viewing it as yet another system imposed by plc," says Gorvett. A sure sign of its success is that local management are using it for their own management reporting purposes.

Mike Shelton, Managing Director of Hyperion in the UK and Netherlands told FSN, "We have always been of the view that Business Performance Management is about the business and not the software. You change systems because it enables the implementation of best practice and the delivery of the right results. Scorecarding, for example is about being able to link strategy to operating performance and Hyperion is pleased to support a seminar programme that helps people to understand best practices not just our software."

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