Author: Pieter Goris

Do’s and Don’t of IT Performance Management

Many organizations struggle to put a performance management process in place due to the following pitfalls:

Pitfalls

1. The customized data warehouse
Do not turn your performance management implementation into a huge data warehouse project with long discussions on data warehouse design based on the available data in your organization. Performance management is not a data driven bottom up approach, but also a top-down approach. What do you need to know today in order to drive your business forward? If this data resides in an operational database, then great, if not, then make sure the accountable person can provide the information to you in a timely fashion. Keep in mind that as your business goals are changing your key indicators for company performance will be changing.
2. Key performance indicator definition studies
“We are not ready yet for an application, we need to decide what our key performance indicators are before we do anything else.”
An often used explanation why the implementation of the performance management process has not started. The truth is: you will never be ready in determining the perfect set of key performance indicators. Why? Because as your business is changing, your indicators will be changing. What you need to do is be pragmatic and just collect all metrics that potentially will be used in indicators in the future and store them in a central place. For example, you already know that the following metrics potentially are interesting: the total number of complaints, total number of calls at the helpdesk, total sales, number of sales meetings, number of production errors, number of produced items. If you collect these and store them in a central place it will be easy for you to roll out indicators such as: average value of a sales meeting, % of complaints at helpdesk etc. By doing so, you can quickly define and design indicators and roll them out. The discussion on which key indicators becomes so much easier when you can show what it means to use indicators A or B.
3. System integration projects
Sometimes performance management projects are chasing the holy grail of a fully automated enterprise dashboard. Ideally, the performance management application needs to be integrated with for example the ERP, CRM, Project Management Database, IT service management database, custom application A and B and legacy application C. However, we are going to replace our project management database, are in the process of upgrading our ERP system, are phasing out our legacy application and will replace them with custom application C. On top of that we have chosen an Enterprise Application Integration hub which we intend to use to tie all our applications together. In the mean time you need information to make your business decisions. You can not wait until this technical integration project has been finalized (if it ever will be finalized since your business applications will continuously change).
The solution is to use a phased approach. First identify who is accountable for indicators and have them enter indicator information into a performance management system. Most of them will run an operational Crystal, Cognos or Business Object report on the operational application and will manually enter this information into the performance management system. For those metrics that are stable and where the source is a stable application, the second phase in the implementation is to automate metric collection tasks. In other words, first implement and support the performance management process, then start thinking about automation.
4. So our dashboard is telling us things are not going as planned, now what?
Many performance management applications only provide dashboard functions. You can see what is going on based on underlying indicators. However, there is no way to ask for detailed explanations nor set out corrective actions and track the results and outcome of such actions in a correlated fashion. When analyzing the performance of a stock, let’s say Microsoft, you do not only look at the KPI’s of the stock such as revenue growth, P/E ratio but you also download the annual and quarterly reports for explanations for the results, to find out what the corrective actions are and what the expectations are for the future. A similar approach should be implemented when it comes to enterprise performance management. Your performance management system should also be the repository of biweekly / monthly management reports allowing you to put things in perspective and have a central repository.
5. Management by spreadsheets
Performance management starts out with a small spreadsheet to track a small number of indicators and metrics. The spreadsheet grows, becomes a shared workbook, multiple people are putting data in and the maintenance cost and reliability of the data eventually is in jeopardy. Excel is a great tool to start of your performance management implementation. However, it is a nightmare tool to share with multiple people labor intense to maintain. Use excel to start, but avoid having multiple “excel developers”.
6. Gaming the system

Performance management is often used to track the performance of processes, projects, service levels, organization units and business goals. By doing so, you also track the performance of the accountable managers. When you have an incentive structure based on performance, managers will try to “game the system”. A great example of gaming the system are many European Governments when they report on unemployment figures. In order to continuously lower unemployment rates, some governments are known to use different definitions for different periods thereby influencing the outcome of the indicator “unemployment”. You can prevent gaming the system by implementing the following procedures:

• Metric approval cycle
Only after approval of another manager, indicators are “published” to the corporate dashboard.

• User access rights
Besides administrators, nobody can modify data after it is published.

• Audit Trail
A detailed audit trail is kept whenever the administrators redefine indicators or modify historic performance

7. Why would I provide my manager with a stick to beat me?
Why would accountable managers in your organization provide top level management with detailed performance data? Do they have anything to gain? Sometimes transparency is not in their best interest, especially when they have the feeling that they do not receive similar transparency on the performance of others of have the feeling that they only provide the information to their manager without being able to analyze and use the information themselves.
This reaction is often seen and understandable.
To avoid this consider the following:
• Implement corporate transparency
• Provide accountable manager the tools to analyze and improve their own performance
• Gather explanation reports alongside hard KPI metrics so that managers can present logical explanations about the results.

Mirror42’s unique approach allows organizations to avoid these pitfalls: Call Mirror42 today to find out more.