Intelligent Enterprise

Better Insight for Business Decisions

RSS
Webcasts
Whitepapers
Subscribe
Home

January 1, 2004

The Performance Decade

To be competitive, companies must adopt performance management.

by Mark Smith

We're all aware of the "tough economic times" of the last few years, and some remember longingly the huge investments in technology we made previously (mostly the vendors). But now companies face the challenge of staving off the competition and increasing profitability with fewer resources. Welcome to the "Decade of Performance Management," where your company must either successfully deploy strategic and methodical performance management initiatives or fall by the wayside.

Three years of a dismal market, corporate shenanigans, and fraud leading to shareholder mistrust and financial regulatory requirements such as the Sarbanes-Oxley Act of 2002 and Basel II (also known as the New Basel Capital Accord) have companies scrambling to reduce financial and operational risks. Although companies have faced dismal markets, corporate scandals, and new regulations before, this time all these challenges are related and hitting hard after companies had already invested heavily in new software and technology because of Y2K and the dot-com boom.

In the past two decades, companies easily gained efficiency by spending billions on technologies; that opportunity doesn't exist today. Although some amazing performance management-related innovations are currently available, investing in technology isn't necessarily the answer to performance problems. Instead, your company needs a new level of understanding of, and accountability for, performance on a continuous basis. But methodically improving your performance isn't easy.

Past Imperfect

In the recent past, companies were compelled and had the resources to throw money into technology to "improve efficiency." The 1980s brought the revolution of personal computing and a focus on individual independence. The '90s saw corporate computing shift from client/server to the Web. The focus on efficiency during these decades helped companies gain greater productivity and control, but it only went so far. Personal computers and ERP have automated and created independence, but they don't help you prioritize and determine what your company must do to be not only competitive but also profitable.

Despite these efficiency improvements, many organizations still feel like George Clooney in the movie The Perfect Storm, where he is trying to keep the fishing boat intact and survive the unrelenting fury of external factors. Many organizations are struggling to stay afloat in the ocean of information created by earlier technology investments. On the other hand, just as many organizations feel they don't have enough information. A performance management initiative can help both types of organizations find solutions that will help them compete in this decade.

By embracing this performance imperative and focusing on effectiveness, companies will not only leverage the independence, automation, and efficiencies gained in the past but also gain additional value from having more visibility, accountability, and predictability.

After looking at the current state of affairs and the massive investment that preceded it, I can only conclude that although the technology may have helped make companies more efficient; it didn't make them more competitive in the long run. It did lay the hardware and network foundations, improve efficiencies with ERP, and create an ocean of information, but these are only the beginning of what will be required to improve overall business performance. Now you must leverage these efficiencies to develop enterprisewide performance management initiatives that drive effectiveness and increase value for your company.