The right tool for the job
A few years ago, I was asked by
an industry leading technology firm to conduct an Assessment about how their Analytics
program might be enhanced to best support performance improvement. The Chief Operating Officer was not sure that
their reporting and analytics deliverables presented an accurate picture of
each division’s growth and profitability in their “matrix management” organization,
which focused on cross-division product lines and market segments.
With executive sponsorship, we
collected, integrated and analyzed all financial, sales and operations
information for the prior three years. I
presented the analysis to the executive committee, including the COO and all
division heads. One of the smaller, but more innovative product divisions was
identified as the fastest growing business unit with the highest profit margin,
while products developed by one of the largest divisions – managed by a high
profile executive – was found to be losing revenue and market share. The
results surprised everyone.
The presentation concluded with
the recommendation to implement individual product and division scorecards that
included customer satisfaction, employee satisfaction, revenue, profit margin and
market share. They all agreed that more
focused scorecards would help everyone stay current with what was important,
rather than just monthly high level results.
We proceeded to develop and
implement the product and division scorecards, reflecting targeted objectives
and actual results, which produced an immediate improvement in quality,
productivity and expense management. The
Scorecards were summarized and included in Executive Dashboards, along with other
reports and analytics. The Executive
Dashboards were used as templates to develop personalized, auto-generated
Dashboards for business unit managers and product development teams. Everyone now has immediate access to current
performance information. The Executive
Committee agreed that business unit scorecards are the right tool for the job.
This story is an example of how most
organizations – even the largest – are still learning how to use Analytics to
measure, communicate and manage performance.
The main reason is that managing performance is a business
accountability, and most business leaders – including IT executives – are just
starting to learn about how Analytics can support performance improvement.
Since we’re only discussing
Scorecards, let’s take a moment to address the differences between dashboards
and scorecards.
- Scorecards – A list of business objectives for individuals, teams, and business units with measurable targeted and actual results for specific periods of time.
- Dashboards – Organized views of information, personalized for each individual based on their role and business objectives that may include scorecards, as well as summarized visual and numeric information with the ability to drill down to more detailed information.
Scorecards present different
information for each level in the organization.
- Executive – Results Only: financial and units by product/service, location, line of business, market and others. Only address what happens – rarely why it happens. Usually delivered monthly after books close, and quarterly in preparation for shareholder announcement.
- Management – Business Unit financial results and operating metrics. Presents what happened and occasionally why it happened, depending on BU management level and performance measurement sophistication. Usually delivered monthly, unless exception reporting generates mid-month report.
- Team – Team financial results and business process metrics. Baseline quality, productivity and cost metrics tell the story of an organization’s performance. While daily feedback is optimum and weekly is reasonable, many organizations provide monthly reports that include very little useful information. Most organizations have the ability to capture business process data and develop automated daily or weekly scorecard reports, but don’t recognize that there is a direct correlation between basic organization quality, productivity and expense management…and growth and profitability.
On a recent project with a large,
global information technology conglomerate, we were asked to lead a project to develop
an enterprise data warehouse to replace the 1,600 spreadsheets that were used
across all thirty-three lines of business, with data coming from Finance,
Sales, Marketing, HR and R&D. In
addition, we were asked to develop performance scorecards for R&D, so the
product development teams could have better information to stay current with
their progress against their timeline objectives.
It seemed like an overwhelming
task, but when we started analyzing reporting requirements and mapping the
various data sources, the data warehouse architecture of conformed dimensions
and fact tables emerged much more quickly than anticipated. In the process, redundant reports across
business units were consolidated and with BU-specific security profiles, producing
a rather small library of standard reports with prompts that replaced thousands
of redundant BU reports. Hundreds of thousands of dollars in wasted time was
saved.
Through the process, the
Finance, HR and R&D project management data was integrated and maintained
in the R&D Data Mart. From there, it
was a rather straightforward process to prepare Product Development Team
Scorecards that provided product development performance insight via near
real-time reporting, while saving significant time and expense. HUGE Analytics
ROI! HUGE!!!
Many times, the short term Analytics
benefit is measurable savings from eliminating spreadsheet development and
deployment. The long term benefit is increasing
organization IQ to reduce the insight to action cycle-time.
People love to play games and
are naturally competitive, so when employees have timely feedback about how
they’re doing compared to others, work becomes fun, more meaningful and more
productive. How are you helping your
employees measure the quality, productivity and cost of their work? How are you measuring yours?