Howard Dresner on the growth of performance management within the enterprise
Howard Dresner is president of Dresner Advisory Services. He was chief strategy officer at Hyperion and is a research fellow at Gartner and author of the book The Performance Management Revolution: Business Results Through Insight and Action (John Wiley & Sons, November 2007). Dresner, widely regarded as "the father of business intelligence," talks to John Kopcke, senior vice president for business intelligence at Oracle and formerly chief technology officer at Hyperion, about how businesses can achieve the best results from enterprise performance management.
KOPCKE: Describe the essence of "the performance management revolution."
DRESNER: What's different about the performance management revolution is that it's much more holistic than anything that's been published before. So many theories or philosophies focus just on IT, or organizational theory, or politics. In this case, we're talking about something that includes all of the constituents. We talk about the organizational principles, the processes, the people, and the technology that have to go into being successful with performance management, but it's really about driving relevancy and accountability and alignment through the enterprise. All too often, in enterprises, we focus on either the wrong things or only part of the right things—we focus on operational excellence, but we don't have alignment with the strategy or we conduct analyses of data without really understanding why it's significant to the health or progress of the business.
KOPCKE: Why do you believe this revolution is occurring now?
DRESNER: Enterprises have probably gotten as much value out of their ERP [enterprise resource planning] and operational systems as they can. We've gotten ERP down to a fine art. The next battleground is to coordinate the operational side of the world with the managerial side of the world, which is a scenario that has been woefully neglected. That's where performance management adds value—by leveraging the investments in the operational systems, and taking the enterprise to the next level of effectiveness and efficiency by automating the managerial side of the organization.
KOPCKE: Is this a progression from the business intelligence revolution, which you identified in the late 1980s and saw grow and flourish through the 1990s?
DRESNER: The objective with business intelligence was to deliver information or perhaps a little bit of insight to end users, but it was lopsided. It did not take into consideration one key element: accountability. Accountability is what's needed to make the insight actionable. If we deliver information or insight to users, what are they supposed to do with it? The answer is not always clear. The notion of performance management is to take a step beyond that. By definition, performance management marries business intelligence to the planning and control cycle, so not only do we have the notion of insight and information, but we know what we're tracking, we know why we're tracking it, and we hold people accountable for those results. That's what makes it fundamentally different.
KOPCKE: By definition, every organization has performance management. How are the current performance management practices broken?
DRESNER: Performance management is typically implemented at the functional level or the departmental level, and not at the enterprise level. While it might serve the parochial needs of finance, marketing, or sales, it is in fact to the detriment of the larger enterprise. In some cases, they're working against each other to achieve their own goals.
KOPCKE: What is the purpose of having a shared vision of performance management throughout the enterprise?