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Ventana Research talks stewardship and strategy

August 15, 2008

Mark Smith, CEO & Executive Vice President of Research at Ventana Research, drives the global Performance Management research agenda covering both business and technology areas. Here, he joins Performance Perspectives editor Delaney Turner to explore Operational Performance Management and check in on the relationship between business and IT.

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Operational Performance Management defined

DT: Your latest research is on a concept you call "Operational Performance Management." Could you define it briefly and explain how business intelligence fits into it?

Operational Performance Management is something we started on six years or so ago: the notion of taking performance management into operational management roles and responsibilities in organizations is pretty straightforward conceptually.

But practically, what do they do to put together the right kinds of systems to support the people and processes?

If we look inside the operations of a manufacturing or services company you've got roles like Marketing, Sales, Customer Service, Field Service – lots of different functions that work as departments.

A lot of them have performance targets that they're trying to achieve, and when we look at Operational Performance Management it's about helping those departments and how they work together to acheive those particular goals and objectives.

So frankly, Operational Performance Management is about taking the notion of "How do we align, optimize, and understand performance" in very simple and straightforward manner that works the way people work, not the way technology works.

Data governance, stewardship, and strategy

DT: Obviously that's putting data at the heart of the strategy and decision-making and it raises the issue of data governance and data stewardship. What strategies do you see companies takikng to manage their data so they can work productively?

That's a very good point. The challenge today is that most organizations – if you look at the data inside the operational management functions – it's scattered all over the place.

In fact, our research finds that the top data sources for operational functions are things like spreadsheets, reports, email, and PowerPoints – things that don't have an enterprise platform, and there's a lack of consistency.

"Many organizations need to balance their efforts"

DT: Everything but BI

Everything but BI, and data is everywhere but it's not consistently in the right form in the right context. So data strategy is really important. And you can't get great Operational Performance Management without having a good, solid information management foundation.

Information management at the data context is, How do we define and use measures, metrics, and KPIs concistently? How do we make sure we define customers and levels of customers properly?

So the data issue is a big one. And many organizations need to balance their efforts, because BI should provide the context for operational performance management; but it should also the framework for governing and understanding the data assets efficiently.

Comparing features and functions "flawed"

DT: You provide some detailed criteria that companies can use to evaluate different vendors of performance management platforms. Could you walk through the top 3 criteria that companies should look at?

It's a really good point. When we engage with organizaitons we find that a lot are still in the feature-function comparison: "Let's put together a list of the 500 features and functions that an organization might use over the next three years."

Unfortunately, that strategy's flawed. Functionality needs to be put into the context of the busines users. The senior vice-president's needs are different than the business analyst who actually analyzes the data, compared to operational line managers.

What we've done is taken our performance management framework and these three steps – align, optimize, understand – and defined the sets of user functionality that's important for managing performance, to make sure that the priorities are set by user types.

Our Ventana Research Scorecard provides evaluation criteria to have a performance management context [and] at the same time provides a set of steps to make sure that the gaps between what the different business users need are well-addressed by the IT function.

By bridging that business-IT divide, companies can actually reduce the risk of not having failed BI projects.

IT and business: We can work it out...

DT: The IT-Business partnership. We've been reading that to be successful, these two sides need to work together.

MS: Correct

DT: From what you're seeing out there, are the two sides getting any closer? Are there any specific examples you can think of where they shake hands and everyone's happy?

In many cases, IT has centralized a lot of the responsibility for BI technologies, but hasn't done a great job of defning the user functional information plans.

And so part of bridging this divide is making sure that IT understands the daily pressures that the business faces.

In the forward-looking, innovative companies, we found that IT now is helping recommend how to get a better centralized strategy that encompasses those issues, but governs them so that the data is used in a consistent manner.

So it's getting a little better in some organizations.

It all comes down to skill sets

DT: IT has the dual responsibility of trying to drive results for the business and optimizing decision-making. They also have to "keep the lights on." How does IT balance those responsibilities and what kind of expectations do they set?

The question is, "What is really the responsibility of an IT organization?" Should they be a service bureau to help provide enabling capabilities, or should they be responsible for designing applications for performance management processes?

It really comes down to the competencies and skill sets. In some organizations, IT is under significant pressure to keep the lights on and their teams focused on BI and enabling performance management are quite small.

So, how companies need to look at this is [say]: "We do need to have a performance management set of teams and build competencies which are about decision-making processes. They're actually different than having competences about using BI technologies.

But what are those decision-making processes? How do we share and collaborate across the organization? These questions need business leadership, and business needs to be actively involved.