A Pervasive Network Connects Decisions and Performance
PM technology doesn't simply provide interactive information on performance to senior executives; it drives decision making throughout the operations of the business. "On our balanced scorecard," says Luis Miniet, director of IT finance at TIAA-CREF, "at the highest level of the company, there are two key financial objectives [growth in premiums and funding to maintain its investment grade] and several others addressing our customers, staff, and operations. But our balanced scorecard doesn't just stay at the top. It's not a corporate document that we just show to others. It's a real, working document that we use to link to lower levels of the organization, to cascade information, and to show how key objectives can be translated into work that individual team members use to deliver tangible results."
At TIAA-CREF, the scorecard consists of four areas: "customer impact, operations, people, and financial — each of which has its own measurements." Miniet reports that throughout the company, tight linkages between the scorecard and operating activities "ensure that work efforts are clearly aligned so that, for example, folks who are customer facing have the products and services that our customers need to be successful."
Norris at Nissan cites a similar example of using its core metrics — unit-sale targets, return on sales, and outstanding debt — to drive operating decision making. "There are very clear, measurable objectives," says Norris, "and everyone's activities and personal objectives need to tie into one of those three objectives. On the performance management side, it's a matter of aligning everyone's objectives and compensation with the direction of the company."
Standard Databases Yield a Single Version of the Truth
One IT element that many of the interviewees cited was the need for a common, companywide, integrated database. Disparate, incompatible systems, they complain, waste time and reduce productivity. Often, these disparate systems have been built with the best of intentions. At Washington Adventist Hospital in Tacoma Park, Maryland, for example, chief financial officer James Lee explains that IT implementations are driven by a best-of-breed mentality; each department looks to buy the best computer systems for its particular need. So far, so good. The problem, however, is that these departments need to share data. Radiology, for example, must provide Nursing with data from MRIs and CT scans so they can provide appropriate care to patients. "Most of the time," Lee explains, "these systems are not made by the same vendor. They don't talk to each other. So we need to build interfaces. It becomes very sub-optimal."
At Pep Boys, vice president of planning Tim Brokaw cites multiple sources of information as a core challenge: "We have some metrics that are coming from HR and our payroll systems. Others are coming from sales systems. There are a lot of different legacy systems we have to tie together and ensure they are all populating this one data warehouse. And then, how do you deliver it to the field in a meaningful way?" The data needs of compliance are so great, in fact, that at some companies, compliance has driven demand for standardization of systems across business units.
DuPont is in the process of implementing an ERP system that, among other things, will help standardize information needed for Sarbanes-Oxley compliance. The company operates several IT platforms for its twenty-plus strategic business units. The result, says John Shannon, managing director of finance at DuPont Performance Materials: "There was not a lot of opportunity to leverage information." Yet the company had run this way for some time; what changed, says Shannon, was a greater scrutiny in the name of Sarbanes-Oxley compliance and the need for increased efficiency. "It became very apparent to people outside of the finance function just how ineffective we were by having all these different systems environments," he explains.
Another important element of performance management is the need to handle what's known as unstructured data (e.g., e-mail messages, spreadsheet comments, text files, and administrative notes) that can be stored and managed effectively in a database. Few interviewees at present have effective solutions in place, but they also express a clear aspiration to extract and manage the truths that reside in text documents. DuPont's Shannon recalls an early disappointment in this area: "People are supposed to have documentation of the fact that controls are executed, and there was no disagreement with that need. Initially, however, the company intended us to print a physical copy of everything that supported compliance," he says. "This was viewed as excessive and now certain electronic recordkeeping is acceptable."
The Systems CFOs Dream Of
When asked to design their "dream systems" for performance management and compliance, finance officers point to simple, dashboard-like systems that would provide rapid, at-a-glance updates and alerts on key measurements. "If we were beginning this company from scratch, we'd design a more fully integrated system to accommodate our data needs," says CFO Rick Puckett of United Natural Foods. "We would piece together the enterprise solution around high-performance systems, and we'd put on top of that a really good business intelligence system."
Reader Comments» Post a comment