Once again, we thank the software company. The book Drive Business Performance, which sheds light on business intelligence and how to implement it properly, was published with Microsoft's sponsorship as part of a series of management books released together with Wiley Publishing House. The book was written by two authors, Bruno Aziza and Joey Fitts, both company employees.
We'll start with the Israeli perspective before delving into the book's depths and structure. Like many other books, this book includes, alongside the methodological description, case studies that illustrate various ideas. One of the case studies is about Clalit Health Services and its business intelligence system. The book primarily describes the organization's analysis activity and quotes Gadi Gilaon, previously the Information Systems Manager at Clalit, and later Mazal Tuchler, the BI activity manager in the organization.
The book is structured as a conceptual book integrated with an action guide. It is primarily intended for people involved in business intelligence activities in an organization (less so for CEOs and business professionals). However, it is written simply and clearly and does not require extensive prior BI understanding. It is recommended to read it twice: once to understand the ideas, and subsequently, you can return to it and use it when analyzing an organization's performance and wanting to improve it through business intelligence tools. It provides tools for understanding an organization's positioning in the BI world and operational recommendations on where and how to move forward.
The book is composed of the following chapters:
Performance Management - Its stages and components
Monitoring
Analysis
Planning
Understanding the organization's state and advancing it
This article summarizes the main points. The book also includes explanations about using KPIs, Dashboards, Scorecards, and more. However, to get the full details, it's advisable to read the book, which is nearly 300 pages long. There is much to learn.
I hope you enjoy your reading.
Performance Management - Its stages and components
Performance Management deals with tools that help an organization improve its results - its bottom lines.
Organizations typically begin managing performance due to one of the following factors:
Leadership change in the organization
Top-down management requirement
Bottom-up initiative by middle managers
Sectoral awareness (other organizations in the sector manage performance)
Information systems initiative
Regulation or public reporting obligation
The need and desire to improve performance is clear. The central reason organizations manage performance is to operate better by their strategy.
An organization cannot succeed solely through a beautiful strategy. Performance is required to achieve success. Therefore, performance must be managed.
Six value levels can be achieved through performance management:
Increasing visibility into what happens in the organization
Making decisions based on data and information rather than gut feelings
Planning for success. Doing this continuously (not annually), collaboratively (across organizational units), and consistently
Executing according to strategy, doing what is said and planned
Gaining the power to compete
Developing a performance culture: people, tools, and processes
Performance management includes three components:
Monitoring: The ability to understand what is happening (or has happened) in the organization
Analyzing: The ability to know why things are happening (or happened) in the organization
Planning: The organization's ability to understand what will happen and structure what needs to happen
Performance management components, as described, support three types of decisions:
Tactical decisions
Operational decisions
Strategic decisions
The basis for decision-making is based on these, but also on trust: trust in data (accuracy and consistency), trust in insights (obtained from data examination), and trust in the decisions themselves (managers' ability to make, communicate, and act on them).
Monitoring
Monitoring involves understanding what is happening in the organization as a prerequisite for improvement.
The three guiding principles helping companies develop monitoring capabilities are:
Consistency
Accountability
Alignment
Accountability
Accountability can be taken if consistency and data, information, and metrics can be trusted. Data and information that are not acted upon are worthless. Only people can make decisions; therefore, they are required to take responsibility for the data, information, and metrics before doing so. Taking accountability adds dimension to performance management.
To ensure people take accountability, the following is required:
Relevant information
Personal information (focused on the reader's needs, not broad and dispersed)
Assigning an owner to each metric (KPI). It's important to know who to turn to when metric colors change.
Using Dashboards and Scorecards to provide context to metrics and bring them closer to decision-making
Alignment
Alignment links strategic, tactical, and operational decisions across the organization.
To enable alignment, the following is required:
Context (by using Dashboards and Scorecards)
Communication of strategy within the organization
Simplifying performance management processes to facilitate alignment without investing significant time each time
Incentivizing maintenance of alignment
Analysis
The analysis involves understanding the factors behind the organization's performance and answering the "why" question.
The three guiding principles helping companies realize benefits from analysis capabilities are:
Agility
Relevancy
Efficiency
Agility
In the 21st century, the importance of an organization's agility is clear to everyone. Agility addresses changing needs, new opportunities, and emerging threats. Globalization only increases the need to respond quickly to any change to advance and survive. To achieve this, the following is required:
The transition from analytical analysis by individual experts to the knowledge of employees in different business units
Analysis supporting both strategic, tactical, and operational decisions
Support from web-based analytical software
Easily understandable outputs (accompanied by explanations of metrics, etc.)
Recognition of work (limited, under constraints) in personal software (Excel)
Relevancy
The relevance of data and information is important for decision-making and subsequent actions. Relevance also prevents people from getting lost in a sea of reports and branches. Often, users receive information based on permissions, not necessarily limited by their role or affiliation. The result is randomness and an inability to focus. The purpose of relevance is to enable focus, specifically in the context of:
Contents that are required for decision-making and action
Contents based on people's roles and levels in the organization
To ensure relevance, it is recommended to:
Use filters and, by default, offer little information
Only with additional selection and user request allow access to broader information
In some cases, accompany graphs and reports with action recommendations to enhance relevance
Efficiency
Good analytical analysis allows for understanding information, identifying trends, and acting faster. One benefit of analytical analysis is not just doing things better but simply performing them quicker—this is efficiency.
To enable efficiency, analytical tools must be designed accordingly:
Allow drilling up and down, as well as across, from one branch to the adjacent branch
Enable quick access to the root, no matter how much information exists
Provide a solution that is easy, simple, intuitive, interactive, and flexible
Planning
Planning is somewhat of a misleading term. It includes not only planning but also budgeting and forecasting.
Organizations that plan their performance can achieve several benefits:
Alignment
Agility
Accountability and Empowerment
Note: These benefits also appeared in previous chapters, but the content in each differs depending on the component to which they are assigned.
Alignment
To enable alignment, planning activity must include:
Knowing what is wanted (not as simple as it sounds)
Precise and focused definition (avoiding spread)
Understanding the parameters influencing organizational performance and the ability to plan an accurate, simple yet sophisticated, and shared model based on these parameters
Systemic thinking, but separate local forecasting in each domain, product, or geography
A planning process that can be run multiple times, quickly (without significant repeated investment each time), in a managed manner, allowing refinement and improvement, iteratively, collaboratively (not in a closed room), with the participation of different business units, and with comprehensive integration of unit plans into a shared plan.
Agility
To ensure agility, planning software must enable a planning process (with all its components) that is fast, changing, and flexible:
Fast process - without extensive resource investment for each setup and each change
Changing - adapted to the needs of different units while maintaining connections between them
Flexible - allowing scenarios and changes not known in advance (neither in content nor in time)
Accountability & Empowerment
Accountability in planning represents the highest level of performance management. It involves understanding, as part of organizational culture, that activities and directions must be planned based on information and data and that employee responsibility for performance is cascaded and welcomed.
It must be understood that the planning process involves people. Several responsible parties share it: process managers (whose performance is planned), work program and planning managers, and senior management determining the directions.
For planning to succeed, the relationships between partners must be understood, and each should act as if the organization belongs to them (and therefore wants the organization's complete well-being).
A mandatory condition is a supportive software that is personal, simple and uses familiar terms so that people can take responsibility and connect to planning.
Understanding the organization's state and advancing it
Understanding the Organization's Situation and Advancing It
The three components we reviewed describing the different chapters (monitoring, analysis, and planning) stand together. They bring value to the organization.
At the summary's beginning, the values that can be achieved are mentioned. Their positioning is essential. While some may occur in parallel, generally, they can be seen as hierarchical (from low to high). These values are:
Increasing visibility into what happens in the organization.
Making decisions based on data and information rather than gut feelings.
Planning for success. Doing this continuously (not annually), collaboratively (across organizational units), and consistently.
Executing according to strategy means doing what is said, planned, and wanted.
Gaining the power to compete.
Developing a performance culture: people, tools, and processes.
The book includes a checklist at the end of each chapter, allowing every organization to understand how successfully it implements each component. Based on the checklist scores, each organization can assess its capabilities in this component, ranging from:
Limited capability (1)
Moderate capability (2)
Significant capability (3)
Excellence (4)
Moreover, action directions are proposed based on the analysis of the answers.
In this final chapter, all components are integrated, demonstrating the relationship between component scores and the values that can be achieved through them.
Value/ Ability required | Monitoring | Analysis | Planning |
Visibility | 3 | 2 | 1 |
Informed decisions | 3 | 3 | 1 |
Planning for success | 2 | 2 | 3 |
Strategy execution | 4 | 2 | 3 |
Power to compete | 3 | 3 | 4 |
Performance culture | 4 | 4 | 4 |
Note: In each component, the above grades are the minimum required to achieve this value.
This table offers many lessons. For example, it shows how vital monitoring is for strategy implementation success, how the total number of grades increases, but not every grade increases at each level, how critical each component is—without it, some values become unattainable—and how important the synergy between components is.
The book also includes practical recommendations on where to focus (almost) in every combination of grades, based on the assumption that not all components can be addressed simultaneously. It also recommends when it is worthwhile to return to a value at a lower level (for example, from planning to success to visibility) when monitoring is lacking. Progress will not be possible without it.
And a concluding recommendation: remember that we seemingly dealt with data and information, but we dealt with people. They are the ones who drive performance and bring competitive advantage.
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