BUSINESS INTELLIGENCE TRENDS
The Next Generation of Performance Management

Updated 2/16/2010

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BI Trends: The Next Generation of Performance Management
Every year, technology research firm Gartner surveys 1,500 CIOs. As has been the case for several years, the firm’s 2010 survey1 revealed that BI applications are among the top technology focus areas for CIOs. And business process improvement is the top business priority for IT, followed immediately by reducing costs and improving the use of information and analytics. According to Bob Kaplan and David Norton, the creators of the Balanced Scorecard (the most commonly used performance management system2), “breakdowns in a company’s management system, not managers’ lack of ability or effort, are what cause a company’s underperformance.” Kaplan and Norton define a management system as the “integrated set of processes and tools that a company uses to develop its strategy, translate it into operational actions, and monitor and improve the effectiveness of both” and point out that “the failure to balance the tensions between strategy and operations is pervasive…with various studies published in the past 25 years indicating that 60% to 80% of companies are fall short of the success predicted from their strategies.”3 So why are CIOs spending so much time and energy on BI? These technologies are the platform for communicating, managing and measuring strategic, operational and tactical performance. The issue is that although organizations are spending a lot of time and money on implementing and evolving these systems, the systems are still failing to meet the needs of companies to accurately assess the drivers of strategic outcomes.

Why the Management Process Fails Today
BI technologies are implemented to support management processes. To see how these technologies will evolve to address the next generation management process, let’s examine an example of a best-inclass process. Since the Balanced Scorecard has emerged as one of the most commonly-accepted management processes, a company that uses this system will be the subject of the management process example. In this case, an investment management company has implemented the Balanced Scorecard system. In this system, a strategy map is a one-page visualization of the company’s strategy; each “bubble” on the map represents a company objective.

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Sample Investment Management Company Strategy Map 4

A strategy map is divided into four perspectives: 1. 2. 3. 4. Financial: "What will we have to achieve for our shareholders to view us as successful?” Customer: "To achieve my vision, how must I look to my customers?” Internal Process: "To satisfy my customers, at which processes must I excel?” Learning and Growth: "To achieve my vision, how must my organization learn and improve?”

The financial and customer perspectives are measured as outcomes. In other words, the success of these objectives is measured by transactional, generally historical, data that comes out of a general ledger or some kind of accounting or financial system. The internal process and people perspectives are drivers. This means that the achievement of these objectives is tracked by quantifying “fuzzier” measures. This driver information is usually not contained in any centralized system, but rather sits on an employee’s desktop; in a content management or document management system; on a portal or intranet site; etc. This content is almost always inaccessible to today’s BI platforms. So what happens in practice? If this investment management firm is using specific measures to track success against the objectives on the strategy map, the company usually does a great job of providing data for its leadership team on outcomes. When looking at the strategy map in a monthly management meeting, the CEO will get great summary information as to where the company stands against the 3

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financial objective, “Increase assets under management” (out of the company’s financial systems) or on the customer objective, “Provide high quality experience” (customer satisfaction survey data from the call center or retail locations). Where the management process falls down both from a process and BI system perspective is what happens when the organization tries to report on driver information. For an internal process objective such as “advance strategic account management,” the BI system does not translate the text in the customer records fields in the CRM system to determine if account managers are making the right number of “touches” in the field with their key accounts, and does not measure the sentiment of a voice-to-text record from the call center to determine if a customer from a specific account is happy with their account team. For a learning and growth objective like “Develop next generation of leaders”, the BI platform does not link to data about how much training the young leaders’ program has conducted, since this sits on the training manager’s desktop. As a result, there is often a lot of scurrying around behind the scenes to resolve this information gap by conducting manual analysis and hard-coding this into the monthly management report in the BI system. More often than not, however, the leadership team receives a report that takes them back to square one. They get lots of transactional “after the fact” data, with no perspective on how they can change behavior to influence these outcomes. The organization is back to that old BI analogy, “it’s like driving a car by looking only in the rear view mirror at where you’ve been, not where you’re going.” Even worse, the leadership team does not even realize that the driver information in the system or the report most likely does not have the same integrity or comprehensiveness available in the outcomes information, leading them to make poor strategic decisions based on faulty operational and tactical data.

A Better Management Process Enabled by New Performance Management Solutions
Imagine a different scenario. Envision an architecture where the BI platform is not constrained by looking only at transactional data, but can also access, analyze and present content from a variety of sources, such as documents, emails, websites and blogs. This integration of new information sources enhances insights and decisions that are derived from the intelligence gleaned from these platforms. In the case of the investment management firm’s outcomes information, a report on the status of the measures associated with the financial objective “Increase assets under management” will include not only the historical information out of the company’s accounting systems, but also will contain the financial forecast out of the organization’s CRM system, along with associated commentary about certain major segments or opportunities based on an analysis from major retail investment web sites using customer sentiment about the company’s prospects and products. The customer objective to “provide high quality experience” covers both the customer satisfaction information from existing company call center or retail channels, and also provides “fuzzier” content such as commentary from blogs or industry Web sites about how the company ranks in overall experience quality relative to its competition. The impact is even more significant in the driver areas. For the “advance strategic account management” objective, the company is now able to measure account manager activity against key accounts by measuring frequency of customer communications through e-mail and phone records, and can also determine if the marketing team is sending out new product documents and marketing offers to the correct URLs to maintain a high frequency of communications with key accounts.

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In the case of the “develop next generation of leaders” objective, the company is able to measure this group’s performance in specific leadership development activities, as well as defining how well they’re performing on their most recent projects by searching their ratings on recent project reviews saved on their managers’ desktops.

The Impending Performance Management Revolution
This may sound great, but as a seasoned professional in the BI field, you are probably thinking this scenario sounds like wishful thinking. Part of the reason for that is until very recently the technology simply did not exist to support this management process. Over the past couple of decades, dual information architectures have evolved for corporate information analysis. For structured content, most companies now use a traditional analytic infrastructure: transactional source systems feeding operational data stores, data warehouses, and/or data marts, with a BI application sitting on top to present and analyze the information. For unstructured content, companies maintain a parallel environment with document files and other content stored in a content, records, or document management system, usually with some kind of portal interface with search functionality that allows users to locate the content they are searching for. This bifurcated architecture developed because no one could figure out how to integrate the precision of SQL with the fuzziness of search. You could either ask “What?” (a precise query) or “Why?” (an exploratory question), but you could not ask both questions using the same platform. The next generation of performance management solutions combines the functionality of both types of information access without eliminating the benefits of either. The magic happens in the data integration layer, where content that historically did not source well into a database can now be transformed and loaded into a format that fits better into a traditional analytic environment. In addition, information presentation is also evolving to provide new tools to query across all content types to locate the most relevant information, to see patterns in seemingly unrelated data, etc. Once this trend becomes more mainstream, it will only be a matter of time before performance management applications will allow cleaner linkages between business activity and business outcomes: the holy grail of performance management.

Next Step
This paper has focused on why you need to look for solutions that unify access to all types of information in analytical applications such as BI and BPM. To learn more about how you can gain these advantages today, please explore these additional online resources: A white paper that explains unified information access: “Agile Enterprises: Accelerating Information-Driven Business Processes” A webinar, “How 6 Companies Transformed Information Management with UIA,” featuring Enterprise Strategy Group Senior Analyst Brian Babineau with Attivio’s CTO Sid Probstein and Solution Architect Reid Craig A short video featuring Forrester Research's Matthew Brown, VP and Research Director, and Boris Evelson, Principal Analyst, explaining the business benefits of unified information access and why companies need to take steps now

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About Attivio
On-demand insight is critical to the success of your business, but the information that decisions and processes depend on is created and stored in many formats - databases, spreadsheets, documents, emails, blogs, and more. Attivio provides the solution to this long-standing problem of information isolation by integrating search, business intelligence and process automation capabilities to provide answers and intelligence – not just data. With Attivio’s Active Intelligence Engine™ (AIE), users retrieve and analyze all types of content and data with one simple, search-style query or via reports and executive dashboards.
AIE’s dynamic new approach to unified information access features rapid development, true

incremental scalability and a tiny footprint that can be easily embedded in other products and applications. Business and IT leaders, system integrators and independent software vendors partner with Attivio to address today’s global business imperatives - uncovering insights that drive innovation and reveal new opportunities, mitigating risk and containing cost. Please visit attivio.com for more information.

Footnotes
1. 2. Gartner Research, Inc., EXP, January 2010 Kit Fai Pun and Anthony White, “A performance measurement paradigm for integrating strategy: A review of systems and frameworks,” International Journal of Management Reviews (March 2005) 3. Robert S. Kaplan and David P. Norton, “Mastering the Management System,” Harvard Business Review (January 2008) 4. Palladium Group, 2007

Prepared by:
Attivio, Inc. 246 Walnut Street Newton, MA 02460
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