Davidaxson Wp Justifyperform

PREDICTIVE INTELLIGENCE

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Justifying Investment in Performance

Management Systems

It’s not just smoke and mirrors!

Common sense tells you that investing in performance management systems

is worthwhile, but how do you build a compelling business case? In an article

in the Wall Street Journal on 9/11/06 Carol Hymowitz commented that

“Many CEO’s who don’t want to step aside still rely on an antiquated strategic

planning process that often doesn’t help them make better decisions faster.”

For many managers the last four words, “make better decisions faster” are the

reason for investing in performance management. Today’s ultra competitive,

volatile and uncertain markets demand that managers are able to make high

quality decisions in real time. Traditional static budgeting and reporting

processes that rely on the general ledger or ERP system to drive monthly or

quarterly processes are increasingly seen as obsolete. Performance management

systems provide a set of tools that enables managers to structure their

performance management processes to the rhythm of their business not just

to the accounting calendar.

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Of course, few executives will green light a major investment in new technology

solely on the promise of potentially better decision making – though maybe

some should! So how do you put a value on better, faster decision making or

more accurate forecasts? The simple answer is you can’t in the traditional sense

of building a straight cost benefit analysis but as with many other types of

investment such as R&D, marketing, and training it is possible to build a

compelling case that combines real productivity gains with measurable

improvements in effectiveness. The good news is that performance management

investments can be justified in a more tangible way. The key is to build the

argument around both the objective: “better decisions” and the process:

“performance management”. Based upon my experience working...