Analytics versus Performance Management – Does Anyone know the Difference?

GaryCokins
Posted by GaryCokins

One of the fun but also frustrating aspects of enterprise performance management is dealing with the confusion about what it is and is not. Debates abound among IT analysts, management consultants, business journalists and software vendors – just to name a few groups.

I like to debate. That is the fun part. In a blog by Muthu Ranganathan, the SAP product manager asks the question echoed in this blog post’s title.

In my opinion Muthu tries to oversimplify this topic by stating that “analytics is the past, and performance management is planning plus analytics.” I discuss this in my prior blog “Rearview Mirrors or Windshield.” I think he underestimates the role that analytics plays in analyzing the future. Analytics is not just about slicing and dicing historical data. What do I mean?

For example, when you integrate various performance management methodologies, such as customer relationship management and rolling financial forecasts, and imbed each of them with analytics; one can quickly evaluate the impact with what-if scenario trade-off analysis of various marketing campaigns and differentiated sales service-levels or offers to see the financial impact both short-term and long-t…

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One of the fun but also frustrating aspects of enterprise performance management is dealing with the confusion about what it is and is not. Debates abound among IT analysts, management consultants, business journalists and software vendors – just to name a few groups.

I like to debate. That is the fun part. In a blog by Muthu Ranganathan, the SAP product manager asks the question echoed in this blog post’s title.

In my opinion Muthu tries to oversimplify this topic by stating that “analytics is the past, and performance management is planning plus analytics.” I discuss this in my prior blog “Rearview Mirrors or Windshield.” I think he underestimates the role that analytics plays in analyzing the future. Analytics is not just about slicing and dicing historical data. What do I mean?

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For example, when you integrate various performance management methodologies, such as customer relationship management and rolling financial forecasts, and imbed each of them with analytics; one can quickly evaluate the impact with what-if scenario trade-off analysis of various marketing campaigns and differentiated sales service-levels or offers to see the financial impact both short-term and long-term. This is about the future, not the past.
I also argue with Muthu’s claim that “performance management is a process.” It is not. And it is not a system or software, although software technology supports the various integrated methodologies. The full vision of performance management is the integration of all the methodologies as a framework, each embedded with analytics — especially predictive analytics.
Debate is the fun part. The frustrating part is the slow adoption of organizations to embrace this integration. Too many organizations see power in having a solid foundation of transactional business systems, like an ERP system. That is only the starting line. The real race is to transform and model this raw data into information and business intelligence to drive better decisions that are truly value creating.

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