Finally … From Performance Management to Performance Optimization

February 4, 2009
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I have periodically stated that I wish that whoever gave the name “Performance Management” had given it the better title of “Performance Improvement.” In a recent article on the CNN website there is reference to report by the Aberdeen Group, an IT analyst research firm, which ups the ante and describes it as “Performance Optimization.” The report is titled “Enterprise Performance Optimization: Understanding the Customer-Focused Organization.”

The CNN article says:

the Aberdeen study “found that 69% of survey respondents believe that gaining a deeper understanding of the link between back-office operations and customer service is a top strategic approach for reducing cost and improving the customer experience. … These top performing organizations are increasingly viewing enterprise performance from a holistic standpoint which blends front and back office operations by leveraging best practices in each function across the entire organization”

I like the term “holistic” because there is a misconception that performance management is a narrow CFO-driven initiative restricted to dashboard dials and better financial reporting. It is much more.

And I really like the term “


I have periodically stated that I wish that whoever gave the name “Performance Management” had given it the better title of “Performance Improvement.” In a recent article on the CNN website there is reference to report by the Aberdeen Group, an IT analyst research firm, which ups the ante and describes it as “Performance Optimization.” The report is titled “Enterprise Performance Optimization: Understanding the Customer-Focused Organization.”

The CNN article says:

the Aberdeen study “found that 69% of survey respondents believe that gaining a deeper understanding of the link between back-office operations and customer service is a top strategic approach for reducing cost and improving the customer experience. … These top performing organizations are increasingly viewing enterprise performance from a holistic standpoint which blends front and back office operations by leveraging best practices in each function across the entire organization”

I like the term “holistic” because there is a misconception that performance management is a narrow CFO-driven initiative restricted to dashboard dials and better financial reporting. It is much more.

And I really like the term “optimization” even though it can be dismissed by some managers as theoretical or impractical to achieve. Enterprise optimization can be described as the pursuit and realization of an organization’s strategic objectives with the least amount of total resources in an ever-changing environment. This pursuit maximizes long-term shareholder wealth creation through a deep understanding of customers.

Some confuse enterprise resource planning (ERP) software systems as the ultimate solution to enterprise optimization. It is not. ERP as a technology-based tool can contribute transactional data, but the management actions of planning, simulation, defining alternatives, analyzing them and selecting an optimum outcome via decisions that managers are responsible for is much broader. This can only be done by integrating the various methodologies of the performance management framework and embedding business analytics, especially predictive analytics, within each methodology – capabilities that software from my employer, SAS, does so well.