While there has been significant interest and adoption in performance measurement and management software by organizations over the past decade, technology still remains one of the most misunderstood and badly managed areas of performance measurement.
Many organizations have failed and some are still failing to achieve the intended results from their measurement-related technology implementations. This is so because the majority of business leaders view technology as a system itself. What they fail to understand is the role of technology in transforming performance measurement and management.
Technology plays an important role of supporting the performance measurement system. As long as the organization’s performance measurement system is bad, business leaders should never anticipate technology to make it good. Business leaders who are always in search of a quick fix (believing that investment in technology will solve all their measurement problems) without fully understanding the focus, context, interactivity and integration of performance measurement are bound to have their fingers burnt sooner or later.
As organizations evolve from having too little data to having too much of it, the challenge on them is to make sense out of this data in order to improve decision-making. Unfortunately, many business leaders are not interested in taking the necessary time required to transform measurement data into insights, insights into knowledge, and knowledge into wisdom that aids strategic decision-making and drive business performance.
Because they don’t want to be involved, automation becomes the answer. Instead of making decisions based on real knowledge and social aspects, software is allowed to take over and do the thinking. These business leaders join the bandwagon of software implementations (scorecards, dashboards, business intelligence and analytics) that provide little or no insights.
Although technology plays a critical role when it comes to collecting, storing and analyzing vast amounts of data, it falls short when it comes to interpreting the data for the purposes of sound decision-making. This is where the human element of performance measurement comes in. Adopting and implementing technology will not solve problems that lie within the organization’s measurement system.
Automating a broken process often results in an automated broken process. What is important is for business leaders to understand that delegating decision making to analysis tools at the cost of good human judgement is potentially damaging. It is also important to note that every performance measurement-related technology has limitations.
Performance measurement and management technology is effective only if it is capable of turning measurement data into insights, knowledge and wisdom that can be used for evidence-based decision-making. The purpose of technology and the organizational culture both play a critical role if the implementation is going to be successful. Business leaders must create a platform that promotes positive adoption. If people view the measurement technology as a performance monitoring tool aimed at punishing them if they miss targets, then it is most likely that the adoption will be poor.
What then is the proper role of technology? Measurement technology helps people positively deal with business difficulties and the explosion of big data through data mining which produces insights that aid decision-making. Furthermore, technology also helps people perform various tasks they cannot do effectively themselves or do inefficiently. For example, technology can measure more, more quickly; can automate data collection; reduce data handling errors; perform “what-if” analysis; facilitates simulation and predictive modelling as well as present data in almost any form.
Data from measurement systems must be used to create dialogue on performance measurement. Overdependence on technology may lead to poor identification of the critical few performance measures, poor differentiation from the many unimportant measures and poor performance management. For example, if any organization has data on almost every transaction with its customers, this does not mean that relationships will improve.
Fostering a culture focused on real customer relationship improvement is more social game than technical. Technology solutions will not provide the desired results unless the social and organizational enablers are in place.