Performance management (PM) can be taken to mean a combination of terms, including: budgeting, planning, reporting, score cards, and business intelligence. Organisations often purchase one of the performance management processes only to discover it has failed to deliver.
The speed, complexity and global nature of business today, presents challenges for even the best managed organisations. To adapt to this constantly changing environment, companies require broad deep access to critical information in real-time. They need cross-departmental integrated views of operational and financial drivers and results to support company wide collaboration, enabling them to harness the best thinking possible no matter where in the company or the world it originates. They must gain firm control over their financial reporting and disclosure process to provide more information faster to satisfy the requirements of regulators, shareholders and other stakeholders. This is where performance management software can help lower total costs of technology ownership.
Performance management is a term that refers to a closed-loop process, covering the setting of corporate strategy, planning for alternatives, allocation of resources, reporting, forecasting and feeding back into the corporate strategy. Performance management software is also a term that helps organisations optimise their performance through analysis of business processes and also provides an analysis of the company’s performance and provides tools to enable forecasting.
The most commonly used performance management solution is budgeting and planning which provides the user with reports that can be combined with a strategic plan to deliver results.
Strategy is often something that is kept secret for fear of the competition getting hold of it, however, the disadvantage of this is that some senior managers may not know their own company plans. Studies have shown that companies who state their objectives and perform against them are often rewarded in the market than those who do not. Therefore, senior managers who are charged with making planning and budgeting decisions should be aware of their company’s corporate strategy.
The five stage process to achieve performance management perfection:
1. Define long and short-term objectives
2. Identify strategies and their impact, noting that in some cases one strategy may adversely impact on another.
3. Develop tactics and hi-level operational budgets
4. Assess and mitigate risk
5. Check the strategic plan for completeness and finalise
Once the above stages have been completed, the plan is ready to be published. The budgeting and planning process is now simply the allocation of resources to achieve the high-level operational budget.
This is why many companies are turning to Performance Management Software to help them improve their budgeting and planning process.
