Hyperion Expert Insights

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Wed, 27 Jun 2007 07:27:45 -0700

My blog has moved! As part of the transition from Hyperion to Oracle, as of now my weblog can be found at:

http://blogs.oracle.com/frankbuytendijk/

The layout has changed, but the topics wont. I will be commenting on a variety of topics around business intelligence and enterprise performance management, on a weekly basis.

So I hope you will keep reading my weblog, and I look forward to your comments...

frank

BI = Blissful Ignorance, Part II

Wed, 27 Jun 2007 01:53:34 -0700

In august 2006 I wrote about my new car, and that it was ironic that -- as a performance management professional -- the first I did was look for the button to switch off all that information on the dashboard on fuel consumption. I just dont want to know.

I just bought another car, just for fun. Its a 21 year old Citroen 2CV. Heres a picture of the car.

Would you like to see the dashboard? Here it is...

I guess today you could call it minimalistic design. But who cares about the dashboard? I get all the experience I need not by looking at the speed, but by feeling the road going underneath me, the wind coming through the open roof, and from the steering wheel in my hands.

frank

Performance Networks, A Small Survey

Thu, 21 Jun 2007 00:58:46 -0700

Last week I did a webinar on the topic of Performance Networks, my favorite topic lately. For those interested, you can download it through this link: Performance Networks: Understanding Stakeholder Dynamics and Business Indicators

In the webcast we ran a little poll with some interesting results. In fact, much more enlightened than I would have thought. On one hand side it means that my research is perhaps not as weird as one would think: go figure, its actually happening (I mean, ofcourse, where else would I get it from). On the other hand, probably the webinar had some kind of self-selecting mechanism, only the ones ready for more advanced forms of performance management (PM) would invest the time to listen to a webcast on the subject, so the sample has a bias. Lastly, the survey was not really scientific, it is pretty clear what the advanced answer is. So, with these sidenotes, here is a loose summary of the results.

Question 1: What is the main purpose of PM in your organization?

Only 8% answered that with financial control, and 12% with external reporting. The most popular answers were operational control with 32% (which means PM would be expanding and leaving the realms of finance) and 48% answered driving strategic behavior of the organization and employees. Wow.

Question 2: What describes your performance measurement best?

21% still responded it was a set of performance indicators across the business without obvious structure. 9% stated it was a structured set of performance indicators, but 45% pointed out it was not only structured, but also linked to strategic objectives. 24% claimed it was a structured set of indicators linked to stakeholder needs and contributions. That 24% sounds very high to me.

Question 3: Whats the management control approach in your organization?

46% of respondents said it was a top down process, prescribing vision, mission, values and purpose. 11% stated performance indicators were used to monitor implementation of objectives, and 42% involves employees regularly in decision making activities. I do believe that participative decision making indeed is the common model in many western countries.

Question 4: Knowledge of stakeholder relationships

This was the beef of the webinar, using PM to improve stakeholder relationships. 11% stated they had an incomplete understanding of stakeholder relationships, while 85% claimed they had a partial understanding. 3% claimed to have a complete understanding of these relationships.

Well, with the content of the webinar, and the paper you can download in previous posts on this weblog, perhaps the understanding of stakeholder relationships is improved!

frank

BI and EPM in Japan

Fri, 08 Jun 2007 08:11:32 -0700

For a few years now, I have had this thought in the back of my mind that I would like to research BI and EPM deployments in Japan. I have often read in the press and in analyst comments that BI and EPM are lagging in adoption in Japan, and it always did strike me as somewhat odd. How can the country that has had such a massive impact on global management practices on quality management and operational management, NOT be at the forefront of performance management. Are Japanese managers not interested in numbers? Not that I have seen the times I visited the country!

I recently read a well-known paper on control principles, by Ouchi (*), a famous management professor. He writes:

... Japanese firms rely to a great extent upon hiring inexperienced workers, socializing them to accept the companys goals as their own, and compensating them accordingly to length of service, number of dependents and other nonperformance criteria. It is not necessary for these organizations to measure performance to control or direct their employees, since the employees natural (socialized) inclination is to do what is best for the firm. It is also unnecessary to derive explicit, verifiable measures of value added, since rewards are distributed according to nonperformance-related criteria which are relatively inexpensive to determine (lenght of service and number of dependents can be ascertained at relatively low costs).

The article is from 1980, and much has changed, but this is a very interesting view. Perhaps BI and EPM principles are not universal, and can be rejected, which is not the same as not adopted. There are other ways of getting grip on an organization, in this case much more behavioral of nature.

Is it coincidence that the concept of Keiretsu is Japanese as well? Not only can we socialize our employees to adopt the overall objectives as their own (as Ouchi writes), but we can do the same with our complete business environment (what Keiretsu stands for).

Interesting... exactly the topic of my research these days. Unfortunately I am not an expert in intercultural management. Does anyone care to shed some light on Keiretsu style BI and EPM.

frank

(*) Ouchi, W.G., (1980), Markets, Bureaucracies, and Clans, Administrative Science Quarterly, Vol. 25., No. 1, pp. 129-141.

One Version of the Link

Sun, 20 May 2007 03:36:22 -0700

Oops. I am sorry. The link that I posted to download the One Version of the Truth white paper didnt seem to work. Here is another link that should work:

http://www.hyperion.com/products/immersion/one_version_wp_form.cfm

I welcome your feedback!

frank

One Version of the Truth

Wed, 16 May 2007 11:06:51 -0700

Oh, and by the way, here is another paper. It is called The Myth of the One Version of the Truth and you can download it by clicking on the link.

In the field of data warehousing and business intelligence, the problem most projects deal with is trying to create the one version of the truth. Rarely has it been successful, and most efforts have been misguided.

The reason why it is such a difficult problem is the fact that we look at it from a vertical or hierarchical point of view. Senior management doesnt really know the subtleties of differences in definitions of terms between departments, and through the hierarchy, the managers dont really get to know what their peers exactly mean. No wonder that senior management sees apples and oranges when IT tries to consolidate all different versions of the truth, and why managers fight this consolidation as they dont see their issues reflected in a bland compromise of a single definition of a term.

If we look at the problem from a horizontal or value chain approach, the problem is remarkably (or dare I even say: disappointingly) easy to solve.

The white paper explains how.

frank

Introduction to Performance Networks

Wed, 16 May 2007 02:03:19 -0700

I just finished writing a paper. Due to its length and format, it is less applicable as an Expert Insight on http://www.hyperion.com/leaders/, yet I believe it is very interesting for you (assuming you are a performance management professional, if you take the time to read this). It will make you think very differently about performance management!

I have been working on the concept of performance networks, as I believe there is great value in using performance management to manage relationships between stakeholders, and not only within the business, towards a single stakeholder. Interestingly enough, there is not much thought leadership available on this topic.

Here is the summary of the paper:

There is a gap between the state of performance measurement and much of the innovation taking place in business models. Where business models are becoming increasingly networked due to outsourcing and various forms of inter-organizational collaboration, performance measurement remains a very hierarchical exercise. This paper discusses the use of transaction cost economics (TCE) in performance measurement. The paper introduces TCE - which is not traditionally well-known by performance management professionals - and applies it to performance measurement. It proposes a framework of three levels of relationships organizations can have with their stakeholders; transactional relationships, added-value relationships and joint-value relationships, and how to use these three levels to define better performance indicators.

You can download the paper here:

Download tce_in_pm_fabuytendijk_weblog.pdf

I will be writing much more on this topic in the weblog.

frank

Conceptual Thinking

Wed, 16 May 2007 01:46:33 -0700

Recently I had a chat with a reader of the blog (thank you P.!) who commented the blog was useful, but sometimes a bit too conceptual of nature. Blogs are just read in a casual way, and not studied.

I agree, and I will try to better my life there ;-).

However, I would also like to point out how important conceptual thinking is. A good concept helps understanding reality in two different ways:

A good concept helps you perform a gap/fit analysis on reality. If you are evaluating a certain situation, the concept helps you figure out which bits are still missing and which bits are redundant.
A good concept helps you broaden perspective. If you understand the concept behind something, you can define other applicabilities as well.

Ok, examples. Lets take for instance a set of metrics within an organization. A concept for creating the right metrics is the balanced scorecard (there are many frameworks, I am just picking this one because it is so well-known). So if you need to evaluate the metrics you have, mapping them to the balanced scorecard framework tells you if you are missing metrics in vital areas, such as growth/learning, or if you perhaps have too much metrics in another area, such as process.

And if you understand how to apply balanced scorecard principles on internal management metrics, you can understand how the same principle applies in other areas. For instance, you can use the same framework in managing supplier relationships (supplier scorecard), or creating a brand promise to customers using the balanced scorecard. Or... or... or... a good concept, boiled down to the essence, can be used in many different ways.

Hope this was not too conceptual...

frank

Performance Accountable Organization

Wed, 09 May 2007 10:00:21 -0700

Wouldnt it be great? Everyone is accountable for his/her performance and contribution to the organization. Everyones added value is clear, and for every target there is a clear owner.

It is the mantra for enterprise performance management, and it is a beautiful vision.

One issue: it doesnt work that way.

If organizations drive accountability too deep, people create their own agenda. Many of todays number games are based on accountability. Heres what happens:

(1) Never promise too much. Play down stretch goals

(2) Always build in cost, risk and virtual profit margins in everything you do

(3) Dont care about someone elses performance. Youre not rewarded for it, it distracts your attention and hey, if they mess up and you dont, it makes you look good.

The drive for accountability leads to people losing buy-in in the shared objectives of the organization, and creating their own objectives. Local optimizations. Mediocre performance.

People turn into suppliers of performance, instead of business colleagues with the same goal. Relational behavior is driven back to transactional behavior.

It may sound weird coming from a performance management professional, but perhaps we should measure less, and trust more. Performance management should not be about control, it should be about feedback. And the feedback tells you if you are doing well, so you take the next set of decisions with confidence and with the organizations goals in mind. And the feedback tells your boss you are trustworthy.

That would be a shock in most organizations.

Yet more and more I get convinced that the one keyword of performance management and BI is not control, but is feedback, probably leading to a much higher level of control. Getting grip by letting go.

Someone called me a hopeless romantic in a panel discussion a few weeks ago. It was the nicest compliment I could think of...

frank

Dealing with Dilemmas, Last Part

Fri, 27 Apr 2007 04:44:46 -0700

In previous posts, I shared a lot of thoughts around how to deal with dilemmas. There will be lots more of that later, I hope, but for now there are a few new projects I am working on, that will feature in the blog.

A great way to end this series for now, is a few links. The papers published on http://smartbi.hyperion.com have now been translated in other languages as well. Here are the links:

France

: http://smartbi.hyperion.com/fr/index.html?id=immersion_framp;link=frank_blog

Germany

: http://smartbi.hyperion.de/index.html?id=immersion_deamp;link=frank_blog

China

: http://smartbi.hyperion.com.cn/index.html?id=immersion_cnamp;link=frank_blog

So if you want to learn about CIO Dilemmas, or if you want to learn French, German or Chinese ;-), go there!!

frank

Hyperion Solutions 2007

Wed, 25 Apr 2007 03:31:36 -0700

Between the 22nd and the 25th of May, Hyperion held its annual user conference in Orlando, attracting several thousands attendees. It was good to see so many organizations and people that are using Hyperion for a wide variety of purposes. Over 300 presentations, of which a very large part were submitted case studies, ranging from global dashboard implementations to focused strategic finance deployments, from large scale reporting to integrated risk and performance management, from operational planning to financial consolidation. It was also the begin of a new era, being part of Oracle. During the opening session, symbolically, Hyperions use of the color orange, changed in red. During his opening keynote, Thomas Kurian, in charge of Oracles middleware group, showed great passion about BI and Performance Management, and showed a very much aligned Oracle and Hyperion vision. A very encouraging start.

One observation. Even more encouraging than what was presented during the day, was the dynamic in the evening. Having gone around various receptions and dinners, I saw lots of staff mingling, whether they were wearing an Hyperion or Oracle shirts. Last year, in my blog, I came up with some metrics to show the success of Solutions 2006, heres my key metric for Solutions 2007: number of decibels of laughter in a room, while sharing a beer, a glass of wine, or just a glass of water. Whatever the target on that metric, I think we overachieved it.

Next Stop: Hyperion Solutions EMEA 2007, 20-22 May in Lyon, France.

Helicopter View

Sun, 15 Apr 2007 05:23:12 -0700

Last week, the Dutch office of Hyperion had a seminar, organized in one of the old traffic control towers of Schiphol airport. Quite an interesting location. Every attendee received a small token of appreciation, a very simple remote controlled helicopter, with the remote control only having one trigger: up and down. Changing direction is a question of playing with the trigger. The message, as intended by the local management, was clear: Hyperion would bring you a helicopterview.

I spent yesterday evening playing with the helicopter (would that count as working hours?), and it started to dawn on me there is another quite powerful parallel ,when we define the helicopter as the organization, the launching pad with the batteries to charge the helicopter as Hyperion System9 and the remote control as the discipline of performance management.

First of all, it requires a certain team. I decided to try it out together with a friend -- a very strong project manager with a background in application integration, need I say more.

Then there is the question of TCO. The helicopter set was for free (Ok, so the parallel with Hyperion software is not 100% accurate), but that doesnt mean the total cost of ownership is. I had to put for about 22 euro of batteries in it, 8 large ones in the launching pad, and 6 penlights in the remote control. So only after doing that, I started to have an idea of the overall cost.

The batteries had to be put in in a certain order, and I made a mistake doing that at first. So understanding how to install the system really is relevant, it takes some expertise (it helps to read the manual, blush blush).

So, Ok, after we had finished the technical part of the project, we were ready to start flying, to go live. We knew how to operate the system, having read the manual, but now it was time to move from theory to practice. Yes!! The helicopter went up in the air, it worked!! But did it mean we had it under control? Hardly... Like with an organization, pushing the buttons doesnt mean we fully steered it. The helicopter partly had its own path in mind, often in an unintended direction (Tree! Tree!). The buttons had impact, but it wasnt always entirely clear what impact exactly. We quickly found out that by letting go of the controls a bit, we increased our control. What a discovery!!

Also, the battery power isnt endless, the helicopter had to be recharged in the launching pad after about 2 minutes. It needed a break once in a while...

Bottom line: performance management is all about timing, about knowing when to push a button and when to let go, and about recharging the battery once in a while. And when you do a good job, people will stop and admire what you are doing...

What is an organization?

Tue, 10 Apr 2007 08:28:53 -0700

Sometimes it takes 20 years or so to return to the basics you learn in school, or maybe I am just not that fast. Recently, I started toying with the question What is an organization?, and I only now feel this question has become meaningful.

Effective Performance Management will look different,based on how you view an organization. Many of the current methodologies are aimed at an organization as being a vehicle to maximize shareholder value. Although this definition may work for many people, somehow it doesnt work for me. I need a more inspiring definition.

The most common definition of an organization, if you look around a little, is a group of people, sharing the same objectives. That one is better already. Its about people and what they would like to achieve. One problem though: shared objectives may sound logical in the definition, but in practice, the various stakeholders rarely share the same objectives!

Ive recently been studying the field of transaction cost economics (TCE) a bit, and found a very interesting definition. According to TCE an organization consists of all activities where the costs of internal coordination are lower than the costs of market transactions.

What I like about this definition, is that it is open. The definition suggests that organizations interact with other organizations via markets. This definition suggests that next to the command and control model (how our performance management currently looks, usually), there is the need for an approach to collaborate and communicate. TCE takes a very cost based approach, but we can easily broaden that focus, to also include innovation, market access, economies of scale and other themes that are important to business. Where it is easier or better, or more efficient to interact with others, than to coordinate activities yourself, relationships should be forged.

This all leads to the definition that I like best, it defines an organization as a katalyst between stakeholders:

An organization is a unique bond between stakeholders, through which each stakeholder can achieve objectives, that it could not achieve alone.

In other words, stakeholders need each other. They may not have the same objectives, but through the organization, they align them. Some bring capital, others supply labor, others are business partners, or for instance society provides us with an infrastructure to do business. This definition requires quite a bit of change in our current ways of thinking about performance management.

What is your favorite definition of an organization?

frank

Atoms of Business Intelligence

Tue, 10 Apr 2007 08:20:14 -0700

Check out this link to www.taodata.com. Author Robert Mehldahl comes to the conclusion that OLAP lies at the very foundation of financial information. He says that the accountants journal has always been an OLAP historical database - unfortunately heretofore implemented with fifteenth century technology.

Interesting line of thought...

frank

Dealing with Dilemmas Part IV

Mon, 19 Mar 2007 05:58:43 -0700

In Dealing with Dilemmas Part I, Dealing with Dilemmas Part II, Dealing with Dilemmas Part III and Kobayashi Maru, I did discuss -- well obviously -- how managers should deal with dilemmas.

A dilemma is a difficult choice of some sort. Managers typically dont like dilemmas and feel trapped. In many cases this is not necessary, many dilemmas turn out to be false dilemmas. We do not have to EITHER outsource OR not, centralize OR decentralize, control costs OR fuel for growth. In many cases we can do both at the same time. Sometimes because there is a synthesis possible between the two, as I did describe on on our BI Website. But in many more cases the dilemma turns out to be false because no one said it had to be 100% either/or. You can outsource a little bit, but not everything. You can standardize, but not on one single platform, etc you get my drift. IN general, not all budget you have (in terms of time and money) has to be spent on one choice, you can invest in a portfolio of choices. Each of the components in the portfolio addresses a part of the desired result, without hitting the dominants disadvantage of the either/or option. In other words, you decompose both sides of the dilemma into smaller parts, and recompose them not as a single either/or choice, but as a set of smaller and/and choices, avoiding the false dilemma altogether.

There is actually quite some economic background in portfolio theory. Check this link.

Best regards, frank