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Level 3 – Fact-based decision-making |

Level 3 – Fact-based decision-making

Description

At the third maturity level a common organizational culture starts to evolve. The management, in particular, begins to appreciate the benefits to be gained from performance management. People in the organization start to adapt fact-based decision-making, and their decisions and actions are based on their understanding of performance management systems. People are starting to understand better the factors that have an impact on the business. The performance management initiative gets support from top management. The organization begins to form a performance management competence centre where specialists from both business and IT are joined together to meet the needs of the end users.

The organization has a common set of standards and vocabulary. The shared terms and metrics are standardized across the organization. From the technology point of view, one characteristic of this level is that there are data warehouses that have more actionable and better quality data. The number of data marts is decreasing, or at least they are less important. The organization consistently collects, cleans, standardizes and stores data from a variety of sources. The collection of financial data, in particular, is highly automated. Information is seen as a necessity for improving performance and enabling organization-wide initiatives. This level sees the beginning of organization-wide technology management and architectural design. Technological performance management solutions are especially designed to support the implementation and monitoring of strategy. The importance of the organization’s strategy in performance management is increasing and it defines the key performance indicators. Performance management is used to communicate and monitor strategy and performance management instruments such as metrics and management dashboards are used for senior and middle management and, indeed, all employees.

Key Capabilities

  • Top management support
  • Management dashboards
  • Common business vocabulary and master data
  • Strategy execution and monitoring
  • Planning and forecasting
  • Key Performance Indicators
  • Data warehouses

Next Steps

  • Start building a culture of measurement and accountability
  • Train end-users to use data properly to make strategic and tactical decisions
  • Train and encourage top management to use analytics
  • Create a performance management competence centre
  • Use data warehouse solutions to improve the quality of data
  • Create trend analyses and alternative scenarios based on performance data
  • Define and communicate organization’s goals and objectives effectively
  • Use scorecards and dashboards to connect employees to organization’s strategy

Maturity Levels

Components in Detail

Component Description for level 3
Communication Business goals are presented; strategy is communicated through metrics, scorecards and dashboards
Information Data quality becomes better; collecting financial data is highly automatized; data warehouses have timely data; common data model and business vocabulary; better data availability; people have access to data they need in their work
Intangible assets Common organizational culture starts to evolve; people are adopting fact-based decision-making; factors affecting business are understood  better; support from senior management; projects become more strategic; competence centre is being formed
Management and responsibility Metrics are defined for owners; program manager; management roles and structures becomes more formal; data ownership and responsibilities are defined
Methods and tools Assortment of various methods in use; organization recognizes no single method can cover PM; standardized set of project and development methods and tools
Performance KPIs that are derived from organization’s strategic goals; performance measurement is aligned with strategic goals; visualization of data via dashboards and scorecards; KPI scorecards; performance-based component in bonus or compensation plan; risk management
Scale and scope Moving outside finance operations; performance is managed at organizational and individual levels; organization-wide PM strategy and goals
Strategy and Business Particularly supports strategy execution and monitoring; indirect benefits are gained through better quality data; cost savings; promotes fact-based decision-making; funding from business units on a project basis
Technology Data warehouses; the importance and number of data marts is decreasing; great number of different technologies; initiatives for organization-wide technology management and architecture targeting to multi-layer platform; implementation can be repeated and moved elsewhere

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