What is performance management?

Updated: 2008-08-21

Performance management includes the processes used to manage corporate performance (such as strategy formulation, budgeting and forecasting); the methodologies that drive some of the processes (such as the balanced scorecard or value-based management); and the metrics used to measure performance against strategic and operational performance goals.

Performance management also comprises a series of analytical applications that provide the functionality to support these processes, methodologies, and metrics, targeted at strategic users and corporate-level decision-making.

The next article, The Role of Performance Management in Organizations, is from the book The Rational Guide to Planning with Microsoft Office PerformancePoint Server 2007, by Adrian Downes and Nick Barclay.

PerformancePoint Server: three capabilities, one integrated solution for performance management

Microsoft Office PerformancePoint Server 2007 builds on the familiar Microsoft Office environment and Microsoft SQL Server 2005 to deliver a comprehensive solution that includes the following three critical components of performance management.

• Monitoring: Scorecards, dashboards, and key performance indicators (KPIs) help drive accountability and alignment across your organization.

• Analytics: Integrated analytics help you quickly move from monitoring information to analyzing it to sharing it throughout your organization.

• Planning: A flexible framework offers powerful business planning, budgeting, and forecasting and management reporting functionality that supports critical business processes and strategic decision making.

How is performance management different from business intelligence?

Business intelligence (BI) includes the processes and applications that support better business decisions. Performance management is an extension of business intelligence with the primary focus to manage corporate performance such as strategy formulation, budgeting and forecasting.

Discovering what to monitor, analyze, and plan

The expected result of implementing a performance management system is that everybody in your organization sees the decisions they make in the context of the big picture, and every decision is aligned with company goals and strategy. The following illustration shows a process that a company may experience from company mission statement to key performance indicators.