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“What’s next?” is the perennially insistent question in information technology. One common observation about the industry holds that cycles of innovation alternate between hardware and software. New types and forms of hardware enable innovations in software that utilize the power of that hardware. These innovations create new markets, alter consumer behavior and change how work is performed. This, in turn, sets the stage for new types and forms of hardware that complement these emerging product and service markets as well as the new ways of performing work, creating products and fashioning services that they engender. For example, the emerging collection of wearable computing devices seems likely to generate a new wave of software/hardware innovation, as my colleague Mark Smith has noted. This said, I think that the idea of alternating cycles no longer applies. It would be convenient if we could assign discrete time periods to hardware dominance and software dominance, but like echoes as they fade, the reverberations are no longer as neatly synchronized as they once were. Moreover, adoption and adaptation of technology by consumers reflected in the design of work, products and services always lags – and lags in different ways, further blurring the timing of cycles.
Adding to the messiness, technologies enter the market and evolve in ways that seem designed to embarrass pundits. In the 1990s, Bluetooth was supposed to be the next big thing for wireless connections; Wi-Fi wasn’t on most radar screens. Today, Bluetooth has an important role, but Wi-Fi is bigger. Some heralded technology breakthroughs sink without a trace. Sadly, that has been the case for multidimensional spreadsheets like Javelin and Lotus Improv. Other technologies appear, are used in trendy ways and then become mainstream. Instant messaging and chat immediately replaced passing paper notes in class for teenage girls. While somewhat passé in this role today, they have become an essential tool in the workplace. Of course the rate at which technology is incorporated into mainstream business use varies greatly. The Internet became central to business and commerce at an astonishingly fast pace while earlier inventions such as voice mail took about a decade to become universal.
Software has dominated as a driver over the past two decades, but devices and business process changes have become increasingly important in amplifying the impact and producing knock-on effects that spur innovations of all sorts. Smartphones and other mobile devices might have become another Minitel except that there were programming tools and business models in place (including the absence of top-down control and regulation) that spurred ingenuity, substantially enhancing the value of these devices and making them highly adaptable to personal preferences and individual business needs. Rapid and broad adoption of mobile devices has been driving change in business software to enable companies to utilize the value of these devices. Yet there are plenty of examples of how organizations have failed to change how they conduct business. Our benchmark research finds that companies have been slow to adopt better methods facilitated by information technology for planning and budgeting, closing the books, managing the workforces or handling customer interactions. Software-driven change will come in these areas over the next decade, driven in part by a generational shift as baby boomers retire, and more attention will be paid to cognitive ergonomics and the resulting increased attention to the design of the user experience in business computing, such as gamification.
Innovation in business often takes longer to appear than futurists hope. One part of today’s answer to the “What’s next?” question includes all the things that software marketing departments have been promising over the past decade or so that haven’t come to pass yet. Usually, this is because there is some confusion on the part of vendors between “easier” and “easy.” Many innovations and enhancements in business software have made them easier to use but not easy enough for mainstream adoption or easy enough to spur process innovation or a change in management practices. One example is advanced analytics. There have been steady improvements making it possible for many kinds of users to employ them in business, but most users today require advanced degrees or specialized training (although I have some hope for new mass market tools on the horizon). Consequently, our research finds that two-thirds of companies make little or no use of advanced analytics.
Another example is in business planning. For all the discussion about changing budgeting and planning, practices have remained pretty much the same over the past two decades. One way to make planning and budgeting more useful is to make reviewing results more actionable. This could be accomplished more easily if organizations could immediately drill down into the details of the results rather than having to wait for follow-up information or debate what the likely causes might have been. Yet only about one-fourth of participants in our business planning research are able to get to the numbers behind the numbers while the meeting is under way. Improved software technology is making this easier to do. For example, many ERP vendors have changed the basic architecture of their systems to make them capable of handling transaction processing and analytical tasks at the same time. But technology alone will not make a difference. It will take a change in management and demand that periodic reviews be highly interactive to make a difference.
Even with hidebound management techniques, it’s likely that new devices coming to the market will be major sources of innovation, either those that complement existing business practices and consumer demands (which are obvious candidates for rapid adoption) or as a speculative venture. The loudest buzz is around the Internet of Things. This is an amorphous concept at the moment, and there are considerable technology hurdles that must surmounted for it to become practical (notably the limited address capacity in the IPv4 standard). Still, the concept has a good deal of theoretical appeal when one extrapolates the value already realized by increasing the scope of people-to-machine connections (such as for monitoring processes or the health of devices) and the variety and number of machine-to-machine control and instrumentation (for example, automatically tracking physical assets and optimizing machine performance by monitoring conditions).
As I mentioned earlier, wearable computing is another emerging area of innovation. Thus far, it has had more allure than demand, but that was true also for the personal digital assistant, which had a few notable flops before catching on and becoming a mass-market device, eventually to be subsumed into the smartphone. Devices are already being worn for health, entertainment and augmented reality purposes. Bracelets, fobs and glasses have considerable scope for use in business settings, for consumer applications and for wellness. Glasses and wrist devices in particular have the ability to augment the utility of any computing device as sensors or for input/output. A computer screen is rather like a keyhole through which one “looks” into the computing device. Dual screens are now commonplace because this expands the breadth of view of the user. Glasses can broaden the scope of view considerably more, improving the ergonomics and expanding the utility of any computing device. Any of these devices could augment the capabilities of software applications. They will give software designers added scope to enhance the capabilities and usability of applications.
So the answer to “What’s next?” in business computing probably is “ A lot – and sooner rather than later.” There’s a tendency to view current technology in terms of the major advances of the past. If that is any guide, today’s information technology will soon appear pitifully primitive. Consumer use of technology has outstripped that of business, in part because multiple individual needs are generally less difficult to serve than that of an organization and the tasks the technology performs usually are far less complex: They’re apps, not applications. Yet business computing is on the cusp of a fundamental shift in which devices and software are powerful enough to adapt to the needs of users. In the past, business computing was defined by the limits of information technology and required that businesses adapt to those limitations. Everything from a richer and more enjoyable (or at least less painful) user experience to the transformation of accounting systems from paper-based analogs to a truly digital ledger has the power to change for the better how businesses operate.
Robert Kugel – SVP Research
Anaplan, a provider of cloud-based business planning software for sales, operations, and finance and administration departments, recently implemented its new Winter ’14 Release for customers. This release builds on my colleagues analysis on their innovation in business modeling and planning in 2013. Anaplan’s primary objective is to give companies a workable alternative to spreadsheets for business planning. It is a field in which opportunity exists. Our benchmark research on this topic finds that a majority of companies continue to use spreadsheets for their planning activities. Almost all (83%) operations departments use spreadsheets for their plans, as do 60 percent of sales and marketing units. Yet the same research shows that satisfaction with spreadsheets as a planning tool is considerably lower than satisfaction with dedicated planning applications. But despite general agreement in companies that the planning process is broken and spreadsheets are a problem, companies seem reluctant to break the bad habit of using spreadsheets. This conclusion suggests that either switching to dedicated software hasn’t been easy enough or that the results of doing it have not been compelling enough to motivate change. Anaplan intends to address both of these issues.
Anaplan designed its software to support business planning integrated across an enterprise in a practical way that’s an attractive alternative to spreadsheets. Its HyperBlock architecture is a hybrid of relational, vertical and OLAP databases with in-memory data storage and calculation. To translate that technology-speak into a plain concept, it’s easier than ever for those trained in spreadsheet modeling to transport their skills to a dedicated planning application. Anaplan simplifies the process of creating a planning environment that can be used by sales and marketing, finance, operations – any part of a company. Individual business units can create their plans without IT involvement. Customer companies don’t have to move all plans at once to Anaplan, but when they do, integrating all of the plans into a unified company view is straightforward.
The bulk of the changes in the Winter Release are aimed at refining and improving the user experience and facilitating model creation and updates. One of the most obvious changes is in the individual user interface, which opens up with “model tiles” representing each of the plans each individual has in his or her portfolio. It’s fairly typical for individuals to participate in multiple planning activities. Our benchmark research on business planning finds that, on average, employees participate in five sets of plans. Each of these may have multiple versions, and some may have subsidiary plans to a main plan. Some plans may be current while others are no longer used and are archived. The new interface makes it easier to organize this collection, making the most important plans readily accessible. This enhancement and others that will follow reflect Anaplan’s intent to incorporate ergonomics in the design of its software.
Choosing a model opens a dashboard relevant to the specific role of the user and the plan he or she has selected. Organizations can configure the layout of the dashboard, which provides high-level summarized information and different ways of navigating into and around the details in the plan. Navigation is now role-based to enable users to zero in on only those models and dashboards relevant to their function or role. Anaplan can be configured to drill down to specific items or transactions if necessary. Doing this in a multidimensional model is not always straightforward. An Excel add-in is a must for any planning application because it provides a familiar user interface that enhances productivity while eliminating the disadvantages of desktop spreadsheet, since the individual is working with a formal application and an advanced database environment. Anaplan’s Winter Release simplifies installation of the add-in. All of these enhancements go beyond a simple “consumerization” of business software – layering a snappy gloss onto software that remain tedious to use – to provide a more satisfying working environment.
Another notable addition in the Winter Release is “intelligent mapping,” a useful way for one person to create templates of components used in a model (say, all of the costs of adding a store, doing a marketing campaign or performing heavy maintenance on capital equipment) that others can use. Since organizations tend to handle most processes in much the same way, the operational and financial aspects of those processes are likely to be modeled in almost exactly the same ways. Being able to quickly copy a useful exemplar and easily customize it to an individual’s specific needs saves time. Moreover, making it simple to achieve consistency can improve the effectiveness of planning. Using intelligent mapping needn’t be the product of a conscious effort to create a template, either. An equally likely use is when someone looks at a plan created by another business unit and sees some component in that plan that’s useful to his or her model. Intelligent mapping makes it easy to copy and modify it to suit the need.
Effective collaborative planning is a structured dialog. Structured because it involves hard numbers and a dialog because it involves a back-and-forth exchange between executives and managers to mediate between the results desired and what’s feasible. Toward that end, Anaplan has added a capability in its models it calls a “hold,” which fixes one or more values in the model while the rest are adjusted. This simplifies the process of setting month-by-month, line-by-line objectives because it enables executives to impose selective constraints (minimum or maximum values such as sales by a product line or advertising expense) while adjusting assumptions quickly to assess whether the resulting changes are realistic. Fixing and releasing holds iteratively simplifies and shortens the process of assessing specific details to achieve a plan that is workable and agreeable.
For analysts that create or support planning models, the Winter Release adds a floating formula editor. This is a small but important element because it improves the productivity of modelers – typically a constrained resource in most companies.
The new release further advances Anaplan’s strategic objective to provide corporations with a tool that reduces the amount of effort needed for collaborative planning in any part of the business and enhance the value of this planning by better aligning business unit objectives with market opportunities. Our planning research finds that companies have many plans but, other than the annual budget, very little of it connected and coordinated. Anaplan focuses on collaborative business planning as a way to differentiate its offering from budgeting tools – a mature market with entrenched competitors. Its objective is supported by the underlying architecture of the software, which is designed to lower the barriers to switching from spreadsheet planning and budgeting as well as generating greater business value from a company’s planning processes.
Having said all this, I have to add that making it easier not to use spreadsheets is necessary but insufficient to alter corporate behavior. Companies need a business incentive to change. Anaplan’s use of in-memory technology provides that incentive because it adds considerable value to the planning process. Since the software can process even complex models with large data sets in seconds, in-memory computing can change the nature of planning, budgeting, forecasting and reviews. For example, the technology enables organizations to run more simulations during a planning or review session to understand trade-offs and the consequences of specific events. It can change the focus of reviews from what just happened to what to do next. Rather than relying on intuition or simplistic scenarios to make that decision, in-memory systems support structured, numbers-driven conversations to develop the details of a plan. This is the breakthrough to any planning or budgeting process that in-memory processing provides and a good reason for businesses to make the leap to more capable software.
Anaplan’s product doesn’t do everything. For example, companies that want all of the rigor that goes with a formal sales and operations planning effort should focus on applications dedicated to this process. And Anaplan doesn’t have all of the features that dedicated project planning software can provide. That noted, I recommend that companies that are looking for a dedicated application for general business planning and financial budgeting consider Anaplan. This is especially true if their objective is to have a planning environment usable by all parts of the business that can serve as the integration point for all business planning. We have found their customers have made significant progress to improving the modeling and planning which is why it received the 2013 Ventana Research Leadership Award. If you have not taken a look at Anaplan it is well worth your time.
Robert Kugel – SVP Research