Research has shown how to make sure your PMS investment works. By Sai Nudurupati, project manager, Mastclimbers and Umit Bititci, centre for strategic manufacturing, University of Strathclyde.
To meet customers' increasing demands companies need to be more responsive, produce more customer-specific products, use more flexible processes, and better co-ordinate suppliers and resources. And they still have to keep down costs.
This is where performance measurement systems (PMS) come in. Methods such as six sigma and lean manufacturing, as well as other monitoring and improvement techniques, can help companies meet these challenges. PMS can take the form of a few measures at higher levels for senior management on a monthly and annual basis. Or it can mean a lot of measures at lower levels for middle management, measured on an hourly and daily basis. Whatever the case, the end result must be up-to-date and accurate performance information that needs to be integrated, dynamic, accessible and visible to aid fast decision-making.
A lot of organisations use IT to provide performance information online. But many fail to check the benefits achieved against their investment. There are many stories of successes and failures with performance measurement and IT implementations but there are few studies on the impact of PMS.
A study by Nudurupati et al in 2003 on four companies in the UK showed that PMS can have positive results. But only if they are used correctly, supported by the right IT platforms and backed up by senior management commitment. As with many things, the greater the effort, the greater the reward.
An appropriate performance measurement should consist of a balanced set of performance indicators derived from strategy and stakeholder requirements. There are several methods, tools and techniques for designing performance measurement systems (such as the balanced scorecard, integrated performance measurement system and the performance prism).
Appropriate IT support could be established by ensuring automated data collection, analysis and communication. In addition to their commitment to the PMS project, senior management should:
When implementing PMS-IT the technical team should ensure that:
With these three factors in place, information can be disseminated easily throughout an organisation, and people can have confidence in that information. However, there are several possible reasons for negative feelings. They include:
These forces might differ for businesses with different cultures and management styles. Whatever the case, senior management should lead by example by using and understanding the system and overcoming resistance through a non-threatening management style. This should include:
For management, PMS-IT can increase proactive management style - managers can make quicker decisions, as they have confidence in the information. It can also increase positive behaviour, such as focusing on facts, communication, empowerment and teamwork.
PMS-IT can also bring transparency and visibility of information to the business. It gives a transparent picture of business performance. It identifies weak areas of the business are identified and brings continuous improvement through better decision-making.
Mastclimbers is a service provider to the construction industry. For more information and a list of further references on PMS-IT contact tim.cooper@cimaglobal.com
October 2004
