The Glue

Achieving Sarbox Compliance with Dashboard Software

Many public corporations have spent millions of dollars over the past few years building processes and automated software tools to track key measures needed to prove compliance with the Sarbanes-Oxley Act (“Sarbox”). But what if this critical information could instead be managed using the same strategic dashboard tool that you use to execute your overarching business strategies?

This is, in fact, what some clients have done, using dashboards designed and managed by their Finance departments. Rather than representing a truly “balanced” scorecard (as is more typical for our clients), these dashboard focus on areas of strategic importance to this one functional area in the company. And one area of intense focus for publicly held companies is clearly Sarbox compliance.

In some ways, these KPI (key performance indicator) dashboards can represent a cascade of the corporation’s top-level scorecards –- and they provide tremendous additional value in supporting this key financial reporting responsibility. They are used to track areas of Sarbox compliance such as “Percentage of Balance Sheet Accounts Reconciled by Deadline,” “Dollar Value of Balance Sheet Non-Current Reconciling Items,” and “Number of High-Risk Internal Audit Comments.”

ActiveStrategy Goes Mobile (And Gets Blogged by Wall Street Journal)

At our annual Client Conference last week, we demonstrated the very first enterprise performance management application for the iPhone.

This is the first ActiveStrategy product optimized to run natively on a mobile device. So why did we pick the iPhone?  There are several key reasons:

1. The user-friendly, large display shows our Dashboards and Scorecards far better than any other mobile device can.
2. Since this will be a native app on the iPhone (versus an application optimized for a web-enabled mobile device), executives can view it anywhere -- even offline. Since so many of our users are high-level executives who tend to be on-the-go, they can prep for business reviews anywhere -- even at 30,000 feet.
3. Apple recently announced their enterprise roadmap, which we believe is going to make it a far more viable option for business users in the very near future.
4. Everyone loves the iPhone. We wouldn't be surprised if a few executives out there are just looking for a reason to tell their IT shop to support them. So this can be their reason!

How to Measure the Hard to Measure: Part 3 - Strategies for Too Many Measures

In my last post on How to Measure the Hard to Measure, I focused on strategies for narrowing large quantities of measures down to the critical few for a Balanced Scorecard. Here are some approaches to consider with this issue:

One approach is to use a measure that focuses on HOW MANY of the child measures actually hit their targets.  Now, rather than having a green indicator that hides the red performance of one of 10 child measures we talked about earlier, we would actually see that 9 out of 10 of the children met their goal. That might give me a better feel for what is going on and at the very least makes me feel more comfortable that I'm not missing anything if the measure stoplight is green (this approach is called "percent of measures which achieved target" in ActiveStrategy Enterprise).

How to Measure the Hard to Measure: Part 2 - Large Quantities of Measures

In my previous Part 1 post on measures, I discussed Measuring Project-based Objectives. This time I'll talk about how to deal with the omnipresent problem of too many measures.

Ideally, Strategy Execution projects include a lot of time of figuring out what critical few objectives are important to an organization and picking a few measures. Sometimes, however, there are industry standard measurement frameworks that are designed to make it easier to compare performance across different organizations.  These frameworks serve a great purpose and can really help define focus in an organization. But if you are not careful, you may find that the sum of the parts is not really a useful tool to help get the results you are looking for.

Take HEDIS, (Health Plan Employer Data and Information Set) for example. This is a set of more than 60 measures (the number changes with new releases) that indicates everything from how fast a health plan answers a phone to how well they screen their members for cancer.  It's a great tool for businesses to compare health plans and many health plans work hard to improve their numbers.  There are lots of other examples of such frameworks in hospitals, IT Organizations, Government and many other categories and the dangers we are talking about apply to them as well.

In an ideal world, the HEDIS measures might be sprinkled across many different scorecards in the organization -- owned by those accountable for them.  So the director of the call center might own the two or three metrics related to that, the Chief of Cardiology Standards might own the few related to heart treatment, etc.  Invariably, though, top executives want a single number that tells them "how we are doing on our HEDIS measures."

Why Software as a Service Will Change Performance Management

In case you haven't heard, Software as a Service (a.k.a. SaaS, rhymes with Jazz) is the hot new thing in Silicon Valley.  Simply put, this is where a vendor provides access to an application via a secure Internet link and charges on a monthly or quarterly basis (usually by user).  There are lots of technology improvements that differentiated this from the old Application Service Provider (or ASP) model, but the ideas are similar.

For the client this means quicker implementations with less up front investment and lower costs to maintain the application.  It also means quicker results.  With the success of companies like salesforce.com and Netsuite most of the old IT concerns about application and data security are melting away. 

We have used salesforce.com internally since our company's inception, so we're customers of this type of service.  And for our customers, we've always offered our Strategy Execution software application as a monthly or quarterly service.  Based on our experiences and those of our clients, I think there is going to be a huge move to SaaS offerings over the next few years.  Let me illustrate with a tale of two projects...

Technology Clarifies Strategy Execution

Last week, ActiveStrategy's seminar series on Enterprise Strategy Execution had a stop in San Francisco. While delivering my 6th of 9 presentations at this 2-day event, something hit me.  Let’s call it a small epiphany (though really it’s something I’ve known all along, but am just now fully embracing).

My focus within ActiveStrategy is on providing consulting support to organizations wishing to pursue better Strategy Execution.  So, my perspective can be rather myopically focused on how to teach and educate executives on the methodologies of strategy execution.  As we all know, just gaining this understanding is a major hurdle and the first part of the change process in the strategy execution evolution or journey.

Though ActiveStrategy is also a software company, I often find myself avoiding references to the software and explaining strategy execution as divorced from software or automation. This has been partly to ensure I'm operating with complete integrity for my clients and partly because I've feared that bringing in a  software discussion might cause confusion, diverting attention away from learning the core, underlying methodology elements, which are the prerequisites to using the software.

The Valley of Despair: Avoiding a Strategy Execution Pitfall

When I read Crossing the Chasm, by Geoffrey Moore 15 years ago, it had a big impact on my understanding of how people accept technology.  Though it is a bit dated, it still rings true today. 

What stuck with me most is the concept of the technology adoption curve.  Basically, this states that your techies lead (or bleed) the way with new technology and visionaries/early adopters follow closely behind.  Things don't get really fun until the pragmatists and conservatives get on board (like my 92-year-old Grandmother who just started using CDs to listen to books on tape). At that point a technology is mainstream and society really begins to benefit.

So what does this have to do with getting better business results?  Good question.  There are two factors at work here:

Finding the Data You Need for Your Scorecards

I’ve seen balanced scorecards with as few as nine measures and monster scorecard hierarchies that eventually drill into thousands of measures. Whether yours is large or small, you'll run into questions about where to find the data you want to track on scorecards. Across industries and even in government, a "rule of thirds" seems to hold: you are already reporting 1/3 of the data you need, another 1/3 is “around here somewhere,” and you can’t get at the last third — yet.

• The first third. Most of this data already exists in reports or dashboards currently being produced. Often, you will only need a level or two of summary from a given report. Unfortunately, there can be A LOT of reports where you need only a few data elements. 
• The second third. These are measures that can exist in lots of forms: scribbled on a post-it in someone’s cube, on the excel spreadsheet that Jane in marketing keeps, on reports from external vendors or partners, or inside that rickety old legacy system everyone is afraid to touch. Tracking down all of this data can be a lot of work but it is also a relatively quick win when you start managing performance with it.
• The last third.  This is the "Boy, it would be great to measure this" stuff. I tell executives (note: only the executives) to leave these on a scorecard (as place keepers) if they really think the organization can get around to measuring them in the coming year*. Then, it's up to the executive to push and prioritize people to come up with a plan to actually measure these. Lots of these don’t end up getting measured, but some do and they can actually have a huge impact.

This "data audit" process can take up a chunk of time in a Balanced Scorecard/Strategy Execution implementation, so plan accordingly in your project plan.

 

Wherever you end up getting your measure data, make sure you come up with good, clean definitions. The definition should explain exactly what the data element is, where it comes from, and give an example calculation if applicable. If there are ten definitions of revenue in a company and your scorecard doesn’t explicitly call out which one you're measuring, you are going to create more questions than you answer.

* So actually, the rule of thirds can be self limiting: if you eliminate a lot of the measures you won’t be able to get to, you will end up with less than a third in the category.