By Gary Cokins, Founder of Analytics-Based Performance Management LLC
I hope that you enjoyed my last blog on the topic of modeling. Perhaps it gave you some cause for thought about the type of business models you use in your own performance management systems. In this blog I am turning my attention to decision management.
I like to think of myself as a technical person. We techie-types are fact-driven. We embrace technologies of all flavors including computer hardware, software, mobile devices, the Internet, and social media. We prefer tangible and hard evidence to support a position or argument. We like research studies and the use of analytics to gain insights and foresights as well as to solve problems and pursue opportunities. But darn it there are all those other types of personalities to that sometimes just seem to be in the way of us fact-oriented types.
Decision agreement – possibility or delusion?
Just consider the USA campaigns for President. Both candidates refer to studies by think tanks that contradict different studies or surveys. Imagine if these think tank research teams were forced to be in a room and not emerge until they reconcile their data and assumptions and instead were forced to reconcile their results and conclusions. My imagination would lead me to believe that they could never emerge with a common agreement. Why? Because they are people with emotions, pre-conceived notions and positions about what is right or wrong.
So how do we resolve this? How do we use information that is unbiased to draw unarguable conclusions? Maybe it is not possible and is just a pipe dream. Maybe we might not want agreement because we always want open forums for debate regardless of the conflict and tension it creates. Argument can be good. It reveals ideas not previously considered.
There is hope
Inevitably, however, decisions must be made in order for any organization to advance and improve. One area of information management that has caught my eye is as the concept of “decision management systems” advocated by James Taylor, CEO of Decision Management Solutions. Taylor’s belief is that traditional systems are too inflexible, fail to learn and adapt, and cannot apply analytics to take advantage of “Big Data.” This is because traditional systems ignore decision-making and keep analytic systems separate from operational systems. He advocates decision management systems that are agile, analytic and adaptive.
Decision management systems make assessments based on an evaluation the interdependencies of variables such as time, quality, service level, capabilities, capacity, and cost. Cost is particularly relevant because money stated in financial terms, like the return on investment and spending is usually an overriding determinant of decisions.
Taylor defines decision management systems as being:
- Agile – so they can cope with rapidly changing business conditions and new regulations.
- Analytic – so they can leverage an organization’s data to improve the quality and effectiveness of decisions.
- Adaptive – so they can learn from what works and what does not work to continuously improve over time.
In Taylor’s mind the role of analysts, now popularly referred to as “data scientists,” is to use business rules, data mining, analytics workbenches and optimization suites (that all leverage in-memory database technologies and high performance analytics) to build systems that manage decisions rather than making individual decisions themselves.
Technology is no longer the barrier
The challenges in implementing a decision management system are daunting. The least obstacle is technology which currently exists and is proven. Instead, the major obstacles are social and cultural barriers. We return to people. Leadership, so often mentioned as essential to drive change, will need to demonstrate more vision and inspiration. Exponentially increasing data mean C-suite executives can no longer make as many decisions alone as before. They still need to make the big strategic decisions, but need to let the other multitude of daily decisions be made by their workforce and partners.
The title of this blog is “The Soft Stuff is the Hard Stuff.” Few of any of us were trained in the field of behavioral change management. We’ll need to get better at it. Most likely this will come in the form of on-the-job training, but gaining competencies in it will be essential for any organization’s performance improvement.
Look out for my next blog, in which I turn my attention to the annual budget.
About the Author: Gary Cokins, CPIM
Gary Cokins (Cornell University BS IE/OR, 1971; Northwestern University Kellogg MBA 1974) is an internationally recognized expert, speaker, and author in enterprise and corporate performance management (EPM/CPM) systems. He is the founder of Analytics-Based Performance Management LLC www.garycokins.com . He began his career in industry with a Fortune 100 company in CFO and operations roles. Then 15 years in consulting with Deloitte, KPMG, and EDS (now part of HP). From 1997 until 2013 Gary was a Principal Consultant with SAS, a business analytics software vendor. His most recent books are Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics and Predictive Business Analytics.
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Hear Gary share some of his thoughts concerning EPM innovations and best practices at the SAP Conference for EPM in Chicago, October 13/14, 2014