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7/19/15, 10:24 AMBusiness looking to software for answers not just metrics - Silicon Valley Business Journal

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From the Silicon Valley Business Journal:http://www.bizjournals.com/sanjose/stories/2005/12/12/story7.html

Business looking to software for answersnot just metricsDec 11, 2005, 9:00pm PST Updated: Dec 8, 2005, 12:06pm PST

Carolyn Schuk

How often have you seen a business identify the right problem only to address it with the wrongsolution? The emerging field of operational performance management software seeks to makethose missteps a thing of the past, by providing answers not just metrics.

Here's how.

A call center experiences a sharp increase in the average handle time (AHT) for calls. Metrics froma business intelligence (BI) system show that performance is moving in the wrong direction butthere are many possible causes. It could be a training problem, a product quality problem, orsomething as simple as poor information on the Web site.

Tracking down the cause using traditional reporting systems could take months -- as productivitycontinues to take a hit. However, with operational performance management software, call centermanagement can drill down through a variety of information systems and databases within minutesand see a correlation to a billing policy change instituted a month earlier. Now the company can actimmediately to beef up customer communications.

"It's not enough to just know the numbers," says Colin Snow, vice president and research directorat San Mateo-based Ventana Research, which specializes in performance management consulting."Companies are floating on a sea of operational data but they don't know which part of the datarelates to the problem. They can't link their metrics to their strategic business goals."

San Mateo-based Enkata technologies aims to help businesses do just that and hopes that a recentacquisition will accelerate the five year-old company's growth.

On Nov. 21, Enkata announced it acquired the intellectual assets of defunct business collaborationsoftware supplier, ePeople. Enkata expects the move to increase the value of its on-demandoperational performance management application suite, according to Enkata founder and co-president Ron Hildebrandt.

"By adding the ePeople functionality, suddenly we make it easier and faster for customers toimprove all aspects of their service organization," says Mr. Hildebrandt.

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He illustrates the point with the example of a telecom company that uncovers a 25 percent churnrate (the number of subscribers discontinuing service) on a promotion. By drilling down andcorrelating data from both the sales information and provisioning systems, the Enkata systembrings to light the fact that subscribers dropping the service never implemented the DSL serviceincluded in the package.

Insight into causes is only one part of the solution. "You don't get value from business intelligenceuntil someone fixes the problem," says Mr. Hildebrandt.

"Using the ePeople functionality, you can create a workspace called 'DSL activation issue,'" hecontinues. "You can invite people into that space to share their thoughts, attach documents, andintegrate with Microsoft Outlook to schedule meetings and send e-mail."

The whole arena of performance management -- including business performance management,corporate performance management and enterprise performance management -- is the newestrefinement on the perennial quest to increase business effectiveness.

In 2005, spending on software, services and hardware related to performance management isexpected to top $22 billion, according to Boston-based research firm, AMR.

While much of the spending in past years has been targeted to corporate back-office needs, suchas finance and administration analytics, AMR Research sees operational performance managementrapidly expanding in both importance and scope, according to Mr. Hagerty. In fact, the researchfirm's survey showed that the vice president of operations role was by far the largest sponsor ofanalytic programs for 2005. AMR expects this trend to continue for the foreseeable future.

With so much opportunity, it's no surprise that many software companies have a horse in this racefrom business intelligence specialists like Business Objects and Hyperion, to enterprise supplierslike Oracle and SAP, to specialized performance management applications suppliers like PilotSoftware and Enkata.

Performance management is a natural evolution of business intelligence, says John Hagerty, AMR'svice president of research.

"Analytics and BI technology have been around for a lot of years," Mr. Hagerty says. And most ofthe systems in place are focused on financial metrics, he says. "Most of these systems are drivenby the CFO and everyone understands dollars."

Ventana's Mr. Snow agrees.

"Most people think of business performance as financial performance," he explains. "They think ofmeasurements like earnings-per-share."

Operational performance management, by contrast, focuses on measuring the effectiveness ofbusiness activities -- for example, the number of interactions per insurance claim or supplier on-time deliveries.



It's important to distinguish between efficiency and effectiveness, says Mr. Snow. "It's not effectiveto do the wrong thing faster. The important thing is to do the right thing and prevent the problem."

That's an important distinction, echoes Mr. Hagerty.

"Now businesses are peeling back the onion," the AMR executive says. "People are turning theirattention to the mechanics of how the business works." This in turn points the way to performanceimprovement.

"OPM is about taking business intelligence and putting it in the hands of people on the front lines,"says Steve Woolidge, senior product manager at Business Objects' American headquarters in SanJose. "To do that, you need to be more real-time and more process-aware."

"It's a sense-and-respond model," says AMR's Hagerty, "as opposed to command-and-control."

To achieve this, operational performance management software takes information from disparateinformation from operational systems and analysis/reporting systems, integrating it with businessactivities like call handling and manufacturing scheduling.

For this reason, operational performance management applications are specific to industries andprocesses -- for example, insurance claims processing or financial reporting compliance withSarbanes-Oxley, the 2002 federal legislation on corporate financial reporting and accountability.

Industry trends are making this kind of operational information more critical, according to Enkata'sMr. Hildebrandt, who points to factors like industry consolidation in the telecom business as well as"pay for performance" and consumer-directed care trends in the health care sector.

"These industries are typically the lowest-rated for customer satisfaction," Mr. Hildebrandt says."They need systems in place to manage service quality."

About 15 percent of enterprise employees use business intelligence software today, according toBusiness Objects' Mr. Woolidge. "They've seen the ROI and so they're going to drive thatimprovement to more people in the organization."

Carolyn Schuk is a freelance writer based in Santa Clara.