A Pop Quiz on Business Intelligence and Performance Management

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Do the words, "pop quiz," stimulate shivers down your spine and send you into a cold sweat? Do you remember when your school teacher would say, “Put your books aside, we are having a pop quiz”?

Rest easy, this pop quiz won't be too difficult. Even better, it is multiple choice, so you can guess and maybe luck out. The answers are at the bottom.

Question 1. Which has relatively higher value for managing an organization's strategy?

a. A balanced scorecard

b. A strategy map

c. A club to whack underperforming managers

Question 2.What is a relatively more effective and higher ROI way to retain, grow, win-back, and acquire customers?

a. Spray-and-pray magazine advertisements

b. bribery

c. work backwards understanding the unique preferences of customer micro-segments (and ideally individual customers) and tailor deals, offers, discounts, etc. to them.

Question 3.True or false: The annual budgeting process is so broken and dysfunctional that it should be abandoned altogether.

a. True

b. False

Question 4.Which is the correct relationship? The suite of Enterprise Performance Management methodologies is either a subset of Business Intelligence / Data Warehousing (BI/DW) or the reverse or they are unrelated.

a. Performance Management is a subset of BI/DW

b. BI/DW is a subset of Enterprise Performance Management

c. They are unrelated

Question 5.

Which will have more impact?

a. Implementing and integrating many performance management methodologies without any imbedded analytics.

b. Implementing and integrating fewer performance management methodologies than (a) but imbedded analytics in each methodology.

c. Status quo and not implementing anything.

ANSWERS:

1. (b) The strategy map has all the intelligence in it. The balanced scorecard, although also important, is the feedback mechanism where its KPIs should be derived from the executive team's strategy map.

2. (c) If you answered (a) or (b), please see me after class.

3. (c) “Tr-alse” I tricked you. The answer is kind of both. The annual budget is typically obsolete in a few months, and the budgeted department costs are padded by veteran managers who sandbag their numbers, caves in into the loudest voice or strongest muscle and worse is over-inflated by needless “use-it-or-lose-it” fiscal year-end spending since the next year's spending for each expense is typically incremented by 3% for inflation. But if you abandon the annual budget, what do you replace it with to satisfy the purposes of a budget? Those who asked that question get extra credit.

4. (b) BI/DW is a subset of Enterprise Performance Management (EPM), but they are inextricably linked together. EPM deploys the potential power in BI/DW. EPM applies BI/DW in the context of a problem to be solved or system to be optimized.

5. (c) Doing nothing will have a sufficient adverse impact that eventually an organization will fail or go bankrupt. The more interesting question is if (a) or (b) will have more impact. The answer is an “it depends” one. My leaning is (b) because embedding analytics (such as multivariate correlation analysis among KPIs and PIs in a strategy map) will turbo charge and add more torque to the EPM's integrated gears compared to having a few more gears spinning.

No one ever said that tests in school were easy or fair. That only becomes more true when applied in the real world.

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What's Strategy Management?

Gary Cokins shares his advanced cost management and performance improvement systems expertise with the Business Finance community.

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