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Letter Drop

Do-It-Yourself XBRL; Performance Management: Fact or Fiction?

Do-It-Yourself XBRL

Regarding Doug Henschen's "XBRL Sets the Standard" (Dashboard, June 2005): XBRL isn't about implementing a standardized, "one-size-fits-all" approach to financial reporting. If accounting standards allow companies to bury poor performance deep in hard-copy financial reports, the same information will be buried in the XBRL instance document, though it will be much easier to extract. Currently, we have standardization at the data aggregator level, giving rise to "normalized data points." XBRL will let data consumers do their own electronic analysis on original data as published. This is always a better option as data aggregation invariably results in data roll-up, which at the extreme would lead to a two-line balance sheet: assets and liabilities.

Colm O hAonghusa
Managing Director
EuroReg Consulting
Malahide, Ireland
[email protected]

Performance Management: Fact or Fiction?

Mark Smith has continually hyped performance management (PM) in his columns to a level not seen since business intelligence first emerged in the 1990s. I challenge him to name a single PM methodology that hasn't also been available in traditional BI and OLAP or predictive data mining.

Furthermore, PM relies on users to formulate intelligent queries. In data mining, users don't have to know about the data at all and can still uncover hidden facts. Data mining tools outperform PM tools by leaps and bounds. Smith should tone down the PM hype to be in sync with real technology advances.

Name Witheld

Mark Smith responds: Performance management has nothing to do with technology but connecting people and processes to improve performance by aligning business and IT. A lot of methodologies and applications are beyond the scope of BI and OLAP.

Technologies that have no structure or form to support the process of managing performance aren't really helping business but hindering it. For example, deployments of BI dashboards full of KPIs that have no context and no ability to take action aren't helping an organization manage performance, just measure it. There are plenty of PM methodologies at different levels of focus and importance depending on the organization, including Balanced Scorecard Collaborative (BSC), Six Sigma, Cash Flow Return on Investment (CFROI), Economic Value Add (EVA), Beyond Budgeting Round Table (BBRT) and Presidents Management Agenda to name just a few.

On the subject of hype, the reality is that PM helps companies focus on performance from a people, process and technology perspective. There is unfortunately not enough focus on this from a process and cultural point of view.

Technologies such as data mining play an important role, but are clearly only pieces of the puzzle. In fact, the real advances in technology aren't in data mining but in applications that are being adopted and deployed across enterprises today that enable companies to mature from a measurement-only to a management-based approach.

If you think PM is about having users perform intelligent queries, I ask you to do some more research on the subject.

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