Housing Technology recently interviewed Chris Coan, managing director of Visualmetrics, on what drives the adoption of performance management systems, the tangible and intangible benefits of doing so, and how to integrate your performance management system with other core business applications.
What are the business influences behind the adoption of a performance management system?
The drivers for enhancing performance management fall into four categories. First, we have executive drivers, key among which are tenancy engagement, government and regulatory compliance, executive command and control, monitoring finance and budgets, and delivering a single KPI-based view of performance linked to strategic objectives.
While regulatory compliance and government initiatives do not dictate how a housing provider should measure business performance, they inevitably influence strategic goals at an executive level. These must be cascaded down to operations and a best-practice performance management system must flex and grow to support them. The Affordable Housing Development initiative will create a need for companies to deliver insight from the top (executive) to the bottom (operational) of how long-term capital developments are performing.
Equally, the change in regulatory compliance metrics that follows the disbanding and replacement of the Audit Commission and TSA could be weighted to place particular emphasis on any key area of operations to ensure cost-effective service delivery. In turn, this will affect a company’s ability to ensure operational reporting and executive strategy are aligned, if the system they currently use cannot adapt.
As many organisations in the housing sector look to consolidate or merge to deliver more cost-effective services, the challenge of delivering a single view of group performance – from operational to executive levels and from multiple people, processes and technologies, and leverage combined data assets – often drives a requirement to enhance performance management.
The second key area is the greater need for performance management systems to deliver both operational and executive insight into core processes around housing operations, developments and repairs processes as well as finance and cashflow management.
A pertinent example would be the changes in the housing benefits ceiling, where the need to monitor and manage tenant arrears will become acute in certain areas. Only by having the information to quickly respond to arrear trends, will housing providers be able to minimise the financial impact these changes could bring.
Operational and functional drivers (information aggregation, user self-service, time-based analysis, financial comparatives, drill to detail, etc) and technical drivers (data integrity, integration, automation, traceability and security) are the final two areas that influence the need to enhance performance management. It is the lack of operational and functional capabilities, or the technical configuration of the current system, to deliver against either executive or business area drivers that result in the need to enhance reporting systems.
What are the quantitative benefits of a performance management system?
Alongside the cost savings arising from information automation, the increased opportunity for cost of service delivery optimisation completes the quantitative business case.
The focus has to be driven from improving income from assets while effectively controlling expenditure. Key areas for analysing returns include voids and arrears reduction, enhanced efficiency in all aspects of the repairs process, better control of income and expenditure, ensuring more effective capital and revenue expenditure, driving increased reserves/surplus, and where appropriate, better insight and control of financial management across the life-time of commercial developments.
Creating a mutually-agreed RoI model between the supplier and the customer ensures that the performance management system not only delivers against the functional and technical requirements, but also that business adoption is properly promoted to support and drive business change, thereby ensuring the financial benefits are fully realised.
What are the qualitative benefits of a performance management system?
While a quantitative business case should support the decision to invest in enhanced performance management, many of the benefits of doing so cannot be measured individually. Instead, cross-sector reference data for these combined qualitative benefits provides assurance of their business benefits.
Executive benefits include: enhanced tenancy engagement, streamlined and automated performance management processes, increased staff motivation, assurance of regulatory compliance for inspection, and alignment of strategic goals with operational measures, metrics and reporting;
Operational benefits include: time-based analysis and trending, comparatives of plan versus actual, multi-dimensional analysis, real-time information alerting, mobile device deployment, user self-service, and drill to detail.
Technical benefits include: enhanced data integrity, integration, automation, auditability, traceability and security – some of which are becoming quantitatively measurable as companies begin to understand better the value of information as a business asset.
What should potential buyers of a performance management system look for, in terms of functionality and corporate credentials?
Above all else, a proposed partner for the delivery of a performance management solution must understand the customer’s exact requirements. No two companies are the same, and it is only through consultation and project scoping that a solution can be delivered that ensures it addresses a customer’s specific challenges.
A performance management system must have the design flexibility and scalability to change as the business evolves through organic, acquisitive or external forces, such as the affordable rent or the (planned) option-to-buy initiatives. Other requirements include sector knowledge, a proven approach to designing and delivering performance management projects, and a technical knowledge of operational applications and associated software tools.
While technology should always remain a secondary concern to fulfilling the business requirements, a partner with the ability to exploit current technology investments and deliver a system using whichever software technology fits best, whether it’s SAP BusinessObjects, IBM Cognos, Oracle or Microsoft, will maximise the business benefits and mitigate the risks.
Finally, the vendor must have the philosophy to engage in a partnership that is flexible enough to cope with changing business demands over time.
How does performance management fit within the pantheon of ‘core’ business applications?
Every company analyses its performance; it is already a core activity. How well it does so, whether it’s through anecdotal manual information or a best-practice performance management system, will determine its success.
Best-practice performance management provides a summarised KPI view of a company’s business performance state to complement and overlay with the operational applications. By drawing data from the housing, financial, asset management and other operational applications, it provides an ‘information viewfinder’, giving business users an intuitive and understandable way of monitoring performance metrics in line with the executive strategy and to streamline and enhance performance.
Best-practice performance management must support the information demands of all user communities; the better a company exploits its data assets and feeds information to its employees, the more cost efficient its services can become.