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What is the relationship between performance measurement and strategy?

Question: What is the relationship between performance measurement and strategy? What is the role of management accounting information in the performance evaluation process?

Sid Adelman's Answer: By performance measurement I assume you mean business performance. If you mean the business strategy of the organization, how it plans to achieve its business goals including revenue, profit, customer satisfaction, supplier compliance, growth, competitive position, sustainability and employee retention, the answer is trivial - for each of the business strategies, you establish one or more business performance measurement.

My guess is you are interested in the BI strategy for measuring business performance. The accounting folks have certain requirements for the type of information they need to be able to report on the business and the line-of-business (LOB) managers need certain information to be able to run their division or department. The accountants and the LOB managers will be able to tell you what they need but the people who can best tell you are the subject matter experts (SMEs) for each group. They will tell what source data is necessary, the currency requirement of the data, how the data should be transformed, aggregated, cleansed, filtered and how it should be delivered. Besides the role of the SME supporting the BI strategy, it's pretty much the same as any other BI application.

Chuck Kelley's Answer: I think that the answers will be based on what you are trying to accomplish. Strategy is generally the "what" we want to do. Performance measurement is "how" we are doing. For example, if the strategy is to increase sales, the plan (tactics) may be to divide the amount equal among our sales folks so that the net increase will be 50 percent, then performance measurement is set up to peek inside of the systems to see how well you are tracking based on the estimates. So the role of management accounting information is to provide "facts" anywhere in the cycle, to see how well the organization is doing versus the plan.


Sid Adelman is a principal in Sid Adelman & Associates, an organization specializing in planning and implementing data warehouses, in data warehouse and BI assessments, and in establishing effective data architectures and strategies. He is a regular speaker at DW conferences. Adelman chairs the "Ask the Experts" column on www.dmreview.com. He is a frequent contributor to journals that focus on data warehousing. He co-authored Data Warehouse Project Management and is the principal author on Impossible Data Warehouse Situations with Solutions from the Experts and Data Strategy. He can be reached at (818) 783-9634 or visit his Web site at www.sidadelman.com.

Chuck Kelley is an internationally known expert in database and data warehousing technology. He has 30 years of experience in designing and implementing operational/production systems and data warehouses. Kelley has worked in some facet of the design and implementation phase of more than 50 data warehouses and data marts. He also teaches seminars, co-authored four books on data warehousing and has been published in many trade magazines on database technology, data warehousing and enterprise data strategies. He can be contacted at chuckkelley@usa.net.

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