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Understanding Performance Management Overview of Performance Management The mandate to operate at an optimal performance level and meet financial and organizational expectations is transforming the way organizations do business. This evolution is driving higher standards of competence in day-to-day operations and adding new pressure to increase stakeholder value. In today’s rapid-paced business climate, the agility with which a company manages performance can determine market position and company profitability. Companies are searching for ways to bring IT investments in line with their most critical business priorities. This quest has created a shift from transaction-centric to information-centric approaches offering collaboration and information that can drive actionable decisions throughout organizations. This focus is the impetus behind a new class of software capabilities now evolving from the roots of business intelligence (BI) and decision support that help organizations manage performance in a methodical and coordinated manner. Defining Performance Management Performance management is the strategy, methodologies and process of managing the performance of the organization and its business network by leveraging assets to achieve a common set of goals and objectives. Performance management focuses on understanding, optimizing, and aligning action and decisions and ensuring the collaboration and empowerment of all individuals across the business network. This enables all individuals to work across strategic, tactical, and operational levels to align actions to ensure optimal performance. The most crucial challenge to achieving performance management lies in the ability of organizations to transition their cultures and methods. Established executive and organizational politics can fracture a company’s ability to transform into a more transparent, bidirectional, performance-driven culture. Enlightened organizations address this issue with executive mandates and solutions that leverage collaboration and metric-driven applications. They actively coordinate and communicate direction and progress on performance goals to communities of individuals. Summary Performance management provides a critical foundation for organizations to manage their businesses and empower individuals to make the right decisions to maximize profitability. Capturing knowledge and information across the organization can build long term value for stakeholders. This is now possible by applying performance management principles to technology investments. Now, as never before, businesses have the ability to implement performance management to transform entire organizations with a focus to achieve goals. And now, as never before, the pressure is on businesses to manage their performance. Click here if you want to learn more about the Ventana Research performance management methodology.