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Every enterprise wants to save money while boosting the bottom line, but dollars don’t always tell the whole story, particularly in decision management initiatives.

Instead, organizations should measure success using a full set of other metrics and factors, experts say. “The key to effective decision management projects is the tie between the decisions being automated and the metrics used by the business to track success,” says James Taylor, CEO of Decision Management Solutions, a Palo Alto, Calif., consulting firm.

When front-line employees such as store clerks and call-center representatives are making decisions, executives need to be able to describe how the decision management system is impacting business objectives, Taylor says. “Once executives see that they need to manage these front-line operational decisions to improve the metrics that measure their own performance, they become much more interested in how systems can be used to do that,” he says.

TIPS FOR DEVELOPING DECISION MANAGEMENT METRICS
“In general, it’s not helpful to focus solely on development cost savings or staffing reductions. Focus on business value first and foremost,” Taylor says. He advised companies to view business effectiveness metrics, such as customer profitability, competitive wins and total fraud losses as benchmarks. “These focus on the quality of decisions—better decisions improve business results—and that’s where decision management really shines,” he says.

Companies have an array of metrics to choose from, including purely financial metrics and factors such as ease of implementation and competitive advantage, says Richard Spoon, CEO and founder of ArchPoint Consulting, based in Lafayette, La.

Companies should examine a range of criteria and then weigh which are most important, Spoon says. “You can take 100 points and spread them across equally, or you can spread them out where financial return gets 50 points, or you can do some blend in between,” he says.

DECIDING WHICH DECISION MANAGEMENT FACTORS TO MEASURE
What to measure all depends on the company’s objectives, Spoon says. A company focused on rapid expansion may emphasize speed of decisions, ease of implementation and the financial returns associated with decision management. Meanwhile, a company that’s more interested in slower growth and penetrating specific markets may focus less on speed and immediate financial payback.

“So much is about what the company wants to do. There isn’t any metric that’s wholly off the table,” Spoon says.

In terms of metrics for decision management, “I ignore anything that’s about saving time or saving cost,” says Neil Raden, CEO and principal analyst at Hired Brains Inc., a consultancy in Santa Fe, N.M. That’s because when companies save money in one area, the cost typically gets absorbed somewhere else, he says. And saving time doesn’t always correlate to increased productivity.

The bottom line: If the enterprise can show consistency in decision making and that customers and partners are judging the enterprise based on recent interactions, that goes a long way to proving effectiveness, Raden says.

DON'T MAKE GROWTH THE ONLY METRIC
Spoon cautioned against implementing decision-making software strictly for growth purposes. “I would be cautious if I were a company looking at a software package to grow my business,” Raden says.

Automated decisions don’t result in growth; they result in productivity. “What automated decision making will give me is tighter parameters, more feedback into the parameters and a tighter set of choices. But choices still have to be made that are going to grow the company,” Raden says.

“Our experience has been that regardless of how precise the automated decision tool is, you still have to deal with human dynamics—people around the table making decisions and people still fighting for pet projects,” Spoon adds.

For example, the sales team will want to measure customer-centric metrics, manufacturing will want to examine equipment and human resources will focus on staffing. Automated decision software processes are going to tell you which of those is the most important relative to company’s criteria, Spoon says, adding that the team will still have to commit to investing in what is most important at that time.

The experts concur that focusing on one metric as the holy grail for measuring decision management software is a counterproductive approach. Instead, enterprises are best served by viewing several metrics that align with their objectives and evaluating from there. Or as Spoon puts it: “There’s no silver bullet in this decision-making exercise. Even if I automate it, it’s still hard to do.”

READER FEEDBACK: How does your company measure the success of its decision management initiative? ebizQ editors would like to hear about your experience. Contact Site Editor Anne Stuart at astuart@techtarget.com.



About the Author

Christine Parizo is a freelance writer specializing in business and technology. She's based in West Springfield, Mass. Contact her at christine@christineparizo.com.

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