Is Performance Analytics More Important Than Performance Measurement?

by Stacey Barr

Some say that because performance measurement is always backwards-looking, performance analytics is more important. Here’s why that’s not true…

Analytics without performance measurement is like a journey without a destination. Credit: https://www.istockphoto.com/portfolio/hkeita

More and more people are saying that performance analytics is fast becoming more important than performance measurement. Their rationale for this is that performance measures are backward-looking (like the old rearview mirror cliché). But with analytics, they say, we can be more forward-looking.

The truth is, performance analytics can’t use data from the future anymore than performance measures can. Both analytics and performance measurement create information from the data we have. The information they create, however, serves different purposes and is created with different processes.

Different purposes. Different processes.

Analytics is a modern term for data analysis, typically applied to large and complex datasets and automated at least to a degree. Data analysis is still at its core, thus it’s still based on a range of computational processes that look for patterns in a set of data. The purpose of performance analytics is to use these discovered patterns to explain what did happen, and to predict and prescribe what could or should happen.

Performance analytics helps us choose the best actions.

Performance measurement is a subset of data analysis, in which we focus specifically on the time series of individual measures. The purpose of performance measurement is to understand how something is changing over time, when the changes occurred, and how big the changes are.

Performance measurement helps us focus on where action is needed.

To manage the performance of an organisation, we need both. One without the other gets us nowhere.

When we use analytics without performance measurement…

Analytics without performance measurement is like journeying around a mapped territory but without any destination. We explore everywhere, in any direction, in the hope of finding something interesting. That’s great for an adventure, but it’s no way to manage the performance of a business.

Any investment of resources to improve business performance needs to be focused on what really does need improving, and that’s the role of performance measurement.

When we use performance measurement without analytics…

Performance measurement without analytics is like setting a destination, but never mapping nor taking the journey toward it. We know where we want to go and why, but we stay where we are. That’s called dreaming, and it’s also no way to manage the performance of a business.

Any improvement in business performance needs a map to get us there, and that’s the role of performance analytics.

Data-informed decision making needs both.

Any data analysis is backward looking if it stops at describing what has already happened. Performance analytics and performance measurement alike can be forward looking if we can extrapolate the patterns from the past to give us clues about likely patterns to unfold in the future, depending on our actions and other information about how the world around us is likely to unfold.

We need performance measures to show us what is the most important set of results to improve, and then analytics takes us deeper to understand why those results are not already good enough, and to help us explore what we can do about it.

 

Analytics without performance measurement is like a journey without a destination. Performance measurement without analytics is like a destination without the journey to reach it.
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  1. David Waters says:

    Hi Stacey,

    Nice article and well described for why both are important IMHOJ.

    Regards,
    David Waters

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