As the CFO of a major organization, you heard the windstorm that is Sarbanes-Oxley, you listened to your CIO expound the virtues of an integrated information platform: "one version of the truth". So you signed off on the check. You paid a few hundred thousand dollars for an end-to-end Enterprise Performance Management (EPM) software solution; a few more hundred thousand dollars for impressive looking consultants with impeccable references who sounded like they knew your business. Now you are able to pull up a futuristic and glitzy looking dashboard with knobs and dials that tells you at any one time what each department, division, region and country is doing. In fact you have a near flawless, apparently perfect information asset. However, there's one problem: all your operational managers are still using Excel. Even worse, they download data from the different tools in the end-to-end suite into Excel, manipulate it and in some cases, type it back into your EPM package. So you still have a lot of the problems you started with: poor audit trail; data inaccuracies; inability to rely on the numbers, etc. You have a situation that might be described as: a perfect imperfection.
So how did it all go wrong? Somebody failed to come up with an integrated EPM strategy to go with the integrated EPM software. The best way to ensure a truly successful EPM implementation is to work with the relevant stakeholders: finance, IT, vendors, consultants, end users, etc. in creating a truly integrated EPM strategy that covers all areas of your business.
Very often we see clients who have been swayed by their competitors to acquire the latest EPM tool. They have undertaken an informal software selection process and selected a vendor that presented the best during the fashion parade. The needs of the business however, were not properly aligned to the capabilities of the different tools being purchased. Once the client purchases the software, they suddenly look up, apparently startled by the cost of this sudden investment, and decide they must save costs during the implementation. So they employ a bunch of independent consultants and lower cost consultancies, each with specialties in one of the tools within the EPM suite they have purchased. The farsighted companies are aware of the need for project management, so they decide against a project manager with experience in implementing these integrated solutions, but "somebody from finance". So here we are with 4 separate streams for each tool: Strategic Planning; Budgeting & Forecasting; Consolidation & Financial Reporting and Dashboarding & Scorecarding. Each stream has "somebody from finance" managing the project. As the "project manager" has never delivered this type of solution before, they are working towards a vision that was presented at the pre-sales demo. As each project manager is from a different department, they don't have implicit knowledge of what the other departments do and therefore how the different streams might need to co-ordinate their work to ensure the eventual data from the different streams are integrated and can be shared easily. We have seen clients develop budgeting and consolidation systems as two parallel streams, then get to the end and find that their budget operates at such a different level of granularity that they couldn't directly load it into the consolidation system to do direct comparisons between their actual versus their budgeted data.
A well thought out Enterprise Performance Management strategy takes into account not just the needs of the appropriate stakeholders, but a review of the underlying source systems; the need to re-engineer existing processes and most importantly, align the stated strategic goals of the organization with tools that have been purchased within the EPM suite. So for example, if the company has a stated goal of creating the best customer service organization in the industry, how do you turn this somewhat subjective goal into measurable objectives that can be tracked using the myriad of tools within the EPM suite from strategic planning to financial reporting?
So, how does a company go about achieving a truly functional, integrated Enterprise Performance Management solution that permeates the whole organization, is used by all the key stakeholders and delivers the enterprise-wide strategic goals? With a great deal of forethought, planning and execution.
The first psychological hurdle to overcome is that these solutions are complex and challenging. You therefore need to work with people who have extensive experience delivering these solutions. You need delivery partners that can look across the whole organization, understand the company's business, its challenges, competitors, processes and culture.
The approach should be both top-down and bottom-up. From a top-down perspective, it is imperative to understand the strategic goals of the business and how they can best be delivered using the right tools at your disposal. From a bottom-up perspective, you need to understand the needs of the end users: the systems they use, the way they work, how the solution will affect them and what processes need to be reworked to enable efficiencies within the proposed new system.
The initial step of aligning the company goals is to make a full list of the tangible and intangible strategic goals, then turning these goals into measurable metrics that can be measured company wide. So for example, if a company has a strategic statement like: "to be the most cost efficient player in our industry while maintaining our position as the best in customer service", you can break this down into metrics that would serve as consistently measurable Key Performance Indicators (KPIs) for the company. Some of these KPIs might be:
profitability per project/customer
cost per business activity
contribution per channel
resolved customer queries per week
outstanding customer queries per week
training costs per customer service personnel
Once a list of these KPIs has been determined, they need to be tested and shared with the relevant level of employees; their feedback captured and used to refine the KPIs again until everyone that will be measured by these metrics buys into them.
The next step is to incorporate the strategic goals and metrics into the complete suite of tools. So for example, the stated aims of cost efficiency and customer service superiority will be captured in the strategic planning tool along with how they will be measured. The associated targets will be recorded in this tool and pushed down to the budgeting & forecasting tool for comparisons during the budgeting process. These same metrics will be built into the consolidation and financial reporting package so that across this international company, all divisions, regions and countries can be measured equitably and consistently. Finally, the metrics and the targets set from the strategic planning tool should be represented in the dashboarding application. The analytic (e.g. a barometer) illustrating resolved customer queries per week or contribution per channel would display a metric that everyone who sees it would be familiar with because they were part of the process determining that particular company-wide KPI.
It is obvious therefore, that if you had different streams not working closely together in trying to achieve the same goal, it would be very difficult to assemble a cohesive and consistent Enterprise Performance Management solution across all the different tools. For a start, you would need to ensure that you have the same or complimentary level of detail across all the tools so that their data can flow seamlessly amongst themselves with little or no data input or re-keying. You would need to co-ordinate the disparate group of users that the different tools touch and ensure their buy-in. This would entail a change in management process so they know how their jobs will be affected by the new solution and how they can contribute positively to its success. Only a deliberate process like this will wean them from their reliance on their tried and trusted Excel spreadsheets.
The success of a truly integrated Enterprise Performance Management solution however, hinges first and foremost on the support of the senior members of the organization. They have to see true strategic, operational, technological and emotional value, both in the short and long term. Once the project has been approved, it has to have a very senior executive as its champion throughout the organization. This individual needs to have the right level of influence, so in most cases it's the CEO, CFO or a very senior VP. The role of champion requires selling the benefits of the solution across the organization. However, it also requires the dissemination of what can be a paradigm shift in the culture of the organization. People will be measured and compensated differently based on the new system. The CEO of a large international company we worked with decided he did not want a 50-page monthly report, but a 4-page report of which the 1st page was a sheet of KPIs. Every senior manager was measured by this same 4-page report as it pertained to their department, region, country, etc. The 4-page report was produced seamlessly from the BPM tool, with each manager having the capability to drill down behind the numbers on those 4 pages. As far as the CEO was concerned, each manager should be able to run their business based on those 4 pages. If he had further queries, then the managers could always drill further into the data, but those four pages where able to provide a full picture of each business unit as well as the company as a whole.
The major omission when companies design Enterprise Performance Management solutions is that they neglect to take advantage of the opportunity to thoroughly review and, where necessary, re-engineer some of their existing processes. Time and time again, we come across instances where companies have simply recreated inefficient processes in the new software system. To take full advantage of the new EPM solution, the company needs to take a meticulous assessment of all processes that will be impacted and decide whether they can be improved not just from a process standpoint, but also in aligning to the EPM solution. So for example, one of the clients we worked with wanted to have a seamless data transfer of their fixed asset data from their asset management system to the EPM platform. However, they only discovered well into the project that their asset management system did not have the right level of granularity to enable the data transfer. They therefore had to go back and modify their asset management system, which caused a delay in the project.
I started this article somewhat impudently, challenging the value of Enterprise Performance Management software. Make no mistake however, of my absolute belief in them. The issue of EPM software not delivering its full value, lies not in the capabilities of the tools themselves, but in the implementation. It is absolutely possible for companies to have a corporate dashboard that leverages the various EPM tools in providing true, accurate, consistent information for informed decision making. However, in my opinion, companies do not put a true cost to the time and effort required to make this a reality. The path to a successful EPM solution has to be one intrinsically entwined with the strategy of the company. Furthermore, a EPM roadmap that incorporates all aspects of delivery: company goals and vision, business process re-engineering, project management, change management and software implementation needs to be in place to ensure success.
This article was written by Bernie Akporiaye, Practice Manager, Performance Management.
During the month of March, Bernie will be available to provide free advice to any of your Performance Management questions. He can be reached at:
