Top of the food chain
Corporate performance management software is no longer just for the most sophisticated or progressive companies, it is something that has been made available and attainable for just about any sized enterprise. Shawn Rogers (Enterprise Management Associates) moderates a panel podcast with the expert opinion of Jon Kondo (Host Analytics), Geoffrey Ng (PROPHIX Software) and Tony Levy (IBM).
SR: I’d like to ask the panel about their thoughts on the three most common mistakes that companies make when they’re planning a CPM strategy. Jon, let’s start with you—from your experience, what do people need to avoid?
JK: Like a lot of things, if you jump in ahead of taking the time to think about what you’re doing you are prone to making mistakes. The three areas that I often see mistakes in are as follows. One is that companies assume that a system will do it all. The system is only part of the solution and needs to include the people, the processes and the overall philosophy across a company that performance management is important. A robust solution helps to enable that but it has to be across the company. The second area would be assuming that you have to get your CPM solutions set from an ERP vendor because it’s going to be more integrated or included, so to speak. What we find is that when companies look across the business there is actually data coming from lots of different areas, so having it integrated from an ERP vendor isn't necessary and oftentimes is cumbersome. The third area is waiting for the all-encompassing CPM project to be done, a year-long project. I think it’s more important that you do it in a phased approach with quick wins because what often happens is that people find it’s an interesting piece of discovery and that it would be great to add more functionality to it. If you can iterate multiple times and have the flexibility to do that, you get to a more valuable solutions set in a much faster fashion. So those are the three areas I’ve seen from my experience.
GN: I agree with some of the things that Jon mentioned. In my observation and when working with various customers around the world, one of the biggest challenges is that they often try to do too much at one time. In my experience the really successful organizations whose projects have yielded significant business value are those that have taken a more incremental or phased approach usually beginning with an extremely focused initiative, whether it be planning, forecasting or reporting, and not trying to do everything at once. CPM is about the people and the strategies in place. Also to Jon’s point, I think the other thing is that CPM is not simply about the technology—therefore don't let it become the centrepiece of the solution. It is about defining the strategy and having management buy into the overall process. So when defining a CPM strategy you want IT to be your partner along with the business stakeholders when decisions are made.
TL: I want to build on Geoff’s comments. He highlighted the lack of strong executive sponsorship as an obstacle; and I would like to echo that and say that the executive support needs to encourage new tools and deploy new practices that will both automate and ultimately transform their critical processes. Geoff also mentioned the lack of a strong partnership between business and IT as another obstacle. I would highlight one other obstacle that we often see and that is lack of clear vision and road map for a performance management journey. We find that successful companies generally follow at least a three step road map. The first step is that they recognize the opportunity to automate what is largely manual spreadsheet-based approaches to planning reporting and analysis. The second step is to adopt best practices—for instance, looking at both the leading and lagging indicators; treating highly variable and material KPI’s differently from low variability and low materiality KPI’s; enabling rolling horizons for planning and forecasting; and designing business drivers into their processes, just to name a few. The third step is something that you echoed earlier in your introduction, Shawn—to extend enterprise life. Often these initiatives seem to be spearheaded by the finance department, but there is significant value that can be unlocked when it is extended beyond finance to integrate operational performance management processes with financial processes.
Listen to this Podcast to help you avoid the three most common mistakes that companies make when they’re planning a CPM strategy.
Publications from Enterprise Management Associates (EMA)