Transcript The Holy Grail of Enterprise Performance

The Holy Grail of Enterprise Performance Management
Lee Mashburn
Marketing & Product Management Executive
Advising Consultant to Cogniti
[email protected]
September ‘12
Agenda Overview
 Strategy Management: We Must Close the Gap Between Costs and Returns
 Enterprise Performance Management; Where Strategy Fits
 The Need for a” Holy Grail” of Enterprise Performance Management
 Defining and Realizing the “Holy Grail” of Enterprise Performance
Management
 About Cogniti
Key Strategies are Not Being Executed . . . And at great cost
 90% of U.S. organizations fail to execute their strategies successfully
 Estimated that U.S. managers spend more than $10 billion annually on
strategic analysis and strategy formulation – which means . . .
 $9 billion wasted annually on strategy that is not successfully executed
 Another statistic: Fortune 1,000 companies spend an average of $7 million
per organization per year
The Importance of Building Accurate Plans has Increased
Dissatisfaction with
traditional planning
processes is on the
rise.
Only 11 percent of
companies
surveyed are fully
satisfied with their
planning
capabilities.
Source: Accenture – Authors Bergstrom, Batchelor, and Marcotte
More than two-thirds
of companies
surveyed report that
planning accuracy
diminished because of
economic volatility.
The Need for a New Planning Approach
Traditional Planning
Flexible, Dynamic Planning
 Driven off historical performance and
internal operations.
 Grounded in market expectations and
external trends.
 Schedule-driven annual exercise.
 Probabilistic scenarios including risk
factors.
 Weak link to operations.
 Labor-intensive data collection.
 Emphasis on short-term profitability.
 Real-time adjustments.
 Planning tightly integrated to front line.
 Broader planning scope to cover
balance sheet and cash flow.
Source: Planning for Success in Dynamic Environments, Accenture, 2009
Accenture Conclusions
 Embed Flexible and Dynamic Planning Processes
 Focus on what matters most – tie it to financials
 Incorporate a range of scenarios
 Involve your operating staff in planning
 Renew the Focus on Strategic Planning
 Helps to prioritize bets
“Forecasts are 33% more accurate when Operations is an integral part of the process”
BPM, CPM, EPM: Simplifying a Complex Market Place
Flavor
Nuances
Business Performance
Management
Corporate Performance
Management
Enterprise Performance
Management
• Often confused with business
process management.
• Most widely embraced by the
“office of finance.”
• Alienates the public sector.
• Alienates operations.
• Widely embraced by largest
management consultants and
software “mega-vendors.”
• Least leveraged by consultants
and analysts.
• Pushed heavily by Gartner, a
leading industry analyst.
• BPM Partners
Adopters
Relative Public
Mindshare per
Google Search
• Capgemeni
Lots of Google
search results
• Gartner
• Infor
• Prophix
• Tagetik
• PwC
• E&Y
23% of business
performance
management
• Alienates SMB.
• Infers large, multi-national.
• Aberdeen
• Oracle
• SAP
• IBM
• Cogniti
• Accenture
• CSC
Attracts larger
organizations
EPM, CPM, BPM . . .
At the end of the day, it’s all really the same!
The Evolution of EPM – Where are you on the maturity curve?
Spreadsheets
Gartner estimates that 40% of
large organizations and up to
75% of mid-size organizations
still heavily on spreadsheets
Financial Management:
Beyond Finance:
• Planning
• Strategy Management
• Budgeting
• Operational Analytics
• Forecasting
• Consolidation
• Statutory Reporting
• Profitability Analysis
• Predictive Analytics
• Scenario Modeling
EPM Market . . . Large and Growing Fast
EPM Market Size
Compound Annual Growth Rate (CAGR):
FY 2012F
FY 2011F
Subscription Revenue
FY 2010F
Maintenance Revenue
FY2009A



Subscription:
Maintenance:
License:
15.7%
14.2%
9.5%

TOTAL:
12.7%
License Revenue
FY 2008A
$0
$1,000
$2,000
$3,000
Annual Revenue ($ millions)
Source: Forrester Research, Inc.
$4,000
EPM Market Size by Application
EPM Market Size by Application
 Strategy Management:
Cost and Profitability Analysis
Strategy and Measurement
FY 2012F
Financial Reporting
FY 2008A
Planning, Budgeting, and
Forecasting





Planning
Scorecards
Strategy Maps
Objectives and Goal Setters
Performance Measurement
 Fastest growing EPM application:
$0
$500
$1,000
$1,500
Annual Revenue ($ millions)
Source: Forrester Research, Inc.
• Projected CAGR of 18%
Top Reasons for EPM Projects
Top Reasons for EPM Projects
Improve Company Performance
Fix Painful Processes
Improve Operational Analysis
Enhance Planning
Improve Management Reporting
0
Source: BPM Partners 2010 Pulse Survey
50
100 150 200 250 300
Number of Respondents
350
400
The Need for the Holy Grail of EPM
Conventional Planning – Types, Traits, Tools, Results
Plan Type
Traits
Strategic Planning
Financial Planning
Operational Planning
• Typically an annual C-Suite
exercise
• Budget preparation exercise
• Wait for the bad news
• Prior year results plus 10%
• Bet on last year plus 10%
• Manual grind for cash impact
• Prepare to negotiate
• Jam down operations’ throat
• Prepare to assign blame
• Minimizes operational input
• No common toolset to tie the
pieces together
Standard
Tools
• Spreadsheets
• Spreadsheets
• Spreadsheets
• PowerPoint slides
• Financial management tools
• Last year’s actuals
• Strategy maps
• BI tools
• E-mails
• SWOT analysis
• Last year’s actuals
• Conference calls
• Analyst/market intel
• Email, intranet
• Sales and Ops Planning
• High cost, low return
• Unclear strategic direction
• Negotiations with operations
• Little to no collaboration
• Strategy gets lost
• Financial plans cannot be
executed
• High cost, low return
Results
• Difficult to assign value
• Overpromise, under-deliver
• Hard to communicate
• Just a budgeting and
forecasting exercise
• Business processes not
improved
To Compound the Problem
Gartner 2011 BI Magic Quadrant
“Ongoing dissatisfation among
IBM, Oracle, & SAP Business
Intelligence (BI) customers
suggests that chronic
dissatisfaction may be the new
normal.”
• High cost of ownership
• Poor Performance
• Implementation difficulty
• Not achieving intended business
objectives
• BI is being increasingly promoted as
a performance management tool.
• Big mega-vendors are failing to
properly integrate BI acquisitions
with the many performance
management modules they offer.
• Improving performance is not being
reached by measuring, analyzing,
and reporting everything.
• Historic performance results are not
helping to achieve business
objectives.
The Holy Grail of EPM
Spreadsheets
Financial
Management:
Beyond Finance:
The Holy Grail:
• Strategy Management
• Planning
• Operational Analytics
•Strategic, Financial, and Operational
Alignment
• Budgeting
• Profitability Analysis
•Continuous, Closed-Loop Execution
Management
• Forecasting
• Predictive Analytics
•Forward Visibility
• Consolidation
• Scenario Modeling
•Connected Business Processes
• Statutory Reporting
•Faster course change, back-up plans
•Key Strategies are Achieved
EPM Must Help You Manage the Ripples
Corporate
Geographical
Locations
Divisions
Departments
Suppliers
Aligned EPM (Marketing Example) . . . The Metrics Must Roll-Up
Role
Data Sources
Performance Metrics
CEO, CFO, COO
EPS, ROIC, shareholder value
Head of Marketing
ROMI, return-on-sales, retention
Mid-Management
Sales pipeline, win/loss ratio, h/c costs
Front-Line
Leads, emails opened, event attendees
Event Management
CRM
Time Management
Email Management
Strategic Value to
Company
Tactical Value to
Company
BI
Achieving the Holy Grail of EPM – An Integrated Continuum
2. ALIGN &
MERGE
1. PLAN & ASSIGN VALUE
Strategic
Financial
Strategic
Financial
Operations
Operations
Processes
4. EXECUTE & ADJUST
Advise
Corrective
Action
Project
Forward
Consequences
3. MEASURE
Alert Off-Plan
Performance
Extract Key
Measurements
Conclusions
As of today, the
costs of strategic
planning are not
returning desired
results
Strategic planning
is changing
(iterative,
collaborative) –
fueled by the
dynamic economy
and by increasing
customer
demands
Integrating
strategic planning
into an
overarching
performance
management
program is
beneficial
Achieving the
“Holy Grail” of
performance
management is
now within your
grasp - thanks to
new-generation
software tools.
Thank You
Please visit my website at:
http://www.leemashburn-com.webs,com/