Presentation on theme: "The Holy Grail of Enterprise Performance Management Lee Mashburn Marketing & Product Management Executive Advising Consultant to Cogniti"— Presentation transcript:
The Holy Grail of Enterprise Performance Management Lee Mashburn Marketing & Product Management Executive Advising Consultant to Cogniti 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
Dissatisfaction with traditional planning processes is on the rise. Only 11 percent of companies surveyed are fully satisfied with their planning capabilities. More than two-thirds of companies surveyed report that planning accuracy diminished because of economic volatility. The Importance of Building Accurate Plans has Increased Source: Accenture – Authors Bergstrom, Batchelor, and Marcotte
The Need for a New Planning Approach Traditional PlanningFlexible, Dynamic Planning Driven off historical performance and internal operations. Schedule-driven annual exercise. Weak link to operations. Labor-intensive data collection. Emphasis on short-term profitability. Grounded in market expectations and external trends. Probabilistic scenarios including risk factors. 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”
Enterprise Performance Management Flavor Nuances Often confused with business process management. Alienates the public sector. Least leveraged by consultants and analysts. Most widely embraced by the “office of finance.” Alienates operations. Pushed heavily by Gartner, a leading industry analyst. Widely embraced by largest management consultants and software “mega-vendors.” Alienates SMB. Infers large, multi-national. Corporate Performance Management Business Performance Management Adopters BPM Partners Capgemeni Gartner Infor Prophix Tagetik PwC E&Y Aberdeen Oracle SAP IBM Cogniti Accenture CSC Relative Public Mindshare per Google Search Lots of Google search results 23% of business performance management Attracts larger organizations BPM, CPM, EPM: Simplifying a Complex Market Place
EPM, CPM, BPM... At the end of the day, it’s all really the same!
Spreadsheets Financial Management: Planning Budgeting Forecasting Consolidation Statutory Reporting Beyond Finance: Strategy Management Operational Analytics Profitability Analysis Predictive Analytics Scenario Modeling The Evolution of EPM – Where are you on the maturity curve? Gartner estimates that 40% of large organizations and up to 75% of mid-size organizations still heavily on spreadsheets
EPM Market... Large and Growing Fast Compound Annual Growth Rate (CAGR): Subscription: 15.7% Maintenance: 14.2% License: 9.5% TOTAL:12.7% Source: Forrester Research, Inc.
EPM Market Size by Application Strategy Management: Planning Scorecards Strategy Maps Objectives and Goal Setters Performance Measurement Fastest growing EPM application: Projected CAGR of 18% Source: Forrester Research, Inc.
Top Reasons for EPM Projects Source: BPM Partners 2010 Pulse Survey
The Need for the Holy Grail of EPM
Operational Planning Plan Type Traits Typically an annual C-Suite exercise Minimizes operational input No common toolset to tie the pieces together Budget preparation exercise Prior year results plus 10% Manual grind for cash impact Jam down operations’ throat Wait for the bad news Bet on last year plus 10% Prepare to negotiate Prepare to assign blame Financial PlanningStrategic Planning Standard Tools Spreadsheets PowerPoint slides Strategy maps SWOT analysis Analyst/market intel Spreadsheets Financial management tools BI tools Last year’s actuals , intranet Spreadsheets Last year’s actuals s Conference calls Sales and Ops Planning Results High cost, low return Difficult to assign value Overpromise, under-deliver Hard to communicate High cost, low return Negotiations with operations Strategy gets lost Just a budgeting and forecasting exercise Unclear strategic direction Little to no collaboration Financial plans cannot be executed Business processes not improved Conventional Planning – Types, Traits, Tools, Results
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.
Spreadsheets Financial Management: Planning Budgeting Forecasting Consolidation Statutory Reporting Beyond Finance: Strategy Management Operational Analytics Profitability Analysis Predictive Analytics Scenario Modeling The Holy Grail: Strategic, Financial, and Operational Alignment Continuous, Closed-Loop Execution Management Forward Visibility Connected Business Processes Faster course change, back-up plans Key Strategies are Achieved The Holy Grail of EPM
Suppliers Departments Divisions Corporate Geographical Locations EPM Must Help You Manage the Ripples
Aligned EPM (Marketing Example)... The Metrics Must Roll-Up CEO, CFO, COO Head of Marketing Mid-Management Front-Line EPS, ROIC, shareholder value ROMI, return-on-sales, retention Sales pipeline, win/loss ratio, h/c costs Leads, s opened, event attendees Event ManagementCRMTime Management ManagementBI Strategic Value to Company Tactical Value to Company Data Sources Role Performance Metrics
Achieving the Holy Grail of EPM – An Integrated Continuum Processes 2. ALIGN & MERGE 2. ALIGN & MERGE 1. PLAN & ASSIGN VALUE Strategic Operations Financial Operations Strategic Financial Extract Key Measurements Alert Off-Plan Performance Project Forward Consequences Advise Corrective Action 3. MEASURE4. EXECUTE & ADJUST
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.