Enterprise Performance Management Done Right

An Operating System for Your Organization

Ron Dimon

• Publisher: Wiley
• Year: 2013
• Print ISBN:
  9781118370759
• Edition: 1
• eBook ISBN:
  9781118417133
• Topic: Business
• Subtopic: Information Management
• Index: Business

A workable blueprint for developing and implementing performance management in order to improve revenue growth and profit margins

Enterprise performance management (EPM) technology has been rapidly advancing, especially in the areas of predictive analysis and cloud-based solutions. Real Enterprise Performance Management introduces a framework for implementing and managing next-generation functionality for better insight, focus, and alignment of EPM. This blueprint shows that EPM can have a direct positive impact on revenue growth, operating margin, asset utilization, and cash cycle efficiency.

• Introduces a framework for implementing and managing next-generation functionality for better insight, focus, and alignment
• Reveals that EPM can have a strong impact on revenue growth, operating margin, asset utilization, cash cycle efficiency

Today's businesses have a great deal of data and technology, but less-than-fact decisions are still made. Executives need a structured framework for gathering, analyzing, and debating the best ways to deploy capital, people and time. Real Enterprise Performance Management joins IT and finance in a digestible blueprint for developing and implementing performance management in order to improve revenue growth and profit margins.

Chapter 1
What's Broken and What's Possible

“Finding what's wrong and fixing it” versus “seeing what's possible and going for it” give two very different lives.

—Tony Mayo

We are in the middle of an information deluge and an insight glut.¹

Our systems, processes, and information are still struggling to escape silos when the economy is crying out for collaboration, efficiency, and better results.

Folks are constantly reinventing the wheel at work and some lament “if only people in our company knew what everyone in our company knows!”² Many companies can barely agree on the definition of a customer, an employee, or sales figures, let alone agree on how to improve them.

With all this technology and information at our fingertips, we are still making decisions in the dark and relying on our best guesses.

Certainly some organizations are doing better than others when it comes to closed-loop, fact-based decision-making, but the opportunity to take advantage of all this data we have is barely being exploited.

Strategy-Execution Gap

What is it that thwarts a rigorous process of sustainably executing an organization's strategy? As shown in Figure 1.1, some of the barriers include those capabilities that are the responsibility of managers and leaders in the organization.

Figure 1.1 Barriers in the Strategy-Execution Gap

In March 2010, Harvard Business Review (HBR) surveyed 1,075 HBR readers about strategy and execution in their organizations.³ Only 37% said their companies are “very good” or “excellent” at execution.

The HBR survey found that the top barriers to strategy-execution were:

• Making the strategy meaningful to front-liners
• Poor communication of strategy
• Lack of accountability
• Lack of clear and decisive leadership
• Too much focus on short-term results
• Everyone is too busy/not enough resources
• Resistance to change
• Strategy goals remain vague and pointless:
  • Leadership actions are inconsistent with strategy
  • Inability to measure impact
  • Business units with competing agendas
  • Too much uncertainty

In my consulting work, and being an employee for small, medium, and large organizations, I've seen some of the barriers to effective strategy execution including the following:

• No vetting of the strategy to see if it's actually doable (do we have the right capital, right products, right markets, right people?), and little debate to refine the strategy.
• Low agreement on what the strategy actually is—even among the C-suite executives (it's always a surprise to see this).
• Low connection between the corporate financial and operational business models (made in the vetting debate) and budgets, plans, and forecasts.
• Low buy-in to the budgets, plans, and forecasts (usually due to management overrides after a bottoms-up exercise), resulting in low buy-in to the strategy from lower levels in the organization.
• Low agreement on what the right measures are to see how well we're doing, and no visible connection between those measures and strategic objectives.
• Low belief that the numbers seen are accurate (or at least the same version), as well as a lot of manual effort to get at the numbers.
• Low understanding of the root causes as to why the company achieves, underachieves, or overachieves results.
• Little connection between root-cause analysis and tweaking the strategy (“hey, we are losing money on product X, and it's not a loss-leader, should we be in that business?”).
• Low accountability for results. Some organizations don't have targets or owners for their key objectives.

When it does work, I've seen things like accounts receivable associates having a Business Intelligence (BI) dashboard that shows how they have a daily impact on days sales outstanding and cash collections which directly impacts strategic objectives like profitable revenue growth.

According to Roger Martin, Dean of the Rotman School of Management at the University of Toronto, in his article “The Execution Trap,”⁴ as operational and front-line employees have to make decisions every day involving customers and operations, they become de facto strategists. Or, in my view, at least de facto strategy executioners, and I don't mean they have to kill the strategy!

Imagine if your number-one strategic objective is “profitable revenue growth,” and the target is 10% year-over-year improvement in both revenue and operating margin. Also imagine that every employee knows this—they even have it written on a laminated card they carry around in their wallets and purses. And then one of your customer service reps gets a phone call from an irate customer. Typically, the customer service rep is measured on customer satisfaction including low call time, low time-to-resolution, high-marks on the net promoter score scale for each interaction, and so on. But what if the phone call from the irate customer was accompanied by a dashboard that automatically popped up on the customer service rep's screen that showed:

• Customer lifetime value (CLV) (how muc...

Table of contents

• Cover
• Table of Contents
• Title
• Copyright
• Dedication
• Foreword
• Preface
• Acknowledgments
• Chapter 1: What's Broken and What's Possible
• Chapter 2: An Enterprise Performance Management Process
• Chapter 3: Gather: Turning Data into Information
• Chapter 4: Understand: Turning Insights into Actions
• Chapter 5: Debate: Turning “What If” into “What's Next”
• Chapter 6: Commit: Bringing Accountability and Focus to the Enterprise
• Chapter 7: Execute: From Insight to Actions to Results
• Chapter 8: Strategy: Aligned to the Right Outcomes
• Chapter 9: Bringing It All Together
• Appendix: An EPM Maturity Model
• Bibliography
• About the Author
• Index
• End User License Agreement