From dashboard to optimisation

In the previous Industry Insight in this series, I revisited the assumptions behind enterprise performance management (EPM). This month, I look at the dashboard/scorecard component of EPM, along with operational optimisation.

We have come a long way since the days of office clerks pushing trolleys laden with dot matrix printouts to key executives in the organisation. These long, seemingly endless printouts contained vast amounts of static information that permitted no interrogation; they were anything but user-friendly, and they were available only to the elite.

How far we have come: today dashboards and scorecards proliferate in organisations, which understand that they democratise business intelligence and EPM.

Just as a driver focuses on the critical aspects of his car's performance through instruments displayed on his dashboard, so employees can quickly and visually ascertain key performance indicators (KPIs) and progress towards key targets.

One of the challenges in any organisation is to get all employees on-side, and one way is by letting them see their place in the bigger picture. Being a small cog in a big machine can hinder perspective and motivation. A dashboard visually shows the KPIs related to a specific employee's position; their role relative to a corporate goal, tactic or strategy; and progress towards targets.

And all of this early enough in the process for corrective action to be taken while it still matters.

Let's consider a few examples: management wants to increase sales by 8%; reduce customer churn by 10%; cut manufacturing defects by 25%; achieve R250 million in new product sales in six months; or boost plant productivity by 15%.

Designated employees would have access to a dashboard that on a daily, weekly and monthly basis shows progress to or slippage against target.

The data that informs the dashboard is drawn from the same multidimensional database that informed the EPM modules that were discussed in the previous Insight: planning, budgeting, forecasting, reporting and analysis and financial consolidation. This further extends the value derived from having a single version of the truth.

As the various departments working on a project or towards a target are now running in synch with other departments, organisational synergy starts to occur. So sales and marketing, manufacture, logistics, the contact centre, and after-sales service are all working and pulling together towards a common goal and fully in synch with each other.

This is strategic alignment, and its attainment alone can be said to justify the entire cost of the EPM exercise.

We have now come a long way, from planning, budgeting and forecasting all the way through to operational dashboards. With these foundations laid, the organisation can move towards operational optimisation.

We have now come a long way, from planning, budgeting and forecasting all the way through to operational dashboards.

Adrian van der Merwe is MD of 8th Man Consulting

The goal here is lofty: to optimise each functional area of the business, obtain a comprehensive view of the entire organisation working in synch, and maximise overall profitability, broken down by function and activity.

This is where EPM really comes into its own. Applying the concepts of EPM to each aspect of the business - HR, IT, sales, manufacturing, service - means you can bring in uncommon discipline and rigour across the organisation.

The linkages that EPM enables begin to deliver value for the business. As all operational entities are working off the same version of the truth, we can look at the impact of one aspect of the business on the others. This is analogous to the promise of enterprise architecture, where an organisation can model all of its resources in such a way that it can understand the impact of change before it occurs.

So, apart from a detailed understanding of and insight into functional areas, management can begin to anticipate impact of a decision taken in one functional area on another.

What will a marketing campaign do to sales? If sales take off, what will the impact be on production? And what of the contact centre? Will a strong marketing/sales campaign impact the contact centre, and the number of agents that will be needed, and what will the service levels be? Vitally, can management play devil's advocate and look at different scenarios and model their ideal responses?

The obvious answer is yes, and given the learning from each iteration, the organisation can begin to fine-tune and ultimately optimise its operations.

That is not just the future of EPM; it is available to any organisation today.

* Adrian van der Merwe is MD of 8th Man Consulting.