Performance management blueprint

Corporate performance management (CPM) is about putting enterprise data to work to provide better financial and business performance visibility. This has forced companies to rethink what they measure and how they put those metrics to work. For those considering CPM for the first time, know that a successful CPM system requires some forethought, and a lot of focus.

To manage something you have to be able to measure it. With numerous disparate, unaligned and unintegrated business management systems in place - all using different metrics or measures - companies are often at a loss as to how to obtain a single comprehensive, view of business performance. To do so they need to measure the implementation and execution of primary business strategies, as well as the achievement of key business goals. They also need to be able to view their operations from more than a financial perspective. However, with no synchronisation of effort across the business, timelines are mismatched, goals are out of kilter and operations in different divisions impact negatively on one another, limiting cost containment, productivity and performance optimisation. This is the primary driver for the implementation of a CPM solution.

Throwing technology at the problem will not solve it. Consideration of a CPM solution begins not with the selection of relevant soft and hardware, but with the creation of an information blueprint. Divisional goals, objectives and initiatives must be aligned with the overall business strategy and an assessment made of where the fastest wins can be achieved through the implementation of a CPM information strategy. Delivery priorities need to be divided into logical phases and the solution implemented in a manner that gives the fastest ROI and wins in the most critical areas, so ensuring profitability and creating competitive advantage.

The information required should be pre-determined. For example, primary or top-line information such as that required by the executive should be identified, its accessibility and accuracy established, and its availability to key authorised decision-makers assured. In the same manner, key information required by line managers, operational and administrative staff needs to be verified.

The aim is to understand what information is available and then define a single layer of business data for decision-making purposes. The fastest wins with the greatest returns can usually be found at executive decision-making levels, although all CPM strategies should be applied in a phased manner and be sophisticated to provide greater detail to more dense levels of role players.

Secondary data may include operational data from across the business that may directly or indirectly impact or influence decision-making and performance at other levels. Or it may comprise detailed data that may be required for drilldown by financial or sales staff, for example. A phased approach to the identification of key performance indicators (KPIs), data cleansing, collection and use should be implemented.

These needs could be determined per department, division or per business competency, such as HR, finance, etc. A secondary requirement may fall into operational areas, where operational managers would need to understand key metrics and parameters that may affect immediate and long-term production or service delivery. In the final instance, reports may need to be drawn up for different role players - ie, executives will require different levels of information than managers, operations chiefs and staffers.

Collecting information is not usually a problem for organisations that have already invested in enterprise resource planning (ERP), business intelligence (BI) and other enterprise-wide solutions. While numerous vendors have released CPM-specific solutions in the past couple of years, organisations are looking to extend their investment in existing applications.

However, to access and store information from the various transactional systems and allow for report creation, planning and projections, BI, data warehousing and analytics solutions may be necessary. To align goals and objectives across the company with the overall business strategy a balanced scorecard solution is recommended. However this information is collated, it must be easily accessible to all identified decision-making staff members. Solutions include publishing KPIs onto a portal or dashboard, or via automated reports, with detailed data available for drilldown through the creation of intuitive data links.

While dependant to some degree on technology, a CPM solution often needs specialist intervention to be successful. For analysis and information discovery human smarts are required. The technology systems may also require considerable tweaking, fine-tuning and ongoing maintenance. Research houses are strongly recommending the creation of BI centres of competency that are staffed by business and technology experts. The design of the technology platform for CPM certainly requires some expertise given the high degree of integration and cross-referencing with other applications that is required to ensure information access. Outsourcing the maintenance of these systems to a focused expert is one way to solve this problem.

To make a positive difference to the performance of an organisation, CPM has to become part of the daily operations of that company, focusing decision-makers on overall performance, highlighting anomalies and allowing for fast assessment and analysis of numerous disparate KPIs.

The value of scorecarding lies in its ability to not only link individual and departmental responsibilities to timelines but to prioritise achievement of these goals based on ongoing assessment. This `feedback loop` ensures achievement of goals, not just a statement of required goals.

Scorecarding further ensures that individuals and divisions understand the drivers of key performance indicators by breaking these factors down into measurable criteria. The effects and impacts of events or non-achievement of priorities also becomes measurable and provides multiple perspectives of the business to staff previously only focused on their areas of competence.

In the final instance, CPM is not only about measurement of business performance and the various components that affect performance, but about effecting change timeously. CPM allows for clarity and visibility, but it is human intervention that will drive positive change throughout an organisation.

`Change` need not be limited to the big decisions by executives that affect the attainment of company strategy. As CPM systems grow and become more sophisticated, core processes can be refined, delivering considerable long-term advantage to the organisation.

CPM is here to stay. From a $520 million market in 2003, CPM is forecast to grow to more than $900 million by 2009. However, successful CPM relies on a methodical approach and structured implementation. Careful initial consideration of current and future business needs will assist to ensure your investment is a sound one and will provide ongoing value.