Enterprise performance management (EPM) can be one of the most effective and impactful initiatives an organisation can embark on as it seeks to improve overall results, accountability and regulatory compliance.
But many organisations find themselves stumbling into a number of EPM pitfalls. They are relatively consistent from one organisation to another, and if the implementation and management teams can avoid them, their EPM project will be delivered faster, more cost-effectively, and yield value to the organisation earlier in the process.
1. Don't try to measure everything If it is true that you can't manage what you can't measure, it is equally true that you can't manage effectively if you measure everything. This makes the process too complex and costly, and leads to over-analysis of performance data. Management should consciously limit the scope of the EPM initiative and deliver it in incremental steps.
2. Measuring the wrong factors As dangerous as measuring too much is measuring the wrong, or unnecessary things. The best way around this is to link the success of the EPM initiative to specific performance indicators, ones which have been mutually agreed and which will have a direct bearing on the business. This aligns performance management results and outcomes with business objectives, which is the Holy Grail of EPM.
3. Failure to obtain stakeholder buy-in No IT project has ever delivered its full value without the full buy-in of all stakeholders. These include the executive, midlevel management, financial management and the users themselves.
The implementation should be preceded by information sharing and training sessions. The purpose of the EPM initiative should be sold passionately and frequently, and successes communicated - success breeds success, and as value obtained is perceived, communicated, understood and shared with other stakeholders, so demand will grow for further EPM implementation. This is the process known as the virtuous feedback loop. Users should as a matter of course be given a clear and easy channel for providing feedback and input.
4. Retaining silos EPM, by its very definition, should cut across divisional and departmental boundaries, so the organisation can arrive at one version of the truth. However, the siloed nature of organisations today means that it unlikely that the EPM initiative will span the silos.
This can lead to multiple versions of the truth; users bypassing the EPM system and running their own spreadsheets in the development known as "shadow IT"; and fierce divisional competition for resources.
The purpose of the EPM initiative should be sold passionately and frequently, and successes communicated.
Adrian van der Merwe is MD of 8th Man Consulting.
Such a situation entrenches the "us" and "them" mindset inherent in many organisations and inhibits the unlocking of full value of the EPM investment.
5. Signing off too early It can be tempting to emulate George Bush and state: "Mission accomplished" when the first phase of the EPM project has gone live. However, that is really where the job begins. Users must constantly be reinvigorated; audits conducted to ensure enduring value to the organisation; and diagnostics performed so managers can be certain they are asking the right questions and deriving the right meaning.
6. Not embedding EPM in the organisation EPM needs to be hardcoded into the organisational DNA, and made part of the way business is run on a daily, weekly and monthly basis.
Only this way will the organisation enjoy full and lasting value, beginning with user acceptance and return on investment; vastly enhanced and inherent corporate governance; and smoother reporting, planning and execution against performance objectives, along with the benefits that flow from a smoother functioning organisation.
On the one hand, a company can fall into the trap of these six common errors and see its EPM initiative stutter and stop; on the other, it can circumvent them and obtain the long-term value expected.
* Adrian van der Merwe is MD of 8th Man Consulting.
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