For businesses to optimise their performance, they need to close the gap between strategy and execution.
This is the view of Frank Naude, presales manager at SAP, speaking during the ITWeb, SAP-Accenture Enterprise Performance Management (EPM) Executive Forum at The Westcliff Hotel in Johannesburg.
“The world of business has gone through radical changes and businesses have to take advantage of EPM if they are to close this gap and maintain a competitive edge,” he said.
According to Naude, the days when businesses had the luxury of having periods of good visibility as well as ample time to plan are long gone.
“Previously, there were reliable charts and navigational aids so businesses always knew where they were; they had periodic corrections to maintain the course. Now businesses are rarely able to see that far ahead; and faced with this situation, there is need for rapid decision making,” he said.
First-time-right execution
He added that presently enterprises are never quite sure which way they are going to get taken or what dangers lay beneath the surface. “This needs reliance on 'first-time-right' execution”.
Naude also explained that clear enterprises should be able to see, think and act clearly.
“About 95% of a typical workforce does not understand its organisation's strategy; 60% of organisations do not link strategy to budgeting; 70% of companies do not link middle management incentives to strategy while 50% of individual goals and incentives composition are aligned with company strategy.”
On the other hand, Naude pointed out that 82% of Fortune 500 CEOs feel that their organisation did an effective job of strategic planning while 14% of the same CEOs indicated their organisation did an effective job of implementing the strategy.
He also revealed that strategy involves four aspects namely performance management; governance, risk and compliance; business intelligence and information management.
“When all these are combined, we will come up with what is known as business analytics, which most organisations aim to have. 77% of 'high performing' companies have above average analytical capabilities while 40% of high performing companies use analytics across the entire organisation.”
Governance, risk and compliance
On governance, risk and compliance, Naude is of the view that it has become part of running a business today.
“The strategic objective of governance, risk and compliance is to increase penetration in select regions and it also aims to increase production based on analysis,” he said.
According to Naude, 64% of companies reveal that governance, risk and compliance convergence is a priority for their organisations.
However, he noted that there are common governance challenges that businesses face. “Most businesses have a fragmented approach to managing risk as well as compliance.”
A comprehensive EPM, governance, risk and compliance; business intelligence and information management approach is needed to make organisations truly sustainable, added Naude.
There is no single solution that can solve the challenges facing organisations today, he said, adding that many of the issues are related in some way, and a holistic view must be taken when looking for solutions.
“For example, you can't plan without a clear strategy and you can't have a good strategy without considering risk and it is all in vain if your data quality is poor. Organisations must have a larger integrated view of the business and prioritise and tackle the issues with the bigger end-state in mind.
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