the holy grail of enterprise performance management lee mashburn marketing & product management...
TRANSCRIPT
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The Holy Grail of Enterprise Performance Management
Lee Mashburn
Marketing & Product Management Executive
Advising Consultant to Cogniti
September ‘12
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Agenda Overview
Strategy Management: We Must Close the Gap Between Costs and Returns
Enterprise Performance Management; Where Strategy Fits
The Need for a” Holy Grail” of Enterprise Performance Management
Defining and Realizing the “Holy Grail” of Enterprise Performance Management
About Cogniti
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Key Strategies are Not Being Executed . . . And at great cost
90% of U.S. organizations fail to execute their strategies successfully
Estimated that U.S. managers spend more than $10 billion annually on strategic analysis and strategy formulation – which means . . .
$9 billion wasted annually on strategy that is not successfully executed
Another statistic: Fortune 1,000 companies spend an average of $7 million per organization per year
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The Importance of Building Accurate Plans has Increased
Source: Accenture – Authors Bergstrom, Batchelor, and Marcotte
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The Need for a New Planning Approach
Traditional Planning Flexible, Dynamic Planning
Driven off historical performance and internal operations.
Schedule-driven annual exercise.
Weak link to operations.
Labor-intensive data collection.
Emphasis on short-term profitability.
Grounded in market expectations and external trends.
Probabilistic scenarios including risk factors.
Real-time adjustments.
Planning tightly integrated to front line.
Broader planning scope to cover balance sheet and cash flow.
Source: Planning for Success in Dynamic Environments, Accenture, 2009
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Accenture Conclusions
Embed Flexible and Dynamic Planning Processes Focus on what matters most – tie it to financials Incorporate a range of scenarios Involve your operating staff in planning
Renew the Focus on Strategic Planning Helps to prioritize bets
“Forecasts are 33% more accurate when Operations is an integral part of the process”
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Enterprise Performance Management
Flavor
Nuances
• Often confused with business process management.
• Alienates the public sector.
• Least leveraged by consultants and analysts.
• Most widely embraced by the “office of finance.”
• Alienates operations.
• Pushed heavily by Gartner, a leading industry analyst.
• Widely embraced by largest management consultants and
software “mega-vendors.”
• Alienates SMB.
• Infers large, multi-national.
Corporate Performance Management
Business Performance Management
Adopters
• BPM Partners
• Capgemeni
• Gartner• Infor
• Prophix• Tagetik• PwC• E&Y
• Aberdeen• Oracle• SAP• IBM
• Cogniti• Accenture
• CSC
Relative Public Mindshare per Google Search
Lots of Google search results
23% of business performance management
Attracts larger organizations
BPM, CPM, EPM: Simplifying a Complex Market Place
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EPM, CPM, BPM . . .
At the end of the day, it’s all really the same!
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The Evolution of EPM – Where are you on the maturity curve?
Gartner estimates that 40% of large organizations and up to 75% of mid-size organizations still heavily on spreadsheets
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EPM Market . . . Large and Growing Fast
Compound Annual Growth Rate (CAGR):
Subscription: 15.7% Maintenance: 14.2% License: 9.5%
TOTAL: 12.7%
Source: Forrester Research, Inc.
FY 2008A
FY2009A
FY 2010F
FY 2011F
FY 2012F
$0 $1,000 $2,000 $3,000 $4,000
EPM Market Size
Subscription Revenue
Maintenance Revenue
License Revenue
Annual Revenue ($ millions)
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EPM Market Size by Application
Strategy Management: Planning Scorecards Strategy Maps Objectives and Goal Setters Performance Measurement
Fastest growing EPM application:• Projected CAGR of 18%
Planning, Budgeting, and Forecasting
Financial Reporting
Strategy and Measurement
Cost and Profitability Analysis
$0 $500 $1,000 $1,500
EPM Market Size by Application
FY 2012F
FY 2008A
Annual Revenue ($ millions)
Source: Forrester Research, Inc.
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Top Reasons for EPM Projects
Source: BPM Partners 2010 Pulse Survey
Improve Management Reporting
Enhance Planning
Improve Operational Analysis
Fix Painful Processes
Improve Company Performance
0 50 100 150 200 250 300 350 400
Top Reasons for EPM Projects
Number of Respondents
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The Need for the Holy Grail of EPM
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Operational PlanningPlan Type
Traits
• Typically an annual C-Suite exercise
• Minimizes operational input
• No common toolset to tie the pieces together
• Budget preparation exercise
• Prior year results plus 10%
• Manual grind for cash impact
• Jam down operations’ throat
• Wait for the bad news
• Bet on last year plus 10%
• Prepare to negotiate
• Prepare to assign blame
Financial PlanningStrategic Planning
Standard Tools
• Spreadsheets
• PowerPoint slides
• Strategy maps
• SWOT analysis
• Analyst/market intel
• Spreadsheets
• Financial management tools
• BI tools
• Last year’s actuals
• Email, intranet
• Spreadsheets
• Last year’s actuals
• E-mails
• Conference calls
• Sales and Ops Planning
Results
• High cost, low return
• Difficult to assign value
• Overpromise, under-deliver
• Hard to communicate
• High cost, low return
• Negotiations with operations
• Strategy gets lost
• Just a budgeting and forecasting exercise
• Unclear strategic direction
• Little to no collaboration
• Financial plans cannot be executed
• Business processes not improved
Conventional Planning – Types, Traits, Tools, Results
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To Compound the Problem
Gartner 2011 BI Magic Quadrant
“Ongoing dissatisfation among IBM, Oracle, & SAP Business Intelligence (BI) customers
suggests that chronic dissatisfaction may be the new
normal.”
• High cost of ownership
• Poor Performance
• Implementation difficulty
• Not achieving intended business objectives
• BI is being increasingly promoted as a performance management tool.
• Big mega-vendors are failing to properly integrate BI acquisitions with the many performance management modules they offer.
• Improving performance is not being reached by measuring, analyzing, and reporting everything.
• Historic performance results are not helping to achieve business objectives.
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The Holy Grail of EPM
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Suppliers
Departments
Divisions
Corporate
Geographical Locations
EPM Must Help You Manage the Ripples
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Aligned EPM (Marketing Example) . . . The Metrics Must Roll-Up
CEO, CFO, COO
Head of Marketing
Mid-Management
Front-Line
EPS, ROIC, shareholder value
ROMI, return-on-sales, retention
Sales pipeline, win/loss ratio, h/c costs
Leads, emails opened, event attendees
Event Management CRM Time Management Email Management BI
Strategic Value to Company
Tactical Value to Company
Data Sources
Role Performance Metrics
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Achieving the Holy Grail of EPM – An Integrated Continuum
Processes
2. ALIGN &
MERGE
1. PLAN & ASSIGN VALUE
Strategic OperationsFinancialOperations
Strategic
Financial
Extract Key Measurement
s
Alert Off-Plan Performance
Project Forward
Consequences
Advise Corrective
Action
3. MEASURE4. EXECUTE & ADJUST
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Conclusions
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Thank You
Please visit my website at: http://www.leemashburn-com.webs,com/