Performance Administration ROI – Think Before You Invest

Few today dispute the need for Enterprise Performance Management remedies – with higher than 65% of US organizations and 62% plus European companies deploying Well balanced Scorecard or strategic EPM techniques within their organizations. Much like all enterprise systems solutions on the other hand, the hyperbole from consultants on value put has been prodigious and at times stupefying.
What really matters for fresh buyers in Asia, and for SMEs across the world, is understanding what evidence there’s of the ROI, of the, oftentimes, significant methods infrastructure investments?
A 2007 survey of 200 large companies by the Hackett Band of Atlanta, discovered that organizations deploying ‘world-class’ EPM techniques (defined as companies in the top quartile for efficiency and efficiency) enjoyed equity market returns of 2.4 times of these peers within their industry (including stock price and dividends). This study also revealed a critical success element in successful deployment was ‘pervasiveness’ – that is to say, many more operations managers had access to the web reporting tools that in their peers in the industry. It really is thus where PM permeates throughout the organization that we start to see the real business performance gains (equity and value).
Pervasiveness comes with a cost. Many organizations have driven PM from the ERP or from the Finance systems, usually drowning their Reporting techniques in data and remaining ‘data poor’. By doing this, mid to large sized companies across the USA, Europe and Australia continue to spend heavily in re-aligning, simplifying and consolidating their EPM styles. In so many cases, execution has failed, because of both ‘poorly-planned deployments’ of simplistic Balanced Scorecards, and for that reason of monumental complexities imposed by ‘poor-fit’ EPM techniques invariably add-ons to major ERPs (they shall remain nameless). Thus knowing what to measure from the inception is vital – get it right at the very top and construct the ‘decision architecture’ from the most notable down.
Pervasiveness does not mean saturation. Making the proper data available at the proper level will require the construction of particular person dashboards for every ‘entity’ in your measurement hierarchy – it must mean additional costs in both choosing the right ‘dashboard’ application, and in acquiring the knowledge to oversee and command the deployment. Targeting the decision makers – not the analysts is essential – put information in to the hands of those have the energy and influence to enact switch.
Another key adjustable in determining the possible ROI of EPM initiatives is the ‘Culture’ of the organization. A 2007 BRWS survey found that both largest obstacles to effective EPM deployment were; (a) lack of accountability, and (b) insufficient readiness to support a measurement driven program of management. Ironically, it is very often therefore that organizations attempt to introduce EPM systems, and by doing this bury themselves in inner conflict and significant IT and consulting costs overruns. Thus, it’s vital to learn your restrictions before you invest – to create the foundations for accountability before investing in the technologies.
Oracle EPM
As important as the availability of the right data at the right level, is learning how exactly to use data to effect choices. Will your dashboard system enable a hierarchical view of one’s business? Does it enable ‘drill through’ to major performance drivers at operational, economic and market – sales levels? Do you meet regularly (virtually or elsewhere) to examine key data? Are staff at all levels aware of ‘performance data’ which is relevant to work they control? Can be your EPM system associated with your performance appraisal and rewards systems? Without consideration of the method that you use your EPM system prior to your investment, there will be no ROI – but there will be ever increasing costs.
The implications? We suggest before you invest, you consider the following:
1. READINESS – Conduct a ‘EPM or BSC Readiness Assessment’ – know where you have weaknesses, and do not invest until you have established the right foundations;
2. CEO COMMITMENT – make sure you have the buy inside of off the Senior Executives before starting – no buy-in is really a RED LIGHT;
3. ROAD MAP – clearly map out the pathway to deployment over a 18 calendar month to 3 year horizon – find out where and when you must invest, and who to require at different stages;
4. BUSINESS CASE – invest time in understanding the total spend and the potential ‘total cost of ownership’ of this system – and quantify the huge benefits before you begin;
5. MAP THE INFORMATION ARCHITECTURE BEFORE YOU INVEST – know very well what information key decision makers need before you build one’s body;
6. MAKE IT PERVASIVE – know that for this to deliver real ROI, you will have to ensure it is pervasive – making meaningful data available at all decision making levels – arrange for these costs;
7. MANAGE IT – Reporting without an effective Performance Management Method is worthless – structure and management your management processes to totally align with and support EPM deployment.
In articles to follow, I’ll review a number of the technology options and considerations, to ensure the optimal ROI on your EPM investment.

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