Simplifying the Complex Enterprise Performance Management Market

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This presentation overviews the enterprise performance management (EPM) market and describes a new approach for realizing key strategies using better EPM software.

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  • I am excited to be here today to speak to such an intelligent and esteemed group of people. What you do everyday as relates to strategic planning (think . . . plan . . . act) is more relevant today than ever before.
  • Strategic planning is increasingly being categorized within the broad performance management market. Strategic planning is too frequently performed in a vacuum – a stand-alone annual project. I think of strategic planning differently when I view it in this broader perspective.Performance management, whether BPM, CPM, or EPM means different things to different people. There’s no common definition and this creates confusion. I developed this diagram to help get folks on the same page.There are tools and vendors that provide solutions that can increase the effectiveness of strategic planning.
  • BPM: Not to be confused with the other BPM (business process management) – workflow automation tools out in the marketAlienates the public sector because they don’t run a businessLeast tracked nuance by analysts and consultantsBut, it’s the most Googled search term - -catch-allCPM: Gartner-driven market segmentOffice of finance (budgeting, forecasting) and now Gartner is driving an evolution that spans beyond this office)Software vendors that coin this nuance are typically spreadsheet replacement vendors (Prophix, Tagetik, Adaptive Planning, etc.)EPM: Adopted by the biggest vendorsInfers big, multi-national/multi divisional (enterprise size)Alienate small to mid-size organization
  • Good time to solicit audience for feedbackStreamline the time to get key information needed while uncovering your own research and due diligence
  • As EPM evolves, so have the tools you can leverage to streamline and automate.Maturity curve where everyone is on a different part of the curve. And it is important to understand your current state in reference to your desired visionary stateERP started out as a financial point solution and in time has progressed to extended ERP with a host of modules, acquisitions.
  • What the chart statesKey point – growing by double digits, lots of attention in the marketplace
  • The fastest growing segment of EPM is strategy management – 18% Compound Annual Growth Rate – Why is thatvolatile market conditionsSlowest growth is occurring in “office of finance, spreadsheet on steroids area” primarily because there is no ROI in budgeting and forecasting. Our time has come – natural evolution process
  • Why are the $billions being investedOrange bar – who’s really voting here. How can a better historical report be more important than performance
  • How do you ever know that these metrics (which drive behavior) are aligned or not.
  • What needs to happen is the integration of performance managementalignment
  • Simplifying the Complex Enterprise Performance Management Market

    1. 1. The Holy Grail of Enterprise Performance Management<br />Lee Mashburn<br />Chief Marketing Officer, Cogniti<br />April 12, 2011<br />
    2. 2. Agenda Overview<br />Strategy Management: We Must Close the Gap Between Costs and Returns<br />Enterprise Performance Management; Where Strategy Fits<br />The Need for a” Holy Grail” of Enterprise Performance Management<br />Defining and Realizing the “Holy Grail” of Enterprise Performance Management<br />About Cogniti<br />
    3. 3. Key Strategies are Not Being Executed . . . And at great cost<br />90% of U.S. organizations fail to execute their strategies successfully<br />Estimated that U.S. managers spend more than $10 billion annually on strategic analysis and strategy formulation – which means . . . <br />$9 billion wasted annually on strategy that is not successfully executed<br />Another statistic: Fortune 1,000 companies spend an average of $7 million per organization per year<br />
    4. 4. The Importance of Building Accurate Plans has Increased<br />Source: Accenture – Authors Bergstrom, Batchelor, and Marcotte<br />
    5. 5. The Need for a New Planning Approach<br />Traditional Planning<br />Flexible, Dynamic Planning<br />Driven off historical performance and internal operations.<br />Schedule-driven annual exercise.<br />Weak link to operations.<br />Labor-intensive data collection.<br />Emphasis on short-term profitability.<br />Grounded in market expectations and external trends.<br />Probabilistic scenarios including risk factors.<br />Real-time adjustments. <br />Planning tightly integrated to front line.<br />Broader planning scope to cover balance sheet and cash flow.<br />Source: Planning for Success in Dynamic Environments, Accenture, 2009<br />
    6. 6. Accenture Conclusions<br />Embed Flexible and Dynamic Planning Processes<br />Focus on what matters most – tie it to financials<br />Incorporate a range of scenarios<br />Involve your operating staff in planning<br />Renew the Focus on Strategic Planning<br />Helps to prioritize bets<br />“Forecasts are 33% more accurate when Operations is an integral part of the process”<br />
    7. 7. BPM, CPM, EPM: Simplifying a Complex Market Place<br />Flavor<br />Nuances<br />Adopters<br />Relative Public Mindshare per Google Search<br />
    8. 8. BPM, CPM, EPM: Simplifying a Complex Market Place<br />Enterprise Performance Management<br />Corporate Performance Management<br />Business Performance Management<br />Flavor<br /><ul><li>Often confused with business process management.
    9. 9. Alienates the public sector.
    10. 10. Least leveraged by consultants and analysts.
    11. 11. Most widely embraced by the “office of finance.”
    12. 12. Alienates operations.
    13. 13. Pushed heavily by Gartner, a leading industry analyst.
    14. 14. Widely embraced by largest management consultants and software “mega-vendors.”
    15. 15. Alienates SMB.
    16. 16. Infers large, multi-national.</li></ul>Nuances<br /><ul><li>BPM Partners
    17. 17. Capgemeni
    18. 18. Gartner
    19. 19. Infor
    20. 20. Prophix
    21. 21. Tagetik
    22. 22. PwC
    23. 23. E&Y
    24. 24. Aberdeen
    25. 25. Oracle
    26. 26. SAP
    27. 27. IBM
    28. 28. Cogniti
    29. 29. Accenture
    30. 30. CSC</li></ul>Adopters<br />Lots of Google search results<br />Relative Public Mindshare per Google Search<br />23% of business performance management<br />Attracts larger organizations<br />
    31. 31. EPM, CPM, BPM . . .<br />At the end of the day, it’s all really the same!<br />
    32. 32. The Evolution of EPM – Where are you on the maturity curve?<br />Gartner estimates that 40% of large organizations and up to 75% of mid-size organizations still heavily on spreadsheets<br />
    33. 33. EPM Market . . . Large and Growing Fast<br />Compound Annual Growth Rate (CAGR):<br />Subscription: 15.7%<br />Maintenance: 14.2%<br />License: 9.5%<br />TOTAL: 12.7%<br />Source: Forrester Research, Inc.<br />
    34. 34. EPM Market Size by Application<br />Strategy Management:<br />Planning<br />Scorecards<br />Strategy Maps<br />Objectives and Goal Setters<br />Performance Measurement<br />Fastest growing EPM application:<br />Projected CAGR of 18%<br />Source: Forrester Research, Inc.<br />
    35. 35. Top Reasons for EPM Projects<br />Source: BPM Partners 2010 Pulse Survey<br />
    36. 36. The Need for the Holy Grail of EPM<br />
    37. 37. Conventional Planning – Types, Traits, Tools, Results<br />Operational Planning<br />Financial Planning<br />Strategic Planning<br />Plan Type<br /><ul><li>Typically an annual C-Suite exercise
    38. 38. Minimizes operational input
    39. 39. No common toolset to tie the pieces together
    40. 40. Budget preparation exercise
    41. 41. Prior year results plus 10%
    42. 42. Manual grind for cash impact
    43. 43. Jam down operations’ throat
    44. 44. Wait for the bad news
    45. 45. Bet on last year plus 10%
    46. 46. Prepare to negotiate
    47. 47. Prepare to assign blame</li></ul>Traits<br /><ul><li>Spreadsheets
    48. 48. PowerPoint slides
    49. 49. Strategy maps
    50. 50. SWOT analysis
    51. 51. Analyst/market intel
    52. 52. Spreadsheets
    53. 53. Financial management tools
    54. 54. BI tools
    55. 55. Last year’s actuals
    56. 56. Email, intranet
    57. 57. Spreadsheets
    58. 58. Last year’s actuals
    59. 59. E-mails
    60. 60. Conference calls
    61. 61. Sales and Ops Planning</li></ul>Standard Tools<br /><ul><li>High cost, low return
    62. 62. Difficult to assign value
    63. 63. Overpromise, under-deliver
    64. 64. Hard to communicate
    65. 65. Unclear strategic direction
    66. 66. Little to no collaboration
    67. 67. Financial plans cannot be executed
    68. 68. Business processes not improved
    69. 69. High cost, low return
    70. 70. Negotiations with operations
    71. 71. Strategy gets lost
    72. 72. Just a budgeting and forecasting exercise</li></ul>Results<br />
    73. 73. To Compound the Problem<br />Gartner 2011 BI Magic Quadrant<br /><ul><li>BI is being increasingly promoted as a performance management tool.
    74. 74. Big mega-vendors are failing to properly integrate BI acquisitions with the many performance management modules they offer.
    75. 75. Improving performance is not being reached by measuring, analyzing, and reporting everything.
    76. 76. Historic performance results are not helping to achieve business objectives.</li></ul>“Ongoing dissatisfation among IBM, Oracle, & SAP Business Intelligence (BI) customers suggests that chronic dissatisfaction may be the new normal.”<br /><ul><li>High cost of ownership
    77. 77. Poor Performance
    78. 78. Implementation difficulty
    79. 79. Not achieving intended business objectives</li></li></ul><li>The Holy Grail of EPM<br />
    80. 80. Corporate<br />Geographical Locations<br />Divisions<br />Departments<br />Suppliers<br />EPM Must Help You Manage the Ripples<br />
    81. 81. Aligned EPM (Marketing Example) . . . The Metrics Must Roll-Up<br />Role<br />Performance Metrics<br />Strategic Value to Company<br />CEO, CFO, COO<br />EPS, ROIC, shareholder value<br />Head of Marketing<br />ROMI, return-on-sales, retention<br />Mid-Management<br />Sales pipeline, win/loss ratio, h/c costs<br />Front-Line<br />Leads, emails opened, event attendees<br />Tactical Value to Company<br />Event Management<br />CRM<br />Time Management<br />Email Management<br />BI<br />Data Sources<br />
    82. 82. Achieving the Holy Grail of EPM – An Integrated Continuum<br /> 2. ALIGN &<br /> MERGE<br />1. PLAN & ASSIGN VALUE<br />Strategic<br />Operations<br />Operations<br />Financial<br />Financial<br />Strategic<br />Processes<br />3. MEASURE<br />4. EXECUTE & ADJUST<br />Alert Off-Plan Performance<br />Project Forward Consequences<br />Advise Corrective Action<br />Extract Key Measurements<br />
    83. 83. Conclusions<br />
    84. 84. About Cogniti<br />“Cogniti gives you all the pieces in one place to pull together strategic, operational, and financial plans and then follow through with the execution and management of those plans.”<br />Craig Schiff <br />President & CEO, BPM Partners<br />

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