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Enterprise Performance Management (EPM) Implement performance management to obtain one version of the truth and enhance the decision making process Anand Subramaniam

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<ul><li>“ The quality of an organisation can never exceed the quality of the minds that make it up .” </li></ul><ul><ul><li>- Harold R. McAlindon </li></ul></ul>

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Highlights <ul><li>EPM – Overview </li></ul><ul><li>EPM – Elements </li></ul><ul><li>EPM – Pre-implementation Planning </li></ul><ul><li>EPM – Implementation Roadmap </li></ul><ul><li>EPM – Implementation Risks </li></ul><ul><li>EPM – Architecture and Applications </li></ul><ul><li>EPM – Maturity Model </li></ul>

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EPM - Overview

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EPM – What is it? An area of Business Intelligence (BI) which monitors & manages an organisation's performance, according to Key Performance Indicators (KPIs) It helps organisations translate a unified set of objectives into plans, monitor execution, and deliver critical insight to improve financial and operational performance A framework for organising, automating, and analysing business methodologies, metrics, processes and systems to drive the overall performance of the organisation

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<ul><li>“ How do you know you have arrived if you don’t know where you are going or where you have been.” </li></ul><ul><li>- Anonymous </li></ul>

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EPM – Questions answered <ul><li>Who needs to know - what, where, when, how, why etc? </li></ul><ul><li>When & how does the data become available? </li></ul><ul><li>What transactions impact performance & decisions? </li></ul><ul><li>How can one get real time information on transactions of interest? </li></ul><ul><li>What tools and processes will let one see what he / she needs to see? </li></ul><ul><li>How will one track progress in achieving an org. goals? </li></ul>

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EPM – Usefulness Why? Functional departments can leverage EPM for collaborative analysis and slicing and dicing data in new and creative ways Marketing can develop new / better products & services, assess the results of campaigns, better understand their target market, cross & up sell Executives can get real-time access to key performance indicators, interact and drill-down on data as against a static number Functional Managers can analyse patterns for effective and faster investment decisions HR can use it extensively to analyse the workforce and the impact of salary and related decisions Impacts functions across org, to meet legal / regulatory needs

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EPM – Enablers Enablers Delivers consistent information to all levels within the organisation for collaborative performance Standardise on data control & communication Continuously assess operational performance based on key performance indicators and historical trends Visualise enterprise-wide planning and budgeting in a single model Analyse customer, product and services profitability in real-time Consolidate financial data from disparate sources across the entire enterprise Optimise IT resources & infrastructure Adjust & re-align strategies as needed to achieve organisational goals Make the right investments in products, people, projects & processes

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BI Vs. EPM Feature Traditional BI EPM Scale Departmental Enterprise-wide Focus Historical Timely Decisions Strategic and tactical Strategic, tactical, and operational Users Analysts Everyone Orientation Reactive Proactive Process Open-ended Closed-loop Measures Metrics Key performance indicators Views Generic Personalised Visuals Tables / Charts Dashboards / scorecards Collaboration informal Built-in Interaction Pull (ad hoc queries) Push (alerts) Analysis Trends Exception Data Numeric only Numeric, text, etc.

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EPM – Drivers Drivers Making business strategy transparent & clear to all employees Create a clear link between business strategy and talent management Increase accountability to achieve corporate goals <ul><ul><li>Determine learning and development needs </li></ul></ul>Improve business performance Creating a shared vision of the business strategy Culture change

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EPM - Elements

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EPM – Key Elements Elements <ul><li>Purpose </li></ul><ul><li>Stakeholder-goal setting </li></ul><ul><li>Return on Investment </li></ul><ul><li>Compliance / governance </li></ul><ul><li>Decision support </li></ul><ul><li>Meet KPIs & objectives </li></ul><ul><li>Model / Framework </li></ul><ul><li>Balanced scorecard </li></ul><ul><li>Earned Value Analysis / Management </li></ul><ul><li>Activity Based Costing </li></ul><ul><li>BPR / BPI / Benchmark </li></ul><ul><li>Measures </li></ul><ul><li>(Non) Financial </li></ul><ul><li>Short & long-term </li></ul><ul><li>Quantitative & qualitative </li></ul><ul><li>Lag & lead indicators </li></ul><ul><li>Performance trends </li></ul><ul><li>Budget Vs. Actual </li></ul><ul><li>Variance Analysis </li></ul><ul><li>Quality targets / goals </li></ul><ul><li>Consolidation / data mngt </li></ul><ul><li>People </li></ul><ul><li>Reporting </li></ul><ul><li>Communication </li></ul><ul><li>Leadership / delegation </li></ul><ul><li>Competency / capability </li></ul><ul><li>Link to compensation </li></ul><ul><li>Reward & recognition </li></ul><ul><li>Change management </li></ul><ul><li>Information </li></ul><ul><li>Cost effective </li></ul><ul><li>Internal &d external </li></ul><ul><li>Relevant & understood </li></ul><ul><li>Timely & accurate </li></ul><ul><li>Well presented </li></ul><ul><li>Technology enablement </li></ul><ul><li>Audit trail / feedback loops </li></ul><ul><li>Processes </li></ul><ul><li>Goal setting </li></ul><ul><li>Strategy formulation </li></ul><ul><li>Budgeting & forecasting </li></ul><ul><li>Performance feedback </li></ul><ul><li>Risk management </li></ul><ul><li>Business Rules / Maps </li></ul><ul><li>Policies & Procedures </li></ul>

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EPM – Integration of Elements Strategic Objectives & Goals Operational Objectives Business Measurements Business Processes, Rules & Activities Information Management IT Infrastructure

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EPM – Pre-implementation Planning

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EPM – Initiation Steps Initiation Steps Blending Business Intelligence with elements of planning, budgeting and appropriate-time monitoring Integrate and take advantage of existing IT assets Identify a Business Intelligence strategy (Operational + Tactical) Identify measurable Business Performance Parameters (BPP) Improve and simplify pegging continuously Peg operational data with business process / rules Identify the data integration strategy

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EPM – Key Success Factors KSF Understanding current performance Flexible and nimble Infrastructure Design Process, standards and controls Integration of business systems and data Global and local compliance capability Senior Management commitment, process rigor, project discipline, focus, train, test, scope, $$

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EPM – Define & Measure Effectiveness Effectiveness Align top-level strategic objectives and bottom-level initiatives Determine priorities and allocate resources based on those priorities Identify opportunities and problems in a timely fashion Take action to improve processes and procedures when the data warrant it Delineate responsibilities, understand actual performance relative to responsibilities, and reward and recognise accomplishments Change measurements when the underlying processes and strategies change Plan and forecast in a more reliable and timely fashion

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EPM – Solution & Benefits Enables improved, automated processes and allocation of resources. Provides collaboration across enterprise teams and processes to accelerate business performance improvements Improve team productivity and effectiveness Results reflected in a consolidated view of the current state of the business, by combining process state information, operational activity status and IT status. It puts the current state of the business in context, enabling proactive problem avoidance / mitigation Provide real-time, contextual insight, delivering role-based visibility into business operations and metrics Resources are directed towards actions that are consistent with meeting the business goals. This enables improved resource planning and prioritisation Enable proactive and directed action Organisations are no longer fractured by independent actions of the business units. They now are aligned and working towards the same business goals Align the business strategy horizontally and vertically throughout the enterprise EPM Benefits EPM Solution

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EPM – Example of a KPI Back Office application running on Oracle Transaction application running SQL KPI Data Sources Both KPI Internal or Customer Facing Mr. JKL KPI Benefactor Mr. XYZ KPI Initiator Mr. ABC KPI Sponsor +7days & -3 day Anticipate Upper and Lower Limits +5days & -1 day KPI Upper & Lower Tolerances Less than 30 days KPI Target Value Days KPI Unit of Measure & Formula 12 months, Daily KPI Life Span & Reporting Periodicity 29 th Jan 2010 KPI End Date 4 th Jan 2010 KPI Start Date Better Cash flow KPI Benefits Maintain credit period of less than 30 days KPI Objective Ageing Analysis KPI Description Details Subject

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EPM – Implementation Roadmap

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<ul><li>“If you want to teach people a new way of thinking, don't bother trying to teach them. Instead, give them a tool, the use of which leads them to [new] ways of thinking.” </li></ul><ul><ul><li>- Buckminster Fuller </li></ul></ul>

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EPM – Closed Loop Process Strategy Execution Integrated Data (Internal & external events & data sources ) 1. Strategise 4. Check / Adjust 3. Monitor 2. Plan Strategy Plans Strategy Maps Proj Portfolio, Prog, Proj Plans, Budgets, Scenarios Scorecards Dashboards Forecasts Models Rules Priorities Reports Portals Events Alerts Where do we want to go? How do we get there? How are we doing? What do we need to do differently? Tactics

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EPM – Implementation Roadmap Vision Mission Strategies Goals Measures <ul><li>Desired future state </li></ul><ul><li>Define process to achieve Vision </li></ul><ul><li>To support the mission & to achieve vision </li></ul><ul><li>Customer satis. </li></ul><ul><li>Cost perform. </li></ul><ul><li>Delivery (on time) </li></ul><ul><li>Quality </li></ul><ul><li>Asset perform. </li></ul><ul><li>KPI </li></ul><ul><li>Define the critical few </li></ul><ul><li>Scope, time, $$ </li></ul><ul><li>Assumption / risk </li></ul><ul><li>Deliverables </li></ul><ul><li>Milestones </li></ul><ul><li>Train / Test </li></ul><ul><li>Pilot run </li></ul><ul><li>User acceptance </li></ul>Imple-ment <ul><li>BSC </li></ul><ul><li>Integrated goals & measures </li></ul><ul><li>Confidence limits </li></ul><ul><li>Dashboards </li></ul><ul><li>Performance trends </li></ul>Score-card <ul><li>Presentation </li></ul><ul><li>Frequency </li></ul><ul><li>Exceptions </li></ul><ul><li>Dashboards </li></ul><ul><li>Performance trends </li></ul>Report Check / Adjust <ul><li>Auto Alerts </li></ul><ul><li>Closed Loop Process </li></ul><ul><li>Scorecards </li></ul><ul><li>Dashboards </li></ul><ul><li>Performance trends </li></ul>

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EPM – Strategise Phase <ul><li>Envision the Future </li></ul><ul><li>Core Competency Review </li></ul><ul><li>SWOT Analysis </li></ul><ul><li>Stakeholder Assessment </li></ul><ul><li>Risk Assessment </li></ul><ul><li>Communication Planning </li></ul><ul><li>Clarity of direction, targets, benchmarks, goals, baseline, priorities, roles / responsibility & KSF </li></ul><ul><li>Strategic alignment / maps, value drivers, KPI, scenario models & statutory reporting needs </li></ul><ul><li>Assessment of market conditions and opportunities for differentiation </li></ul><ul><li>Awareness of known and perceived risks and mitigation actions to maximise potential impact </li></ul><ul><li>Clear awareness of various entities roles in the driving success of the performance initiative </li></ul>Tools / Techniques Outcomes

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EPM – Plan Phase <ul><li>Risk Assessment </li></ul><ul><li>Stakeholder Assessment </li></ul><ul><li>Communication Planning </li></ul><ul><li>Integrated Program Management </li></ul><ul><li>Extended workforce selection and management </li></ul><ul><li>Closed loop performance management </li></ul><ul><li>BI Console </li></ul><ul><li>Flexibility in navigating changing market / competitive changes through robust risk analysis, pl an resources and actions </li></ul><ul><li>Continual assessment of direct, and indirect, function’s ability to support required initiatives and issues emanating from various performance management systems and prioritise actions. </li></ul><ul><li>Constant communications alerting personnel with the current status of the initiative so as to adjust and align actions with required results </li></ul><ul><li>Structured and proven methods in selection, award and management of external workforce </li></ul>Tools / Techniques Outcomes

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EPM – Monitor Phase <ul><li>BI Console </li></ul><ul><li>Root Cause Analysis </li></ul><ul><li>Scorecard Administration </li></ul><ul><li>Performance Audits and Assessments </li></ul><ul><li>SLA Administration </li></ul><ul><li>Compliance & Exception Management Dashboards </li></ul><ul><li>Integrated Program Management </li></ul><ul><li>Timely and exception based reporting to efficiently focus Management attention </li></ul><ul><li>Balanced Scorecard process to assess bilateral support and performance in specific relationships </li></ul><ul><li>Audits and assessments to reactively and proactively gain insights into potential areas of concern </li></ul><ul><li>Timely and efficient assimilation of data from various performance management systems so as to efficiently allocation resources to areas of concern </li></ul>Tools / Techniques Outcomes

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EPM – Check / Adjust Phase <ul><li>BI Console </li></ul><ul><li>Scorecard Administration </li></ul><ul><li>Performance Audits and Assessments </li></ul><ul><li>SLA Administration </li></ul><ul><li>Compliance Management Dashboards </li></ul><ul><li>Exception Management Dashboards </li></ul><ul><li>Closed Loop Corrective Action Process </li></ul><ul><li>Continuous focus on outstanding issues so as to bring closure to gaps in capabilities or performance </li></ul><ul><li>Active process to uncover root causes to ongoing systemic issues </li></ul><ul><li>Continuous accountability to improve value proposition and performance </li></ul><ul><li>Ability to react to and prevent process failures causing performance gaps in meeting stakeholder expectations </li></ul>Tools / Techniques Outcomes

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EPM – Lessons Learned Lessons Learned Ensure executive steering committee support the initiative throughout its lifecycle Identify project manager with strong interpersonal and communications skills, who understands business issues and has the authority to make tough decisions at all costs Ensure the business scenarios / rules consider how the EPM is expected to generate and support bottom line improvements Monitor vendor relation-ships closely Insist on an achievable execution plan and on a proactive communication strategy Manage and analyse assumptions (risk) as changing assumptions are additional risk events Avoid creating additional risk by rushing, under staffing, under funding, or ignoring the obvious Identify benefits and develop benefit realisation plan

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EPM – Implementation Risks

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EPM – Implementation Risks Implementation Risks Other work has higher priority for the business unit Business unit does not provide good people for the project Existing business process is in poor condition Staffing support requirements are underestimated Number of users are underestimated Sponsor not available Business priorities change Several business units cannot agree among themselves

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EPM – Risks (Contd.) Implementation Risks Vendor provides the wrong staff or has high staff turnover Data quality issues Technology does not interface or integrate with existing systems Turnover of project team members Technology performance unsatisfactory or obsolete Resistance to change Lack of support from the vendor Project manager pulled to another project

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EPM – Architecture and Applications

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EPM - Architecture and Applications EPM

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EPM – Dashboards Vs. Scorecards Dashboards Visual display to monitor operational performance Scorecards Visual display to chart progress against strategic & tactical goals and targets

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EPM - Dashboards

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EPM – Maturity Model

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EPM – Maturity Level

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<ul><li>“Few factors are as important to the performance of an organisation as measurement…. and measurement is among the weakest areas in management today.” </li></ul><ul><ul><li>- Peter Drucker </li></ul></ul>

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<ul><li>Good Luck </li></ul><ul><li>http://www.linkedin.com/in/anandsubramaniam </li></ul>