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Oracle EPM Index Cycle II
- 1. Oracle EPM Index Cycle II, January 2010 – results and conclusions
- 2. Oracle launches Cycle II of the Oracle EPM Index Jan 19 - Oracle launches the next cycle of research into Enterprise Performance Management (EPM) Cycle I was launched in March 2009 The Oracle EPM Index has risen from 5.13 to 7.04 on a scale of 0 to 10 This figure is derived from research into the execution of six critical EPM processes by 800 organisations in Europe and North America Processes are: Stakeholder environment; Market Model; Business Model; Business Plan; Business Operations; and Business Results See the Journal of Management Excellence for more information Numeric answers for each process area provide a sub-Index Aggregated number across the processes is the Oracle EPM Index Sub-indices for country, region, industry each tell a story about progress
- 3. Global Businesses Battle Recession with Enterprise Performance Management The Oracle EPM Index investigates the progress of business towards Management Excellence On a scale of 0 to 10, the overall Index for all of the surveyed countries has leapt by 38% from 5.13 in the first report to 7.04 in Oracle EPM Index II. The increase reflects an improvement in performance management confidence across all geographies, sizes of organisations and all verticals. Oracle attributes this rise in confidence about enterprise performance management to the global business climate. The first EPM Index was conducted in January 2009 as businesses grappled with a deteriorating economic outlook. Rather than signifying any major material improvements, the stronger performance in Oracle EPM Index II reveals that the majority of businesses now feel more confident about their ability to address their own performance.
- 4. Looking behind the overall number… Along with increased confidence about progress towards Management Excellence, results from the six key areas assessed in EPM Index II reveal that businesses: Increasingly accept the need to adhere to the principles of enterprise performance management (EPM) Perceive significant improvements in their planning and reporting processes Are still too internally focused, at the expense of wide-ranging stakeholder expectations, and have comparatively weak levels of integration between the operational areas Have an increased focus on customer loyalty to drive growth as opposed to new products, services or geographies Now generally acknowledge the importance of Business Intelligence as a key tool in the execution of EPM
- 5. EPM Progress is positive everywhere since March 2009 Business Plan and Market Model have made the greatest increase – shows businesses have focused on business planning and core competencies Organisations have tightened up the way they plan and approach the market in response to recession Financial reporting (Business Results) is now the strongest process
- 6. Still much work remains to be done Engaging with stakeholders continues to be weak Those countries which showed best stakeholder engagement have come out better overall More focus needed on business models Better market analysis and more responsiveness to changing market conditions is needed More integration needed across the six EPM processes Those countries with better alignment of the processes also showed better overall progress
- 7. Geographical changes Iberia, Germany, Switzerland and Benelux have all improved Italy was second, but has dropped to last Foreseen in previous Index Not fully aware of issues in conducting EPM Still, however, an improvement since March 2009
- 8. Changes in Industry rankings Utilities have made most progress, followed by Industrial and High-Tech Retail, CPG and Finance all losing ground – perhaps most affected by economic circumstances Healthcare and Public Sector still lag Perhaps difficult to apply commercial terms to these industries
- 9. The Importance of Business Intelligence (BI) Over half of organisations now regard BI as an important reporting tool (up from one-fifth) Organisations who understand the importance of Business Intelligence tend to manage their performance better
- 10. Other findings from the research Evidence of more focus on customer loyalty! Companies’ focus to drive through the recession shifts from new products and services to reducing customer churn i.e. maximising what they already have, rather than higher-risk activities such as new products/services or geographies
- 11. Other findings from the research Higher recognition of the importance of the six Management Excellence processes Fewer than 5% of businesses now think that the six processes could be viewed in isolation (was over a quarter in Cycle I) Nearly a third of companies now see that the six processes are interlinked and require an integrated approach (up from one-fifth) Those countries with better alignment of the processes also showed better overall progress
- 12. Oracle’s recommendations To maintain the momentum towards Management Excellence: Engage more with stakeholders Aim for more consistent attention to all of the six processes Aim to react more quickly to changing business and market conditions For more details on the research, visit the Oracle EMEA Media Centre: http://bit.ly/5wbib1
- 14. Analysis of Country Data France Continues to perform well Benefits from extra attention paid to Stakeholders and monitoring business performance against plan Needs more attention to integration across the processes Iberia Good progress from Cycle I, where it was a poor performer Fairly close to average for every Index Best progress on Business Plan and Business Model Only country to put “managing customer” churn as top priority as growth strategy Very even scores across the Indices – well-integrated approach to executing the processes
- 15. Analysis of Country Data – cont’d Belgium/Netherlands Is now top performer Good improvement on Stakeholder engagement better external focus, better business planning and execution and a good general view of the processes Germany/Switzerland Like France, good performance on Stakeholder engagement Best for integration across processes Now towards the top of the table
- 16. Analysis of Country Data – cont’d Italy Has made least progress overall among the countries Much more focus on stakeholder needed Business planning has improved the most Much progress needed in recognising and addressing EPM Issues Nordics Very modest progress Stakeholder engagement is the weakest improvement Not well-integrated across the processes Alone among the countries, Nordics have “managing customer churn” towards the bottom of their growth priorities
- 17. Analysis of Country Data – cont’d North America Somewhat below average in its improvement Except for Stakeholder, which is its best area of progress Business Planning relatively weaker – not the best for today’s economic climate UK Modest progress Stakeholder engagement is relatively the weakest improvement since Cycle I, but Business Planning stronger This inward focus appears to be the response to tough economic circumstances Important to pay attention to all the processes
Editor's Notes
- The Oracle EPM Index is based on six critical EPM processes, identified in Oracle’s Management Excellence Framework, called “Strategy to Success”. By analysing indices for each of these processes, by country, by region or by industry, we can understand specifics about progress on the journey to Management Excellence.
- Let’s start with the headlines. The Oracle EPM Index figures tells us that globally, businesses are increasingly using Enterprise Performance Management to help battle the recession. Furthermore, we understand that the confidence of organisations in their use of the EPM processes has increased. This is emphasised particularly because the original research, undertaken a year ago, was against the backdrop of a very tough economic climate. Because organisations have survived, their confidence in the processes they’re using has increased, which is refelcted in a higher Index humber.
- But we can also look behind the numbers to understand individual situations for specific processes, countries and/or industries. Analysis shows that EPM processes are being better accepted as a way of doing business better Business planning has improved generally – a key internal focus in business survival in tough times But the downside of this is that external focus, particularly on stakeholders (customers, partners, supply chain, shareholders, etc) has not improved as much We also asked questions about where business focus lies, and customer loyalty is a greater focus area now And also BI is now much more widely recognised as a key part of Enterprise Performance Management
- Here are the figures, for all 800 organisations researched in Europe and North America, showing the overall Oracle EPM Index number and each sub-Index value for the latest research as compared with the previous figures in March 2009. The good news - solid progress has been made across the board towards Management Excellence, in each of the six key EPM processes. Business Planning and Financial Reporting (both somewhat internally-focused) have shown the best progress either absolutely (highest overall number for the Business Results Index) or proportionately (greatest proportional increase for Business Plan and Market Model Indices).
- Whilst we see evidence of good progress in EPM, there are some areas which stand out as showing weaker progress than others. External focus, such as stakeholder engagement, or swiftness of reaction to changing market conditions, has not improved as well as other processes.Also, the Index numbers show fairly sizeable variation across the processes (6.4 for the lowest Index, to 7.3 for the highest). This spread has increased since Cycle I, showing that, generally, organisations are focusing even less on consistent attention to all of the six processes.Specifically, it is interesting to note that countries whose organisations were focused more on consistent attention to all six processes actually tended to have a higher Index number. In other words, there is a measurable benefit to ensuring that an organisation is paying attention to all of the six key EPM processes.
- It is interesting to note how different countries have performed in Management Excellence. The most obvious change is for Italy, which was joint top of the table last March, but whose performance has improved less than the other countries. More detail on each country is provided in Appendix I.
- One can do a similar comparison across the Industries. There has been much movement. Financial Services were highest and have dropped considerably, possibly again because of increased awareness of pitfalls. Once again, remember that it’s still an improvement, just not as far as other industries (and Retail and CPG have had a similar change in their ranking, though it’s not clear why these two industries are marking themselves harder than they did a year ago when times were very tough).The Utilities Industry has improved the most, possibly because its position as an important part of a country’s infrastructure is balanced by new technology such as smart metering, for which a clearer focus on business process and stakeholders is a clear necessity. And the confidence of Industrial companies in their performance management reflects an increasing strength in the idustrial sector generally over the last nine months.And lastly we should not be two hard on healthcare and public sector, which, although showing improvements, still languish as apparently the poor performers in this league table. We must remember that for these industries it can be very hard to articulate answers in terms of business performance.
- Cycle I showed BI to have a significant role in EPM. And in Cycle II this role is much more clearly understood across the countries surveyed. Now, over half of organisations regard BI as an important tool, up from under one-fifth, and the number of organisations “not sure” about the role of BI has shrunk below 5%.But also the correlation seen between the way an organisation regarded BI and its overall Index score is even clearer than in Cycle I. Organisations who thought BI to be important or critical scored well over 7; those that didn’t scored just over six (or below for the “not sure” contingent).
- We should emphasise a couple of other findings from the research data, which have been mentioned before, but which bear repeating.There is now an explicit focus on customer loyalty as a prime way of combating recession. The left hand chart shows the average Index score for organisations for each basic growth strategy (new customers, etc). Finding new customers was and remains top priority but in Cycle II, the 2nd highest index score went to organisations managing customer churn – i.e. focusing on customer loyalty.
- Finally, it’s worth emphasising the increasing view that organisations hold of the six key EPM processes and the importance of integrating across them. Only a small number of companies now think that the processes can be viewed and handled in isolation; many more than last March now think that that the processes are linked and require an integrated approach. And finally, there is a correlation between a country’s overall Index score and the spread of values for its sub-Indices: the smaller the spread, by and large the larger the Index. This lends weight to Oracle’s assertion that integrating between the processes – paying equal attention to all of them – does bring business benefit.