Lately, it seems that Enterprise Performance Management (EPM as it is now referred) is getting a lot of press in the global network of business professionals and is quickly becoming a heavily used “buzz phrase” in IT and Operating circles. But let’s face it – neither Performance Management nor its new sexier relative EPM, really represents anything fundamentally new or earth shattering. Or does it?
For starters, let’s acknowledge that in any management discipline, the number of “official definitions” often exceeds the number of practitioners that dominate the implementation space for the associated services. One might conclude that I am merely a lone voice among many with some strong views on what EPM really means. But those of you who know me, know that won’t stop me from wading in with my not-so-humble view of the world…certainly not in a discipline where I’ve spent the better part of 20 years.
With that caveat in mind, let me say that what EPM means to the discipline of Performance Measurement is similar in magnitude to what Information Technology meant to the evolution of Data Processing, and what Enterprise Risk Management meant to the age old function of corporate “insurance buying.” However, it is likely that at the outset of each of these journeys, the practitioners thought that the distinction was much more subtle than it ended up being. In fact, in both of these areas, the end state has evolved well past what anyone would have envisioned only a few years ago.
With that as a backdrop, let’s do a little bit of retrospection and “crystal balling” on the evolution of EPM, from its origins in performance measurement, to the pervasive impact that it can have on business results. For many of us, the Performance Management journey began with some basic steps to raise awareness of what was important to measure, and took strides to measure it. Some still struggle with these very basics. Others have taken this to a broader level of transparency and accountability, integrating these values into all company processes. Others have pushed the envelope and taken EPM to what we call a “pervasive” level in the business, characterized by a universal cultural receptivity to the values of accountability, transparency and “line of sight” integration with day to day business processes.
In the end though, there are three fundamental factors that influence a company’s ability to move along this continuum, and it is these factors that should dominate the agendas of companies desiring EPM excellence:
1. Uniformity and Consistency of Approach
The problem at most companies is NOT the lack of KPI’s, or the failure to provide reports, or the lack of a balanced scorecard or even a corporate dashboard. I have yet to work for a client that didn’t have each of these core attributes in place at some level of the business. The problem is that these pieces of the puzzle remain scattered across various levels and layers of the business. With the exception of a corporate dashboard or balanced scorecard which likely exists at the Enterprise level (at least covering the top output measures), the application of the process is often heavily inconsistent between business units, and especially at lower levels of the business where the results of measurement are much more actionable. The good news here is that most of the important “parts” of the process already exist. But without the integration of the components into a cohesive architecture, you are unlikely to get any of the possible enterprise synergies demonstrated by more advanced EPM companies. EXPECT TO SPEND 15-20% OF YOUR EFFORT HERE!
2. Cultural Competence
For many, the words “culture” and “competence” in the same breath show up like “oil and water.” But it is important to highlight the need for both. Clearly, leaders in EPM space have a “data driven” culture – a fact-based process for measuring, validating, analyzing, improving and controlling key parts of business. But having a process is one thing, and being able to execute is another. I like to say that leaders go through a process of development for any major new skill or behavior – starting with awareness, and progressing through openness, acceptance, competence, and mastery. Any organization right of Stage 3 EPM will point to its Leadership as their reason for success. And it’s not just what they say and what they declare, but often the ability of leadership (which often extends 2-3 layers down to the top 100-300 managers) to demonstrate the behaviors required of a performance driven operating model. EXPECT TO SPEND THE VAST MAJORITY OF YOUR EFFORT HERE – 50-60%.
3. Emphasize the CAPTURE of Value
Ok – before you say it or think it, I acknowledge this sounds pretty basic. Who DOESN’T do this – right? Well before you go too far down that path, how often does your organization ask its project managers and sponsors to account for the VALUE produced by their investments? I’m not talking about if the project was done on time or on budget, but rather if the investment produced the outcome that was projected during its cost/benefit analysis and justification stage. Surprisingly, less than 10% of our clients do this to the level of their own satisfaction. This is by far the greatest value of an EPM process and should be the #1 measure of your future EPM success as a company. In my eyes, it is what distinguishes EPM from our traditional roots of performance measurement and tracking. Linking measures to what we do on a day to day basis, and then retrospectively assessing our day actions against those measures is the essence of the “closed loop” EPM process that we espouse so often. EXPECT TO SPEND 30-40% OF YOUR EFFORT HERE.
Maybe these factors seem simple or trite on the surface. Or maybe they represent challenges that have been elusive in the past. But no matter how elusive, trite or otherwise mundane they appear to be, they represent the biggest roadblocks in the type of EPM journey I laid out at the outset of this post.
You may also find it odd that nowhere on the above list appears the words technology, and conventional terms like dashboard and scorecard only appear in passing. In a way, that should amplify the point (particularly to those in the IT client and vendor community) that EPM is NOT about the technology, much like Risk Management is not about buying insurance and IT is no longer about just Data Processing. EPM has become a central part of MANAGING STRATEGY inside of a closed-loop framework of objectives, measures, investments and implementation.
Author: Bob Champagne is Managing Partner of onVector Consulting Group, a privately held international management consulting organization specializing in the design and deployment of Performance Management tools, systems, and solutions. Bob has over 25 years of Performance Management experience and has consulted with hundreds of companies across numerous industries and geographies. Bob can be contacted at firstname.lastname@example.org