Few today dispute the need for Enterprise Performance Management solutions - with greater than 65% of US companies and 62% plus European companies deploying Balanced Scorecard or strategic EPM systems within their organizations. As with all enterprise systems solutions however, the hyperbole from consultants on value add has been prodigious and at times stupefying.
What really matters for new investors in Asia, and for SMEs throughout the world, is understanding what evidence there is of the ROI, of these, oftentimes, significant systems infrastructure investment?
PERVASIVENESS - IT COSTS, BUT IT DELIVERS A 2007 survey of 200 large companies by the Hackett Group of Atlanta, found that organizations deploying 'world-class' EPM systems (defined as companies in the top quartile for efficiency and effectiveness) enjoyed equity market returns of 2.4 times of their peers in their industry (including stock price and dividends). This study also revealed a critical success factor in successful deployment was 'pervasiveness' - that is to say, many more operations managers had access to the online reporting tools that in their peers in the industry. It is thus where PM permeates throughout the organization that we see the real business performance gains (equity and value).
While a wide scale deployment deployment can deliver high ROI, it can also come at a high cost. The experience of many of the early pioneers in EPM has been painful , with very significant cost overruns, and low, to non-existent ROI. These often massive cost overruns, resulted from a combination of poor implementation planning, lack of experience and inappropriate technologies. Technologies based on existing ERPs (bolt-on BI or Dashboard solutions) were invariably costly to implement, and offered very little of the functionality of purpose designed software.
Lack of coherent planning for implementation also meant that solutions were often hybrids of top down Balanced Scorecards with rich pockets of production and cost data. These often resulted in ill balanced, overly complex and patchy information spread on Dashboards. We have moved on - we now know we must plan for and deploy the 'decision architecture' from the top-down , and we must build it before we commence.
CULTURE FIRST - INVESTMENT LATER A BRWS study in 2007 revealed that the two most significant obstacles to successful implementation of EPM were; a lack of accountability, and a lack of readiness to engage in a measurement driven management system. The consequences of a 'premature' implementation are often significant internal conflict, systems and consulting cost overruns and failure. It is therefore, absolutely essential to get insight into your organization's readiness before you invest. in EPM technologies.
KNOW HOW TO USE INFORMATION Many of the pioneers in Balanced Scorecard deployment over the past decade discovered that their biggest hurdle was not technological, but people. Specifically, managers who were resistant to managing with data, or managers who considered only data they were familiar with, and ignored other data, critical to the health and reputation of the business. Do you have the management systems to support a dynamic flow of critical performance data - do you meet to review strategy frequently? Do people at all levels expect feedback on performance? Is your EPM linked to rewards and recognition management - do you plan to do this? Know how you will use your EPM system before you invest - failure to do will result in ever increasing costs, and no ROI.
BUILD STRONG FOUNDATIONS FOR ROI Considering and EPM deployment? If so, consider the following before you invest: 1. ASSESS YOUR READINESS - commission an assessment of your readiness - know where you have weaknesses, and where you need to build before investing; 2. GET BUY-IN - Ensure you have commitment from the senior management team before you start - without this, your ROI will be minimal; 3. MAP YOUR DEPLOYMENT - build a ROAD MAP for the next 18 months to 3 years, which delineates all your milestones, investment points, and the resources required to make it happen - before you begin; 4. BUILD THE BUSINESS CASE - take the time to model and quantify the ROI, and the total costs of ownership of your EPM implementation; 5. INFORMATION ARCHITECTURE - map it before you invest - know what information decision makers need before you build; 6. PERVASIVENESS - Make your system available across the organization: - know these costs before you begin; 7. MANAGE THE PROCESS - a sophisticated reporting system which is not part of wider management process is a 'white elephant' in the making. Ensure you structure the management of performance as a process - not a technology. Articles to follow will include consideration of the best systems options available in today's EPM marketplace, and factors to consider in making your selections.
What really matters for new investors in Asia, and for SMEs throughout the world, is understanding what evidence there is of the ROI, of these, oftentimes, significant systems infrastructure investment?
PERVASIVENESS - IT COSTS, BUT IT DELIVERS A 2007 survey of 200 large companies by the Hackett Group of Atlanta, found that organizations deploying 'world-class' EPM systems (defined as companies in the top quartile for efficiency and effectiveness) enjoyed equity market returns of 2.4 times of their peers in their industry (including stock price and dividends). This study also revealed a critical success factor in successful deployment was 'pervasiveness' - that is to say, many more operations managers had access to the online reporting tools that in their peers in the industry. It is thus where PM permeates throughout the organization that we see the real business performance gains (equity and value).
While a wide scale deployment deployment can deliver high ROI, it can also come at a high cost. The experience of many of the early pioneers in EPM has been painful , with very significant cost overruns, and low, to non-existent ROI. These often massive cost overruns, resulted from a combination of poor implementation planning, lack of experience and inappropriate technologies. Technologies based on existing ERPs (bolt-on BI or Dashboard solutions) were invariably costly to implement, and offered very little of the functionality of purpose designed software.
Lack of coherent planning for implementation also meant that solutions were often hybrids of top down Balanced Scorecards with rich pockets of production and cost data. These often resulted in ill balanced, overly complex and patchy information spread on Dashboards. We have moved on - we now know we must plan for and deploy the 'decision architecture' from the top-down , and we must build it before we commence.
CULTURE FIRST - INVESTMENT LATER A BRWS study in 2007 revealed that the two most significant obstacles to successful implementation of EPM were; a lack of accountability, and a lack of readiness to engage in a measurement driven management system. The consequences of a 'premature' implementation are often significant internal conflict, systems and consulting cost overruns and failure. It is therefore, absolutely essential to get insight into your organization's readiness before you invest. in EPM technologies.
KNOW HOW TO USE INFORMATION Many of the pioneers in Balanced Scorecard deployment over the past decade discovered that their biggest hurdle was not technological, but people. Specifically, managers who were resistant to managing with data, or managers who considered only data they were familiar with, and ignored other data, critical to the health and reputation of the business. Do you have the management systems to support a dynamic flow of critical performance data - do you meet to review strategy frequently? Do people at all levels expect feedback on performance? Is your EPM linked to rewards and recognition management - do you plan to do this? Know how you will use your EPM system before you invest - failure to do will result in ever increasing costs, and no ROI.
BUILD STRONG FOUNDATIONS FOR ROI Considering and EPM deployment? If so, consider the following before you invest: 1. ASSESS YOUR READINESS - commission an assessment of your readiness - know where you have weaknesses, and where you need to build before investing; 2. GET BUY-IN - Ensure you have commitment from the senior management team before you start - without this, your ROI will be minimal; 3. MAP YOUR DEPLOYMENT - build a ROAD MAP for the next 18 months to 3 years, which delineates all your milestones, investment points, and the resources required to make it happen - before you begin; 4. BUILD THE BUSINESS CASE - take the time to model and quantify the ROI, and the total costs of ownership of your EPM implementation; 5. INFORMATION ARCHITECTURE - map it before you invest - know what information decision makers need before you build; 6. PERVASIVENESS - Make your system available across the organization: - know these costs before you begin; 7. MANAGE THE PROCESS - a sophisticated reporting system which is not part of wider management process is a 'white elephant' in the making. Ensure you structure the management of performance as a process - not a technology. Articles to follow will include consideration of the best systems options available in today's EPM marketplace, and factors to consider in making your selections.
About the Author:
Learn more about business performance management. Visit the Global Consulting site where you can find out about planning for balanced scorecard and performance management systems implementation.
