As the CFO of a major non-profit, you heard about the absolute need to manage your performance; you listened to your CIO expound the virtues of an integrated information platform: “one version of the truth”. So you signed off the check. You paid a few hundred thousand dollars for an end-to-end Enterprise Performance Management (EPM) software [Think budgeting & Planning, Strategic Management, Dashboards etc.]; a few more hundred thousand dollars for impressive looking consultants with impeccable references who sounded like they knew your industry. Now you are able to pull up a futuristic and glitzy looking dashboard with knobs and dials that tells you at any one time what each department, division, region and country is doing. In fact you have a near flawless, apparently perfect information asset. However, there’s one problem: all your operational managers are still using Excel. Even worse, they download data from the different tools in the end-to-end suite into Excel, manipulate it and in some cases, type it back into your EPM package. So you still have a lot of the problems you started with: poor audit trail; data inaccuracies; inability to rely on the numbers etc. You have a situation that might be described as: a perfect imperfection.
So how did it all go wrong?
Somebody failed to come up with an integrated EPM strategy to go with the integrated EPM software. The best way to ensure a truly successful EPM implementation is to work with the relevant stakeholders: finance, IT, vendors, consultants, end users etc. in creating a truly integrated EPM strategy that covers all areas of your business.
Very often we see customers who have been swayed by their competitors to acquire the latest EPM tool. They have undertaken an informal software selection process and selected a vendor that presented the best during the fashion parade. The needs of the business however, were not properly aligned to the capabilities of the different tools being purchased. Once the customer purchased the software, they suddenly look up, apparently startled by the cost of this sudden investment, and decide they must save costs during the implementation. So they employ a bunch of independent consultants and lower cost consultancies, each with specialties in one of the tools within the EPM suite they have purchased. The farsighted organizations are aware of the need for project management, so decide against a project manager with experience in implementing these integrated solutions, but “somebody from finance”. So here we are with 4 separate streams for each tool: Strategic Planning; Budgeting & Forecasting; Financial Reporting and Dashboarding & Scorecarding. Each stream has “somebody from finance“ managing the project. As the “project manager” has never delivered this type of solution before, they are working towards a vision that was presented at the pre-sales demo. As each project manager is from a different department, they don’t have implicit knowledge of what the other departments do and therefore how the different streams might need to co-ordinate their work to ensure the eventual data from the different streams are integrated and can be shared easily. We have seen clients develop budgeting and reporting systems as two parallel streams, then get to the end and find that they budget at such a different level of granularity that they couldn’t directly load their budget into the financial reporting system to do direct comparisons between their actual versus their budgeted data.
An enterprise performance strategy
A well thought out Enterprise Performance Management (EPM) strategy takes into account not just the needs of the appropriate stakeholders, but a review of the underlying source systems; the need to re-engineer existing processes and most importantly, align the stated strategic goals of the organization with tools that have been purchased within the EPM suite. So for example, if the organization has a stated goal of “reducing poverty in francophone Africa”, how do you turn this somewhat subjective goal into measurable objectives that can be tracked using the myriad of tools within the EPM suite from strategic planning to financial reporting?
Implementing EPM successfully
So how does an a nonprofit organization go about achieving a truly functional, integrated Enterprise Performance Management solution that permeates the whole organization; is used by all the key stakeholders and delivers the organization-wide strategic goals? With a great deal of forethought, planning and execution!.
The first psychological hurdle to overcome is that these solutions are complex and challenging. You therefore need to work with people who have extensive experience delivering these solutions. You need delivery partners that can look across the whole organization; understand the industry, its challenges, processes and culture.
The approach should be both top-down and bottom-up. From a top-down perspective, it is imperative to understand the strategic goals of the business and how they can best be delivered using the right tools at your disposal. From a bottom-up perspective, you need to understand the needs of the end users: the systems they use, the way they work, how the solution will affect them and what processes need to be reworked to enable efficiencies within the proposed new system.
The initial step of aligning the company goals is to make a full list of the tangible and intangible strategic goals, then turning these goals into measurable metrics that can be measured organization-wide. So for example, if an organization has a mission like: “reducing poverty in Francophone Africa”. You can break this down into strategic goals and metrics that would serve as consistent measurable Key Performance Indicators (KPIs) for the company. Once these have been achieved they need to be tested and shared with the relevant level of employees; their feedback captured and used to refine the KPIs again until everyone that will be measured by these metrics buys into them.
The next step is to incorporate the strategic goals and metrics into the complete suite of tools. So for example, the stated goals and measures will not only be captured in the strategic planning & management, but they will help set targets in the budgeting & forecasting tool for comparisons during the budgeting process. These same metrics could be built into the financial reporting package so that across an international nonprofit for example, all divisions, regions and countries can be measured equitably and consistently. Finally, the metrics and the targets set from the strategic planning tool should be represented in the dashboarding application.
It is obvious therefore, that if you had different streams not working closely together in trying to achieve the same goal, it would be very difficult to assemble a cohesive and consistent Enterprise Performance Management solution across all the different tools. For a start, you would need to ensure that you have the same or complimentary level or detail across all the tools so their data can flow seamlessly amongst themselves with little or no data input or re-keying. You would need to co-ordinate the disparate group of users that the different tools touch and ensure their buy-in. This would entail a change management process so they know how their jobs will be affected by the new solution and how they can contribute positively to its success. Only a deliberate process like this will wean them from their reliance on their tried and trusted Excel spreadsheets.
The role of senior management
The success of a truly integrated Enterprise Performance Management solution however, hinges first and foremost on the support of the senior members of the organization. They have to see true strategic, operational, technological and emotional value, both in the short and long term. Once the project has been approved, it has to have a very senior executive as its champion throughout the organization. This individual needs to have the right level of influence, so in most cases it’s the CEO, CFO or a very senior VP. The role of champion requires selling the benefits of the solution across the organization. However, it also requires the dissemination of what can be a paradigm shift in the culture of the organization. People will be measured and compensated differently based on the new system. The CEO of a large organization we worked with decided he did not want a 50-page monthly report, but a 4-page report of which the 1st page was a sheet of strategic goals and measures. Every senior manager was measured by this same 4-page report as it pertained to their department, region, country etc. The 4-page report was produced seamlessly from the EPM tool, with each manager having the capability to drill down behind the numbers on those 4 pages. As far as the CEO was concerned, each manager should be able to run their department or division based on those 4 pages. If he had further queries, then the managers could always drill further into the data, but those four pages where able to provide a full picture of each division as well as the company as a whole.
The missed opportunity
The major omission when organizations design Business Performance Management solutions is that they neglect to take advantage of the opportunity to thoroughly review, and where necessary re-engineer some of their existing processes. Time and time again, we come across instances where organizations have simply recreated inefficient processes in the new software system. To take full advantage of the new EPM solution, the company needs to take a meticulous assessment of all processes that will be impacted and decide whether they can be improved not just from a process standpoint, but also in aligning to the EPM solution. So for example one of the clients we worked with wanted to have a seamless data transfer of their fixed asset data from their asset management system to the EPM platform. However, they only discovered well into the project that their asset management system did not have the right level of granularity to enable the data transfer. They therefore had to go back and modify their asset management system, which caused a delay in the project.
I started this article somewhat impudently challenging the value of Enterprise Performance Management software. Make no mistake however, of my absolute belief in them. The issue of EPM software not delivering its full value, lie not in the capabilities of the tools themselves, but in the implementation. It is absolutely possible for organizations to have management dashboards that leverage the various EPM tools in providing true, accurate, consistent information for informed decision making. However, in my opinion, organizations do not put a true cost to the time and effort required to make this a reality. The path to a successful EPM solution has to be one intrinsically entwined with the strategy of the organization. Furthermore, an EPM roadmap that incorporates all aspects of delivery: organizational goals and vision; process re-engineering; project management; change management and software implementation needs to be in place to ensure success.