Corporate Performance Management Framework

Transcription

1 Version 1.0 Copyright 2004 Answerport, Inc.

2 Table of Contents Table of Contents... 2 Conceptual Overview... 3 Conceptual Overview Diagram... 4 The Foundation... 4 Analytic Presentation Layer... 5 Reports... 5 Dashboard Intelligence Data & Cubes... 6 Enterprise Data Adaptors... 6 Beyond the Foundation Expanded Capabilities... 6 External Benchmark Data... 7 Knowledge Base... 7 Real-time Competitive Intelligence... 7 Conclusion... 8 About Answerport... 9 Copyright 2004 Answerport, Inc 2

3 Conceptual Overview In recent years, companies have found themselves in the position where they have significant amounts of data from newly implemented Enterprise Resource Planning (ERP) systems. Many initiatives have been started to make the volumes of data from ERP useful for management reporting purposes. Many of the reporting systems in place today provide a good rear view mirror picture of the business with limited forward visibility and predictability of company performance. Most of these reporting initiatives have come under the umbrella term, Corporate Performance Management (CPM). Corporate Performance Management is the collection and alignment of metrics, measurement methodologies, processes, and reporting systems. CPM allows an organization to institute a framework where corporate performance can be monitored and measured. Answerport s approach to CPM accentuates the relevant information affecting a companies business. In addition, our approach to CPM emphasizes the importance of providing valuable interpretive. While this paper is not meant to be an all inclusive dissertation on Corporate Performance Management it is meant to provide a summary overview of CPM and Answerport s philosophy for achieving real competitive advantage from implementing a CPM system. Much has been written about Corporate Performance Management systems but there has been little written about the value of extending the reporting capability beyond the traditional reporting spectrum. Essentially, the state of the industry is that organizations are mastering and converting the reams of data from their existing transaction based systems into information. Now the challenge is in converting that information into insight where real competitive advantage lies. It is Answerport s position that effective Corporate Performance Management systems require the traditional reporting as a baseline but must go beyond that capability to help companies truly manage performance. The Conceptual Overview Diagram below provides the organizational framework for this paper. First, we will discuss the shaded Foundation area of the diagram which represents the traditional definition of Corporate Performance Management. Second, we will discuss the three (3) shaded boxes along side the Foundation box in the diagram which represent the expanded capabilities that Answerport feels is necessary to gain true competitive advantage from a CPM system. Copyright 2004 Answerport, Inc 3

4 Conceptual Overview Diagram Foundation Presentation Layer Financial Customer Manufacturing Supplier China, Service etc.. Dashboard Dashboard Dashboard Dashboard Knowledge Bases External Benchmark Data Reports Reports Reports Reports Know ledge Intelligence Data & Cubes Rules Industry benchmark AC Nielsen IRI, etc.. Data points. Data cubes Histor y Dimensions Adaptors Real-time Competitive Intelligence Application Enterprise Systems & Business Data ERP SCM CRM Etc... The Foundation The foundation of the Corporate Performance Management Framework consists of the analytic presentation layer, intelligence data & cubes, and enterprise data adaptors. These foundation components allow companies to integrate transactional data from operational systems (e.g., ERP, CRM) and provide valuable information regarding historical business performance. In addition, the foundation should provide companies with the platform to integrate expanded capabilities like external benchmark data, real-time competitive data, and a company s interpretive knowledge base. It is when these components are incorporated that Corporate Performance Management systems can start to provide valuable insight into future business performance. Copyright 2004 Answerport, Inc 4

5 Analytic Presentation Layer It is Answerport s view that the Analytic Presentation Layer should provide three levels of reporting. Typical CPM solutions define two reporting levels. These two typical reporting levels are reports and dashboards which provide a good view of historical performance. Answerport s perspective is that the analytic presentation layer should have a third reporting level, interpretative. This third layer builds on historical performance reporting and incorporates additional information to provide interpretive and predictive reporting for management action. As shown in the above diagram, the presentation layer often times is logically organized into specific business areas, units or functions depending on a companies requirements (e.g., Finance, Customer Service, Manufacturing, Supplier, etc.). The presentation layer should provide management with on-demand information based on a user s selection of the information they want to view. A further description of each presentation level and how they might work follows: Reports. As needed, users should be able to drill into more detailed reporting based on their information needs. For example, from the digital dashboard, where a profit variance may show as unfavorable, the user can drill into the unfavorable geographic location or product area. Reports can be either predefined or allow the user to filter and generate reports on an on-demand basis. Dashboard. This is the high-level performance summary that presents key performance indicators in a digital dashboard format. It contains various performance indicators such as revenue indicators, profit variances, expense variances, etc. The performance indicators are typically color coded to accentuate areas of risk and/or variance from goal (e.g., red, yellow, green).. The interpretive level incorporates outside information sources, benchmarking information, and analytical extrapolation with historical performance data to provide management with a combined view of outside influences, trends and historical performance results. This gives management an analytic view of both internal and external factors which will provide better information and insight; to allow management to determine the recommended course of business action. are based on predefined rules and external knowledge. The pertinent are presented to empower the business s management with relevant information. Copyright 2004 Answerport, Inc 5

6 Intelligence Data & Cubes The Intelligence Data & Cube portion of the foundation is where the data and data relationships reside. This portion of the foundation is the engine that powers the Corporate Performance Management system and contains the data holders for all the reports, dashboards and interpretive insight presentation levels. Careful consideration must be devoted to defining and developing this portion of the system as it defines all of the data relationships from internal and external data sources. In addition, data definitions, various calculations, summary reporting levels, and comparative information rules are established and recorded here. Data is aggregated and processed against rules and definitions to generate an intelligence engine that provides the core information necessary for fast on-demand access to information. This allows the presentation layer to present on-demand metrics and information based on a user s input and settings. Enterprise Data Adaptors Enterprise Data Adaptors are the interface to a company s transaction based business systems (e.g., ERP, CRM). Based on a company s desired measures and key performance indicators, the business application data is extracted from the transaction based systems on a pre-defined basis to populate the Intelligence Data & Cubes in the Corporate Performance Management system. This extracted data can then be transformed into data cubes and dimensions for ondemand presentation. Many standard adaptors are available and compatible with specific enterprise system applications such as Oracle Applications, JD Edwards, SAP, Peoplesoft and Baan. Beyond the Foundation Expanded Capabilities For companies to truly manage corporate performance, their information analysis capability must extend beyond the traditional Corporate Performance Management foundation to include external business influences. While expanded capabilities require the foundation to be in place they incorporate additional information sources. A robust Corporate Performance Management system includes the incorporation of External Benchmark Data, Knowledge Bases, and Real-time Competitive Intelligence. Copyright 2004 Answerport, Inc 6

7 External Benchmark Data External Benchmark Data is typically used by companies as a yardstick for performance across many different areas of the business. By incorporating different benchmarks, companies are able to measure their performance against best practices and industry peers. This comparison technique allows companies to constantly challenge their performance against independent criteria. For example, if a company is turning inventory 18 times per year the conclusion may be that they are doing great in that area. But what if the industry average is 24 turns per year? How does that change the conclusion? What are competitors doing that the company is not? Incorporating benchmark data from leading sources such as AC Nielson, IRI, and/or Gartner will provide the basis for additional insight. Knowledge Base Another expanded capability that companies should address is the capture and utilization of key company knowledge via an interpretative knowledge base. The Knowledge Base provides a repository for key performance indicators and their relationships with both internal (e.g., pricing sensitivity) and external (e.g., commodity future price impact on future profitability) factors. This knowledge, combined with information from the foundation, can provide insight into near and long term performance. This provides companies with increased reaction time for prioritizing initiatives and making decisions. Using an interpretive knowledge base to support concepts such as the Balanced Scorecard, can help companies ensure that success in one measure is not at the expense of another measure. Real-time Competitive Intelligence The most advanced implementations of Corporate Performance Management will utilize realtime data feeds. It is our belief that companies will focus on real-time data feeds that provide timely competitive and general market information. A simple example would be the monitoring of weather patterns in a geographic area to adjust product sales forecasts. A more sophisticated example would be the utilization of web-crawlers to monitor and capture competitive pricing information from competitive web-sites on the internet. This pricing information could then be utilized to adjust pricing, forecasts or develop timely promotional pricing campaigns. Copyright 2004 Answerport, Inc 7

8 Conclusion Corporate Performance Management Framework Corporate Performance Management is the collection and alignment of metrics, measurement methodologies, processes, and reporting systems. CPM can benefit an organization by: Aligning business metrics using a top-down approach via the use of key performance indicator dashboards and supporting reports. Increasing business agility by providing decision-makers with timely access to missioncritical information. Improving consolidation processes where data across the enterprise is aggregated regardless of the technology platform and software. The consolidation process provides the company with a single version of the truth for the entire enterprise. Understanding competitive posture by comparing against industry benchmarks and allowing proactive planning of competitive actions. Providing relevant interpretive to focus actions. The interpretive provide relevant information for more proactive business planning and actions. Corporate Performance Management not only promotes the ongoing survival of the enterprise in today s business environment, but can leverage improved performance throughout the enterprise that leads to differentiation and competitive advantage. Further, the Sarbanes-Oxley Act of 2002, which requires regulatory compliance with financial controls, reporting and auditing processes, can be incorporated as part of the Corporate Performance Management strategy to promote discipline and rigor in reporting practices as well. While many companies are beginning to address the traditional Corporate Performance Management framework, few have taken an expanded view of Corporate Performance Management and the advantages it can provide. Answerport believes that companies must first have the Corporate Performance Management foundation in place before implementing any expanded capabilities. In addition, when planning, designing and implementing the foundation, companies must consider and design for future incorporation of the expanded capabilities discussed in this paper. Copyright 2004 Answerport, Inc 8

9 About Answerport Corporate Performance Management Framework Answerport is a Management and Technology Consulting firm that focuses on improving our client s business performance. We do this by solving business challenges, improving business processes and executing operational services. Our consultants possess an average of 12+ years of experience in improving performance as it relates to business processes and Information Technology (IT). Answerport consultants hit the ground running and deliver immediate results. Our consultants are easy to work with and focused on delivering practical and valuable results to our clients. The solutions we recommend are pragmatic rather than theoretical because we believe an idea is only as good as the benefits that are actually achieved. Our direct, fact-based information will help you identify good ideas and allow you to take immediate action. Our experienced consultants will help you implement them and achieve the benefits. Answerport delivers value to organizations through the following services: Strategy & Advisory Services Business Productivity Services Corporate Performance Management Enterprise Portfolio Management IT Effectiveness Software Evaluation & Selection Process Transformation Program and Project Management Business Intelligence Solutions Business Operations Management Interim Executive Appointments Applications Management Services Business Process Outsourcing Technical Services Copyright 2004 Answerport, Inc 9