Impress your CFO with analytics across the office

There’s a lot more to driving a car than checking your dashboard every now and then.

Similarly, making a company run more effectively may go beyond using business intelligence software but adopting what is sometimes called corporate performance management (CPM). Enterprise execs might use BI dashboards to get a good look at what’s going on in their department, but CPM in theory should encompass much more detailed information around key performance indicators such as overhead, revenue and ones that IT departments will be very familiar with, like return on investment.

Depending on who you talk to, CPM can refer to what sounds like relatively mundane tasks such as budgeting, planning and reporting. Others see it as a collection of practices, technologies and metrics used to gather and supply information. Research firm Gartner has predicted that CPM will eventually converge with BI by 2010, but overall growth is projected at 14.4 per cent. In a survey released earlier this year, Gartner also said that 50 per cent of companies implementing CPM systems will simply automate existing finance-oriented processes and fail to improve performance management processes across the organisation. The survey also said organisations that allowed their finance function to lead a CPM implementation were on average 25 per cent less mature in their use of CPM than organisations that had an equal partnership between finance, IT and key business users in their CPM project.

With that in mind, we spoke to a collection of vendors in this space — some well known, some not — to address the most common questions IT managers need answered before their CPM strategy can get started.

Who really owns and drives CPM in the enterprise, and what role should IT departments play?

Very often performance management started from finance users who needed to do better at budgeting and planning and to align those things with strategy, says Becca Goren, a product marketing manager in performance management at SAS Institute Inc. The trend now, however, is that performance management is moving beyond those confines to other realms of the business.

“Once you start thinking of CPM in a more holistic view, the IT department has a critical role in helping to spread that throughout the organization,” she says. “They’re enabling line of business managers to be able to support their performance management efforts and being that liaison to business and on the other hand looking at CPM from an enterprise level.”

“Our decision-maker is the CFO or controller,” says Bill Soward, CEO of Mountain View, Calif.-based Adaptive Planning. “IT will ask some questions about security and how you integrate with the general ledger system. They’re in more of a supporting role. In organizations with larger IT, they want to manage this themselves.”

According to Joe Pusztai, marketing director of IBM Cognos’ TM1 financial reporting management product, technology professionals play more of a tactical role, although they also have more expertise about other systems that might be affected by a CPM strategy.

“All the IT infrastructure stuff is mandatory — there still needs to be security management, disaster recovery. I would see the role of IT being more infrastructure-related. They’re handling the plumbing as well as the core systems,” he says. “TM1 and Cognos in general makes no predictions about anything you might be running as your systems of record for your GL. That’s still traditionally in the IT domain.”

How can CPM help deliver on business goals?

Depending on how well you can extract data from disparate systems and cross-reference them with financial data, CPM should allow users to understand brand-new relationships between pieces of information. Goren uses the example of a company that tries to figure out how much revenue is being generated by each employee, something that could tie into the metrics of a human resources department.

“One trend we have personally seen is selling human capital management offerings along with performance management applications,” she says. “We provide that analytic human capital data mart, which is a consistent point of employee information. They’re applying the analytics to that. They’re not only looking at revenue per employee, but what is the turnover of critical employees. That’s something the CEO cares about. It’s not just from the HR perspective.”

Software Labs, based out of Sacramento, Calif., has been focusing on what it calls xFusion Insight Packs that provide fast query and export from enterprise resource planning systems from SAP and Oracle. It also provides xFusion Data Quality Packs to track missing or duplicate information, which is another cornerstone of effective CPM. Reed Campbell, the firm’s vice-president of sales and marketing, says the tools can be used for a variety of business purposes.

“If they need to know what the top five customer territories are, we are able to run a template very fast. It’s a double-click process,” he says. “You could also look at the top five open sales orders. A lot of times in a large ERP system, it’s difficult to find those reports or data extraction rules that are working out of the box. You have to bill someone to build these rules. The benefit here is you can cover virtually any system out there with the same utility.”

For many companies, however, CPM continues to centre around finance-related issues.

“Customers want to start with budget and planning,” says Soward. “They’re looking at plan vs. actual, they want to see if there’s a variance and drill down. As we create better integration with some of these back-office systems, we’ll be able to give them more insight.”

Can’t most companies just do most of this stuff (albeit in a more manual way) through Excel?

Sure they can. They just can’t do it as well. Most major vendors are recognizing, however, that coming up with an interface or workflow that doesn’t include Microsoft’s popular spreadsheet application probably won’t resonate with users, so they’re turning it into the front-end for their more powerful CPM applications.

“As far as Excel integration, that functionality was a cornerstone of the product,” says Cognos’s Pusztai. “Once we were able to use Excel-conditional formatting within the TM1 environment, you were looking at much lower-maintenance. They want detailed rows (of data) to look like that.” Soward agrees, noting that all of his customers are coming from an Excel background.

“From that vantage point, Excel is a nice desktop productivity tool, but as business becomes more complex — as you add on more products, locations, people — at some point that complexity outstrips the ability of Excel to respond. The classic case is you send something in Excel to everyone in e-mail. Now you’re in rev two, rev five, rev 15. If someone makes a change, you have to remember and go back to see what’s been changed.”

“Most of these people are very comfortable with Excel,” says Pradeep Tapadiya, Software Labs’ CEO and founder, adding that the company keeps this in mind as it breaks up the market opportunity around CPM. “The first part is reporting/dashboarding, the second part is back end/ETL. We’re focused more on the second part. The UI part, other companies can do that.”

To what extent can this be tacked on to our business intelligence platform or strategy?

Vendors that specialize in BI haven’t completely offered that as a bundle. Cognos’s TM1 is technically considered “financial performance management” for example, but it’s not part and parcel of its flagship Cognos 8. At least not yet.

“Our performance management products are almost all acquisitions,” said Pusztai. “That means the first order of business is determining to what extent that gets integrated into the (overall) platform.” Adaptive Planning’s vice-president of marketing, Greg Schneider, thinks there may be a case for more specialized suites that handle performance management.

“From an IT perspective, companies no longer run their customer relationship management on anything other than a CRM system. With supply chain management it’s the same thing,” he says. “We have enterprise applications for every function of an enterprise. This is one last bastion of functional areas that is still being conducted using Excel.”

Goren said SAS sees a lot of value in using its analytics software for the purposes of CPM, but not unless what’s being analyzed is “clean” and accurate.

“It doesn’t matter how many scorecards you have, how many dashboards, strategy maps, if you don’t have the information, forget it,” she says. “You can develop gradually. You don’t have to have all the answers right out of the gate. We want to prove that performance management is going to move the organization forward. But we don’t know what we don’t know. That really starts with having some good data.”

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Jim Love, Chief Content Officer, IT World Canada

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