| Q: |
What is Enterprise Performance Management (EPM) and how does it
compare to the "traditional" business intelligence Balanced Scorecard? |
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| A: |
Enterprise Performance Management (sometimes called Business
Performance Management) is an integrated business intelligence offering that
supports an organization's strategy. It does so by allowing people to quickly
define, build, and manage interactive scorecards that measure individual,
group, or company performance. It requires that you gain a flexible,
comprehensive view of your business strategy and key performance indicators
(KPIs). This unified, holistic view of your business brings real-time analysis
to all levels of your organization (strategic, operational, regulatory, and
tactical). The result is a transformation of disparate data into powerful
business insights.
We have found that the definition of Enterprise Performance Management itself
is often spun to the strengths of the software developer or service
organization discussing it. You just need to cut through some of the market
noise and understand the landscape the speaker is defining. We believe the
definition provided here is appropriately neutral and a good starting point for
a discussion that can serve the industry best. |
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| Q: |
How do you determine where to start with an EPM effort? |
|
| A: |
Chances are you'll have some opinions on the key performance
indicators that can truly steer your organization. After some review, a
consulting partner like Avanade will have recommendations as well. Key focus
areas include financial, customer, business process, earnings, and growth...
all preferably tied to the organization's vision and strategy.
We generally find that the best place to start is a blend of your beliefs and
your consulting partner's findings. No one will ever know your business as well
as you do. But, at the same time, it's very difficult for a business person to
gain the perspective that a neutral, experienced third-party can. Bringing the
right mix of people to the table who have been in your shoes, and who also work
regularly with others in your industry is key. It's also a matter of asking
each other the right questions and bringing appropriate experience to bear.
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|
| Q: |
That's a useful summary of the strategic or management-level
perspective. What should you consider from a technology perspective? |
|
| A: |
To start an EPM project, technical considerations must be made
that include the identification and systemization of source data. Systemization
can come from unsophisticated sources such as Excel spreadsheets and reports,
or from enterprise-class systems such as ERP, financial, or operational
systems. The key to success from a technical perspective is to ensure that they
remain consistent and are treated as production systems throughout the
lifecycle of the project.
Microsoft® software can play an important part of this systemization of
data sources. Specifically, Microsoft SQL Server® and Data Transformation
Services (DTS) can extract data from any file or database that has an
ODBC-compliant driver. This includes text files (delimited and fixed-width),
Microsoft Excel, Access, XML and all major and minor relational database
systems.
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|
| Q: |
What is the right level of strategy to introduce into Enterprise
Performance Management? |
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| A: |
That's a tough question. The answer lies in your organization's
ability to accommodate real change and your leadership's ability to follow
through with that change. A brilliant EPM solution may require arduous data
collection and complex strategy integration that might lead to what some have
defined as "break-away performance." But an over-engineered EPM effort is
likely to collapse under the weight of data reporting that the organization
can't realistically provide. The team responsible for EPM should establish a
clear set of business goals that a focused effort can segment and report into.
You and your company's leadership then need to be ready to respond to the
results. It's an iterative process that requires establishing realistic goals,
executing a focused effort to get there, and being honest and realistic when
the findings come in. |
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| Q: |
Does strategy come into play from a technical perspective? |
|
| A: |
The right EPM strategy can mean the difference between a robust,
easy-to-maintain solution that fits into a larger enterprise architecture, or
just another silo system that IT has to support and enhance. The goal of any
EPM solution is to either provide the framework for an enterprise-class BI
solution around which your EPM strategy can flourish, or to consume data from
an existing BI solution. In either case, designing an EPM solution with the big
picture in mind will yield a much more integrated and manageable solution.
|
|
| Q: |
If an organization invests in EPM, isn't it safe to assume that it
will make good on the findings? |
|
| A: |
This is another tough question that ultimately requires a
leadership team to reflect seriously on what it wants to get out of its EPM
effort. For instance, we've seen businesses with heterogeneous systems return
data that feeds over-engineered scorecard tracking. Once findings start to come
in and recommendations are made, the organization can't react. The very systems
that are returning findings are too cumbersome to adjust to the business
requirements they reveal. In this case, the systems themselves become part of a
strategic solution that should be addressed. Of course, thoughtful discovery up
front will identify these issues and can help establish a logical path toward
Enterprise Performance Management that is well forecasted and manageable. |
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| Q: |
What about the technical components that make up an EPM solution?
|
|
| A: |
Once the EPM solution is in place, components within it must
provide critical features for bringing non-conforming performance indicators to
light. These features include user-configurable scorecards (letting users
define what's most important to them), exception highlighting (visual
identification of issues within the data), stop-lighting (intuitive visual cues
as to the performance of the measurement) and drill-down on data within the
scorecards (allows further analysis on existing issues). If your technology
plan sets you on the path toward this set of functionality, breakthrough
insight becomes achievable. |
|
| Q: |
EPM is more than reporting to executives. How are the various
levels of an organization integrated into the benefits of EPM? |
|
| A: |
You're right. An organization has to improve today by providing
business insights to all of its employees. It requires integrated platforms and
applications that are secure, personalized, and collaborative. The challenge in
some cases is that in order for EPM to be valuable and effective at each level
of the organization it must be truly comprehensive. A primary technology focus
is needed to ensure that solutions don't have to be over-engineered. Of course,
you need to also address the realities of heterogeneous environments and
integrate with disparate tools and resources appropriately.
|
|
| Q: |
What's the best way for people throughout an organization to
receive and act on the insights of an integrated EPM solution? |
|
| A: |
Information needs to be available to the masses. Socializing
scorecards and KPIs to employees that can make changes-either personally or
managerially-is the last step in pushing the data out. An organization still
has to react to the issues that EPM identifies, but at least now it has the
tools to measure both the original issues and its performance after the issues
are identified.
People should be allowed to use the tools they are used to. In a heterogeneous
environment, that can mean integrating information systems that aren't easily
connected. In a computing environment like Microsoft Office® System, tools
and applications are often more easily integrated and used. Because of the ease
of customization and quicker integration with core business processes, you can
often realize a lower overall cost. Ultimately, it's a matter of determining
which systems work best for your business and your people and then creating a
blended solution that will return real business value. |
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| Q: |
Once you've begun down the path of an EPM effort, what should you
be focused on? |
|
| A: |
Again, setting a realistic path with iterative value
justifications will take you down a predictable road that your leadership and
employees all understand. It requires ongoing planning, re-evaluation, and
consolidation in order to keep information relevant and cost effective. Returns
can be significant to an organization if done properly, with many of our
customers realizing ROI in multiples of 100 percent over multi-year analysis.
The Microsoft suite of Business Intelligence tools ensures that this ROI
happens much quicker that with other BI tools. The Microsoft Office Business
Scorecard Accelerator, released in June 2004, enables organizations to leverage
their existing investment in Microsoft technologies by deploying a rich,
powerful solution using enterprise-class software including Microsoft
SharePoint, Microsoft SQL Server and Microsoft Windows Server 2003. |
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Mark Chaffin is a Business Intelligence Practice Director managing regional
strategy, asset development and customer engagements for Avanade's North
American region BI practice.
We sat down with Mark Chaffin, Avanade's National BI Practice Director, to get
down to the facts around Enterprise Performance Management (EPM).