Does this subject stimulate a few shivers down your spine and cause you a bit of a cold sweat? Do you remember when your school teacher would say, “Put your books aside. “We are having a pop quiz”?
This pop quiz will not be too hard. And it is multiple choice. So you can guess and maybe luck out. The answers are at the bottom.
Which has relatively higher value for managing an organization’s strategy?
- A balanced scorecard
- A strategy map
- A club to whack underperforming managers
What is a relatively more effective and higher ROI way to retain, grow, win-back, and acquire customers?
- Spray-and-pray magazine advertisements
- work backwards understanding the unique preferences of customer micro-segments (and ideally individual customers) and tailor deals, offers, price discounts, marketing campaigns, etc. to them.
True or False. The annual budgeting process is so broken and dysfunctional that it should be abandoned altogether. It takes months to create and is obsolete a few months after being published due to market changes and actions from competitors.
Which is the correct relationship? The suite of enterprise and corporate performance management (EPM/CPM) methods is either a subset of Business Intelligence / Business Analytics / Data Warehousing (BI/BA/DW) or the reverse or they are unrelated.
- Enterprise and corporate performance management is a subset of BI/BA/DW
- BI/BA/DW is a subset of enterprise and corporate performance management
- They are unrelated
Which will have more impact?
- Implementing and integrating many EPM/CPM methods without any imbedded business analytics.
- Implementing and integrating fewer EPM/CPM methods than answer (a) but with imbedded business analytics in each method.
- Status quo and not implementing anything.
#1. (b) The strategy map has all the intelligence in it. It is like a GPS from the executives. The balanced scorecard, although also important, is simply the feedback mechanism where its KPIs should be derived from the executive team’s strategy map including target measures to align employee behavior with the strategy.
#2. (c) is correct. If you answered (a) or (b), please see me after class.
#3. (c) “Tr-alse” I tricked you. The answer is kind of both. The annual budget is typically obsolete in a few months, and the budgeted department costs are padded by veteran managers who sandbag their numbers, caves in into the loudest voice or strongest muscle and worse is over-inflated by needless “use-it-or-lose-it” fiscal year-end spending since the next year’s spending for each expense is typically incremented by 3% for inflation. But if you abandon the annual budget, what do you replace it with to satisfy the purposes of a budget? Those who asked that question get extra credit. The answer is with driver-based rolling financial forecasts.
#4. (b) BI/BA/DW is a subset of enterprise and corporate performance management (EPM/CPM), but they are inextricably linked together. EPM/CPM deploys the potential power in BI/BA/DW in the context of a problem to be solved, opportunity to be pursued or system to be optimized.
#5. (c) Doing nothing will have a sufficient adverse impact resulting in eventually an organization will fail or go bankrupt. The more interesting question is if (a) or (b) will have more impact. The answer is an “it depends” one. My leaning is (b) because embedding business analytics (such as multivariate correlation analysis among KPIs and PIs in a strategy map) will turbo charge and add more torque to the EPM/CPM’s integrated gears compared to having a few more gears spinning.
No one ever said that tests in school were easy or fair. It can be an even greater challenge working in the real world!
By Gary Cokins, EPM Channel Contributor, from: http://www.information-management.com/blogs/Business-Intelligence-Enterprise-Performance-Management-10027033-1.html?utm_campaign=blogs-jun%203%202015&utm_medium=email&utm_source=newsletter&ET=informationmgmt%3Ae4497680%3A2047253a%3A&st=email
Gary Cokins is an internationally recognized expert, speaker, and author in advanced cost management and performance improvement systems. He is the founder of Analytics-Based Performance Management LLC at www.garycokins.com in Cary, North Carolina. His career: First ten years as an executive with a division executive with FMC Corporation; next fifteen years in consulting with Deloitte, KPMG, and EDS; and last fifteen years as a Principal Consultant with SAS, a leading provider of business intelligence and analytics software. See Gary’s articles on EPM Channel here.