In Part I of this series, I highlighted why performance management in NFL football is a lot like EPM in business.
If you missed it, here’s a link so you can go back and review it. As I previously suggested, one of the more interesting and powerful concepts in EPM, and NFL football, is the mid-game review and adjustment process. In sports, as in business, the game plan you design and start executing doesn’t always yield the results you want – winning.
Let’s dive into the X’s and O’s of this topic.
Mid-Game Reviews and Adjustments
In the case of a football game, the defense could line up much differently than you expected and limit your scoring. Maybe they changed their pass coverage scheme and knocked down or intercepted some passes. Maybe they attacked and sacked, or injured, your starting quarterback and knocked him out of the game. So football teams need to assess what’s working, and not working, during the game and make adjustments to their game plans mid-stream.
Historically, we’ve thought about the half-time review and discussions as the best opportunity to assess the results, and make changes to the game plan or players. But in reality, most of the half-time adjustments are already decided BEFORE half-time because the coaches and players have been continuously monitoring, analyzing, collaborating, and discussing what’s working and not working in the first half of the game.
It’s always exciting to see a team execute a mid-game turnaround and transform a potential loss into a win. One of the teams that does this well is the New England Patriots.
Here’s an example of a recent game between the Patriots and Buffalo Bills where the Patriots original game plan wasn’t working – so Coach Bill Belichick made some adjustments both on offense and defense that turned the game around quickly. These adjustments allowed the Patriots defense to shut down the Bills running game and, on the offensive side, allowed quarterback Tom Brady to complete a number of long passes that led to touchdowns – even with fully inflated footballs!
The same approach is required in business. The strategy and plan, or budget defined at the start of the fiscal year doesn’t always yield the desired results. In fact, most budgets are obsolete before they’re even finalized. So after a few weeks or months, maybe a quarter of running the initial game plan, there’s a need to review and assess the results, develop a new forecast, and make the necessary adjustments to get the company back on track to meeting its objectives. These could include a variety of things:
- Making adjustments to pricing for particular products or services
- Shifting marketing spend from one line or product to another with higher demand
- Shifting resources from one region or project to another that’s more lucrative
- Making changes to sales leadership or staff on the ground to improve execution
The possible changes are endless. But without executing a proper mid-game business review, evaluation, and analysis of the results – you may be making the wrong changes, and the business can continue to miss its goals.
People, Process, Technology, Metrics
Many CFOs talk about the key ingredients to successful EPM as including four elements: people, process, technology and metrics. The same concepts can easily apply to NFL football and other sports, but let’s look at them from an EPM perspective.
People – you need to hire the right leadership and players to execute the strategy and game plan.
Process – you need to have the right business processes in place to ensure efficient execution. This includes customer acquisition, talent management, purchasing, order processing, and general accounting. Being competitive also requires solid EPM processes for sales forecasting, financial planning and forecasting, financial and management reporting, analysis, modeling, and others.
Technology – you need to have the right technology in place to enable your people to execute the business processes effectively. A good EPM system should support the core processes of planning, financial consolidation, and reporting – as well as integrated analytics and modeling.
The EPM system should enable you to run your business much more like the way a team plays a football game – near real-time, well-informed, constantly adjusting, able to make large adjustments with more confidence, and rapidly seeing the (good or bad) results. And new technologies like cloud and mobile make EPM easier to deploy and use. Hey, even NFL football teams are using mobile technology to review and make plays during the game.
Metrics – and finally, you need to monitor and track the right metrics or key performance indicators (KPIs) to accurately assess your performance and identify areas that need improvement.
- Business – Sales, Sales Growth, Cost of Goods Sold, Gross Margins, Operating Profit, Annual Recurring Revenue (ARR), Customer Acquisition Costs (CAC), Return on Equity (ROE), and others
- NFL Football – Wins/Losses, Average Points per Game, Running Yards per Game, Passing Yards per Game, Completions, and others.
And the core tenets of EPM hold true in NFL football as well as in business: set goals – develop plans – report the results – analyze the results – model alternative scenarios – adjust your plans – and repeat the cycle on a regular basis. This can be quarterly, monthly, or even more frequently – depending on the pace of your business.
At the end of the day – there’s one big parallel between NFL football and EPM in business. It’s all about attracting customers/fans who purchase the company’s products or services and drive revenue growth and profits for the stakeholders.
Although winning the Super Bowl is the ultimate achievement in NFL football, many teams don’t get to the Super Bowl but still have loyal fans who rent luxury suites and purchase season tickets, food, beverages, apparel, and other merchandise. In fact, according to Forbes, the #1 NFL team in terms of value is the Dallas Cowboys, who haven’t been to the Super Bowl in over 20 years!
But those teams that consistently win, get into the playoffs, and win the “big game” often reap more profits and higher value for their stakeholders
Best of luck to your team!
By John O’Rourke, EPM Channel Contributor, from: http://blog.hostanalytics.com/what-epm-and-nfl-football-have-in-common-%E2%80%93-part-ii?utm_campaign=Blog+Campaign&utm_source=hs_email&utm_medium=email&utm_content=22790531&_hsenc=p2ANqtz-lP90ga8ytkdj_40t141uy79U50m0_xBo2QdugNiXrar35gHYuoc-wqi4KWh8rmxhPZTjFgamQzhdjzUjPXeDO55qN_52-b4mL-ewvDSSB4DTluIM&_hsmi=22790531
John O’Rourke is Vice President of Product Marketing at Host Analytics. With a background in accounting and finance, John has over 30 years of experience in the software industry, and over 16 years of experience in EPM Product Marketing at Hyperion Solutions and Oracle. He has worked with many customers and partners on financial reporting and planning initiatives and has spoken and written on many topics in enterprise performance management. John has also held positions in strategic marketing and product marketing at Dun & Bradstreet Software, Kenan Systems and Decisyon. John has a BS degree in accounting from Bentley University and an MBA from Boston College. See John’s articles on EPM Channel here.