We live in an unpredictable world where the future is uncertain. If it was then we would all make a fortune by making strategic ‘bets’ on certain outcomes – we would know what products and services to back, what level of stock and staffing to have, and when and where to market our capabilities for maximum effect.
But the world is not like that.
Many organizations over-rate the quality of their enterprise and corporate performance management (EPM / CPM) methods and supporting software systems as well as exaggerate how comprehensive and integrated they are. For example, when you ask executives how well they measure and report their costs and non-financial performance measures, most proudly boast that they are very good. However, this is inconsistent and conflicts with surveys where anonymous replies from mid-level managers candidly score their scaled answers as “needs much improvement.”
Every organization cannot be above average!
What makes exceptionally good EPM / CPM systems exceptional?
Rather than try to be a sociologist and psychiatrist to explain the contradictions of executives boasting superiority while anonymously answered surveys reveal inferiority, let’s simply describe the full vision of an effective EPM / CPM system that organizations should aspire to.
(This is second in a series of articles addressing best practices towards improving the finance function.) What is the #1 issue that’s getting in the way of Finance delivering game-changing decision support… of Finance consistently being called in when executives are making important decisions… of Finance being regarded as having the utmost competency? EPM Channel…
Zombie spreadsheets should be dead – for all intents and purposes they should have been put in the ground long ago – but they refuse to die.
According to survey results, Finance believes that they are capable of “game changing” levels of decision support while Non-Finance respondents were far less likely to agree.
While Finance is getting a seat at the table, they can clearly be delivering more value once they get to that table.
John O’Rourke, one of the most seasoned veterans of the EPM industry, offers his perspective in this candid interview with Susan Serven. John shares his views on the future of EPM, the merger of Hyperion and Oracle, the most common misconceptions of EPM, his advice for a company just starting to consider implementing a performance management system, why Balanced Scorecard may have fallen out of favor, and many other insights.
(This is the third of 7 articles discussing frustrations with the EPM industry. To be sure you don’t miss out on any articles of interest, please sign up for our weekly newsletter at http://www.epmchannel.com/register-for-our-weekly-digests/.)
I recently read an article on entrepreneurship that featured Richard Branson. In the article, Branson was quoted as saying that the “real opportunity in business is the ability to identify the frustrations in a particular area and have real solutions to remedy those frustrations.”
That started me thinking about the common frustrations that I have seen while working in the Enterprise Performance Management (EPM) industry for the last 15 years. Here are seven common frustrations that I see frequently along with some recommended solutions.
As far as I’m concerned, doing the right thing is worth whatever amount of time it takes you to get there.
With budgeting and reporting, doing it fast is the basic goal – reducing the number of approval cycles and automating consolidations. It’s a process we just want to get done. Some pundits refer to the budgeting process as a headache; the goal is to reduce pain. Others note that budgeting is about not failing*. Most agree that budgeting has very little to do with doing the right thing to drive your business forward.
Business planning is all about doing the right thing. The “right thing” requires planning at the right level of detail with the right people in the room to make financially-sound decisions at the right time to drive your business forward and impact the bottom line.
There is nothing complex in [the budgeting] process. It is logical, makes sense and should be straightforward. But personal experience and various surveys show that this isn’t the case. In the Harvard Business Review article ‘Turning great strategy into great performance’, only 50 - 60% of the potential within a strategic plan is ever realised with the top reasons for failure being inadequate resources, poor communication, and actions required to execute not being clearly defined. It goes on to say that the cause of this failure is laid squarely on breakdowns in the planning and execution process.
So what’s going wrong and what can be done to put it right?
What do the Olympics and the global economy have in common?
Many times, the teams that focus on their strategy, prioritize goals, and have the resources to focus on infrastructure, training, and process, are the ones which win the most medals.