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May 13, 2008
Let's talk EPM - Part 1
Welcome to the world of Enterprise Performance Management (EPM),considered the Holy Grail of Business Intelligence. EPM and its various manifestations creatively named as Business Performance Management (BPM), Corporate Performance Management (CPM) etc. is a set of processes that help organizations optimize their business performance.
Does it sound good? - Ofcourse, Yes! Show me an organization that does not want to optimize!!
Does it sound practical? - Not really! Don't know where to start!!
EPM means many things to many people - Optimization of business performance can mean optimization at the business processes level (local optima), can also mean optimization at the organizational level (global optima) and can also have many flavors in between.
With many BI vendors jumping into the EPM bandwagon, the problem is that EPM is immediately equated to the solutions provided by tools like Business Objects, Cognos, Hyperion etc. That view, in my opinion, is far removed from the truth.
In this series of posts, I would like to share some thoughts on making EPM a practical reality in organizations. To start with, let me enumerate the components of an EPM strategy:
1) Business Process Maps - Understand the business process
2) Metrics Identification - Get hold of the metrics
3) Metrics Profiling - Understand the metrics in depth
4) Metrics Maps - Understand the cause and effect relationships between metrics
5) Metrics Visualization - Implementation of Metric Maps on BI Tools
6) Watch and Improve - Monitor Metrics and Improve business process as required
A keen observer will immediately realize that implementing EPM has lot more of pen & paper work (substitute your favorite analysis tool here!) before technology can come into the picture. Also, in my opinion, there is no silver bullet - No single metric map can fit companies across industries or even within same industry. EPM framework for an organization has to evolve in phases based on company's growth, its corporate vision, and the important numbers at different stages etc. or in other words "EPM is very personal to an organization".
EPM, to a BI practitioner, represents a convergence of many things:
a) Domain Understanding
b) Quantitative Play
c) BI Tool capability
d) Closed-Loop BI Architecture
e) Knowledge of proven methodologies like Six Sigma, Balanced Scorecard etc.
I will try and explain some of the interesting aspects of an EPM strategy like Metrics Profiling, Metrics Maps etc. in the next few posts. Meanwhile, you can take a look at resources like this one to understand the "big picture" with respect to Enterprise Performance Management.
Thanks for reading!
Posted by Karthikeyan Sankaran at May 13, 2008 9:45 PM
Comments
StrategyDriven contributors believe that performance measures serve to align an organization’s efforts to the achievement of its mission. As part of a company’s evaluation and control program, they quantifiably monitor important characteristics of the company’s products and services and the performance of the individuals and processes creating them. Performance measures support managerial decision-making by providing useful information regarding:
* how efficient and effective are the company’s processes and the individuals implementing them
* if product or service improvements are necessary
* if the company’s customers and stakeholders are satisfied
* if the company is meeting its stated goals
Performance measures best serve an organization when they are understandable, broadly applicable, uniformly interpreted, and economic to apply. They should cascade through and organization’s hierarchy such that achievement of lower tiered performance goals support higher tiered goals that in turn ultimately support achievement of the company’s mission.
The StrategyDriven website (www.StrategyDriven.com) is dedicated to providing executives and managers with the tools and techniques they can use to create more aligned and accountable organizations for the achievement of superior results. Many of our principle, best practice, and warning flag postings as well as StrategyDriven Podcast episodes focus on development of effective Organizational Performance Measures. We hope you'll visit our site soon!
All the Best,
Nathan Ives
Principal Contributor and
co-Host, StrategyDriven Podcast
StrategyDriven
www.StrategyDriven.com
Posted by: Nathan Ives at June 7, 2008 1:55 PM
