The Journey from BI to CPM: Part 3, Cause and Effect

So far we have established that there is no single journey from BI to CPM. Instead it is an evolution that builds on successful implementation and aligns itself closer to the business in order to drive deeper and sustainable success. In the last post I also described a process of establishing requirements which was less about reporting and more about establishing the business priorities, the objectives required to deliver against them and then, in turn, the metrics required.

In this post I want to encourage you to expand on the objectives to understand how they are going to be achieved. This will help the business identify if it is measuring the right things whilst validating what you have discovered so far. It may also uncover related or more detailed information requirements.

For example, the engineering business we talked about in part 2, were looking to increase market share. One of the objectives they identified to achieve this was to increase account share. If we continue to explore this objective further we are likely to identify the initiatives required to achieve it. To increase account share the sales team must cross-sell. In order to cross-sell there has to be collaboration across the sales people that sell their products and services into a single account. In order for the sales team to cross-sell the services team must also align around a strategic account plan.

So our objective to increase account share actually becomes a series of cause and effect objectives or initiatives;

INCREASE MARKET SHARE by increasing account share

• Cross Sell
  
• Align services to strategic account plan
  
  • Encourage global account collaboration
    
  • Create compensation plan that reward global account collaboration
    

Here, we can see a basic cause and effect between these objectives. We can also see that they begin to cross departments because sales, services and HR all own objectives that contribute to the ultimate senior management team objective of increasing market share.

There are a number of methodologies which would drive these discussions including those introduced by Robert Kaplan and David Norton in a series of books including 'The Strategy Focused Organisation' and through their organisation Palladium. This approach organises this cause and effect matrix of objectives across the four balanced scorecard perspectives financial, customer, internal and learning and growth. The completed diagram, a strategy map, is a compelling visual representation of those objectives that should be driving the organisational strategy.

Whatever methods or techniques are used, the essence is aligning organisational information with current business priorities. The alternative, to either replicate (albeit improve) existing systems or to ask the business to mock up endless cross tabs in spreadsheets to communicate their requirements would only deliver partial success.

These last two posts have been about the impact of information systems on performance management. Whilst critical, this is only part of the story. Performance Management is also about what the business does with the insight. How it collaborates, adapts and executes the plan which in turn requires robust planning, budgeting and forecasting. More on this in future posts.

This series of posts draws greatly from the work of Kaplan and Norton and their approach to Corporate Performance Management using the Balanced Scorecard and Strategy Maps.

The Journey from BI to CPM: Part 2, Establish Business Objectives

This part of the journey is about asking if you are measuring the right things today. This seems like an obvious point but reporting systems are often put in place around those things that are easy to measure rather than those things that are important. Over time, systems are replaced but this can make things worse not better. It is all too common for the new system to deliver more or less the same information but in a new technology. Faster, sexier, more charts, in a dashboard, around a scorecard, through a browser but essentially the same old information the organisation has always reported.

To determine what needs measuring requires a more considered approach, a step back. It requires an understanding of the few critical business goals or objectives that are important today. Obviously, this will depend on who in the business you ask. Ask the board and the response is likely to include the strategic objectives and financial outcomes that describe how the company creates value for its shareholders. Ask a functional head and the response is more likely to include those things that contribute to financial outcomes. Sales Management might be looking to "improve sales productivity", engineering to "increase number of product launches" and marketing "increase campaign effectiveness"

There are techniques for organising the various objectives across an enterprise into a coherent whole but it is too large an undertaking for me to cover here. Similarly, I am not advocating a lifetime of paralysis through analysis here. At this stage it doesn't matter about the level. Some objectives will be strategic, some tactical, some board level and some departmental. Whichever part of the organisation you are engaged with will both constrain and influence the answer to your questions, what matters is to ask about objectives, vision and goals. For example, I recently worked with the European Management Team of a global engineering company. They were tasked with growing revenues in a market that wasn't growing. This obviously meant taking market share.

Their approach to achieving this was to go after larger deals through the direct channel whilst growing their indirect channel to pick up deals in the mid market. This strategy could be articulated as a number of objectives;

• Grow indirect sales
  
• Close more deals that of €1m or more
  
• Retain existing customers
  
• Increase account share
  

The next step was to identify the metrics by which these objectives could be measured which included;

• Grow indirect sales (% Indirect Revenue Against Total)
  
• Close larger deals (#Deals >=€1m)
  
• Retain existing customers (Renewal Retention%)
  

So it is really straightforward. Ask the business what it is trying to achieve, to articulate the objectives and then determine how they can be measured. The example above is fairly high level and strategic but the approach to more tactical requirements is exactly the same. What are you trying to achieve? How are you trying to achieve it? How do you measure it?

The next part of the journey will require that you understand the initiatives that support these objectives and then further, the metrics that drive those.

This series of posts draws greatly from the work of Kaplan and Norton and their approach to Corporate Performance Management using the Balanced Scorecard and Strategy Maps.