Everything changes, nothing stays the same. For me, it is on to the next phase of blogging. Now powered by Wordpress and with my own domain name.
Continued comment, observation, opinion and prediction on the business of information but in a new place.
From September 2011 it will be http://decisionhacker.com/
See you there.
BI, Facebook and Decision Loops
I was at an analysts briefing event with IBM last week who were sharing their thinking on Social Business and what I believe is the inspired and innovative pairing of Connections Collaboration and Cognos Business Intelligence. IBM’s Social Business Leader for Northern Europe, Jon Mell shared a slide that compared the number of operations it takes to share a photo and gather feedback with friends on facebook and the number of operations it takes to do the same on email.
This set my mind racing. If there are efficiency gains on something simple like sharing and getting feedback on a photo, imagine the productivity gains on sharing critical business information through Business Intelligence reports.
Why do I say this? Because sharing a photo is typically a single ‘sharing loop’ process. Someone publishes the photo, others contribute with their clever and witty observations. Done. A single loop. Count ‘em. One. (A quote from Muppet Treasure Island, btw)
The out-dated view of BI is that it is shared this way too. That it’s published and the job is done. This just doesn’t hold true any more and I am not sure it ever did. BI requires many sharing loops. Ten, distinct loops to be precise;
That’s ten loops which means that if sharing a photograph on Facebook is more efficient than sharing it in the office using email, the productivity benefits of doing ‘real’ business are tenfold.
There are those that are sceptical about Facebook styled social platforms in the office because they may waste time. The opposite is true. Organisations need social platforms, particularly for collaborative decision making. Without them, they are wasting time.
Organisational decision making is my current preoccupation. After all, as BI practitioners, this is at the heart of the value we bring to an organisation. If we aren’t improving decisions then I am not sure what we’re for.
In an earlier post, I talked about trashcan theory. This is the theory that describes organisations as a collection of people aware of problems, people that are aware of solutions but unaware of the problems and people that control the allocation of money and resources but are unaware of both the problems and the solutions. Good decisions are made when problems, solutions and effort are all aligned but if these things are jumbled up (like in a trashcan) then decisions might not only be poor but they can appear to be random. This provokes those that didn’t make the decision to ask “Why did they do that?”
But good decision making needs information. Decisions without information can still be systematic. They can also be thorough with all possible outcomes discovered, debated and properly considered. Without information though, they are uninformed. In many situations experience, assumption and instinct can make a reasonable proxy for information but would you invest your own money this way? Given the choice of a well researched stock or one that a mate has a good feeling about where would you place a sum (large enough that it would hurt) of money?
This is a bold statement but there is a worrying amount of evidence to support it. Depending on the survey BI is deployed to round 8% of the organisation. Knowledge workers make up between 30% and 45% of the labour force in developed economies, more depending on the definition. Not all knowledge workers need all information, of course, but the gap is significant. The ‘intelligence gap’ isn’t going to get better either. The volume of available data is growing exponentially. Last year we all generated 1.2 zettabytes (remember when ‘tera’ equalled ‘big’?) so as we congratulate ourselves on a job well done we also have to think about what we actually need to know from all of that stuff21.
Even more worrying is that decision makers are telling us that they know they are making decisions without information. In one study (Accenture, Competing Through Analytics) the suggestion is that 40% of major business decision are being made without reference to information from analytics applications. As a BI Practitioner it’s difficult to feel good about that number.
In many cases, the information is actually available. In an earlier post, I used the UK retailer Boots (a business I have an immense amount of respect for) as an example. They launched what turned out to be hugely unprofitable ‘Wellbeing’ services because they had detected a slowdown in their core business. When they abandoned Wellbeing in favour of a return to their base beauty business they did so on the basis that their base beauty business was still growing. They absolutely, positively had that data all along. It was just disconnected from the decision.
To say ‘just’ disconnected is to diminish the importance though. The emerging use of social business tools in organisations is going to make it possible, for the first time, to join up the decision making process and the information that informed it. It’s a tiny connection that can have a profound impact on the quality of decisions. That one single connection will make the decision more transparent, more open and more accountable in a way that the decision makers may need to think again and possibly even make a better decision.
There it is. Better decisions.
Meetings are one of the most common decision making ‘forums’ we are all regularly involved in. In fact one in five company meetings we take is to make a decision. As a way of making decisions though, they can be problematic. Once the meeting has concluded, the connection between information shared, decisions made and actions taken can be weak even lost. It’s as if the meeting itself were a decision making black hole.
Some decision making meetings are impromptu for making a timely, tactical decision quickly. Others are regular, formal and arranged around the ‘drum beat’ or ‘cadence’ of a business to make more strategic decisions. The more strategic the decisions and longer term the impact the less frequent the forum so a Senior or Executive Management Team may only meet quarterly for a business review (QBR)
A typical QBR will see Senior Managers sharing results in PowerPoint, possibly with financial results in spread-sheets which I would hope have at least been extracted from a Business Intelligence application.
If the SMT are reasonably well organised, they will summarise their conclusions and actions in meeting minutes. The meeting minutes will be typed up by an assistant in a word document and then distributed in email.
Throughout, they will all have been keeping individual notes so will walk out with these in their daybooks. The most senior manager in the room might not do this particularly if it’s their assistant who’s taking the minutes.
Later, actions from daybooks and minutes are likely transferred to individuals to-do lists and all follow-up will be conducted in email and phone calls.
So let’s recap. Critical decisions about how resources are going to be allocated will be discussed in a ‘QBR’ and yet the artefacts of this critical decision making forum are scattered into Word documents, excel spread-sheets, emails and outlook tasks. Tiny fragments of the discussion, information, conclusion, decisions and activities implode around the organisation. To be frank, the team are now only going to make progress because the forum was recent and can be relatively easily recalled.
Of course, once time or people move on so does the corporate memory of the decision. Conversations begin with ‘what did we agree to do about that cost over-run?’ or ‘why did we say we were ok with the revenue performance in Q1?’
Many executives complain of a syndrome that feels like ADS. This is because the more senior the manager the more things they will probably have to deal with at an increasingly superficial level. A functional head will probably spend no more than 15 minutes on any one thing. To productively make decisions they will need to be able to have the background, status and related information to hand so that they can deal with it quickly and move on to the next thing. Decision making black holes contribute to this feeling of EADS.
Corporate Decision Making platforms will be successful when they connect;
This means total recall of corporate decisions good and bad so that, over time, decisions can be recalled, evaluated, re-used or improved. A far cry from current decision making forums which whilst functional are inherently flawed, fragmented and are not improving the timeliness and quality of decisions in our organisations.
 |
| Home of the Paradox |
Abilene, Texas seems to be an entirely reasonable place. Jessica Simpson (Daisy to Johnny Knoxville's Luke Duke) was born there and I understand that the museums are free during their monthly Artwalk event. There is even a Country and Western song about Abilene which, last time I checked, there isn't about my home town in Surrey. It seems unfair then, that the place has a whole paradox named after it.
“Cohen contends that managing agreement is the single most pressing issue facing organisations today”
The Abilene paradox describes a particular problem with group decision making. and was introduced by a management expert, Jerry B Harvey, in his article The Abilene Paradox: The Management of Agreement.
The Long and Winding ...
In the article Jerry described something that happened when they were visiting family in Coleman Texas. The family were playing domino's on the porch and enjoying iced lemonade when Jerry's father-in-law suggests that they take a trip to Abilene, some 53 miles north, for dinner.
It was over a 100 degrees outside and Jerry really didn't like the idea of a 106 mile round trip in an old Buick without air conditioning but Jerry’s wife responded before he had time to say anything with, "Sounds like a great idea. Jerry felt out of step but thought he might still avoid it by adding ‘Sounds good to me … if your mother wants to go’. However, Jerry’s mother-in-law then says, "Of course I want to go. I haven't been to Abilene in a long time".
So, they were set. The drive is hot, dusty, and long. When they arrive at the cafeteria, the food is is less than average. They arrive back home four hours later, exhausted.
The Game of Recrimination
To be sociable and break the silence as they are cooling down after the ride, Jerry says ‘It was a great trip, wasn’t it’ Jerry’s mother-in-law says that, actually, she would rather have stayed home, but went along since the other three were so enthusiastic.
Jerry’s wife says, "I just went along to keep you happy. I would have had to be crazy to want to go out in the heat like that." Jerry’s father-in-law then says that he only suggested it because he thought the others might be bored.
The group then did what all groups do in these situations, they played the game of recrimination. No prizes, none of the time. When they couldn't identify a suitable culprit they sat back, puzzled and perplexed as to why they all decided to take a trip which none of them wanted to. They would actually all have preferred to stay on the porch and relax.
We tend to think that the biggest challenge in organisational decision making is managing conflict but what the Abilene paradox describes is the difficulty in managing agreement. I’ll say that again … not managing conflict but dealing with decisions when we agree. It's absurd but then again, that is exactly what a paradox is.
There is no shortage of material that try and make sense of why good people and great businesses make monumentally bad decisions. In the book 'Thing Again:Why Good Leaders Make Bad Decisions' by Sydney Finkelstein, Jo Whitehead and Andrew Cambell the focus is on the strategic decisions that have dramatic and highly visible consequences for the organisation.
An example is one of the UK's premier retailers Boots which enjoys one of the largest footfalls in the UK. Established in the 19th century, it is now a subsidiary of £20billion Alliance Boots. In September 1998, the Chief Executive, Steve Russell excitedly announced a range of healthcare offerings including dentistry, chiropody and laser hair removal. Five years later, the initiative had lost in the region of £100m and Boots needed to break open the piggy bank and look down the back of the sofa for another £50m just to close down the operation and convert that premier retail space back to being ... retail. It almost goes without saying that the changes were implemented by a new CEO, Richard Baker.
Apparently, one of the chief reasons for making the move into Healthcare services was that a slowdown in the Beauty business 'had been detected'. However a spokesman was later quoted in the Telegraph as saying that 'they recognised that these areas are still growing strongly'.
Let's stop there for a second. Spotting trends in sales and revenue by product category is probably marketing and business 101. And even the most rudimentary business intelligence solution should be trending sales over time. Yet the trend in sales in a key category for Boots was diagnosed as slowdown and only a few months later as growth. Of course, the slowdown may have been a short-term blip but the point of trending is to smooth these out for the purpose of longer-term planning. And, the error in trending might be more understandable had it not been for the fact that the later growth was characterised as 'strong'.
Of course, I am not on the board of Boots and I have an advantage shared with all those analysts and commentator that put the boot (or should that be Boots) into Mr Russell ... hindsight. Indeed, it's a testimony to the strength of Boots as a high street giant that they can make major booboo's and still go on to survive and thrive.
And organisations are complex systems of individuals and interactions. Large organisations are very complex. This is why organisational decision making doesn't always stand up to the scrutiny of us as individuals who retrospectively try and apply the logic of rational decision making to such mistakes.
However, what my own experience tells me is that information is all too often disconnected from the decision.
More and more we find ourselves helping customers with externally facing business intelligence as well as what we might call traditional and internally facing business analytics.
Those that work with me will know that I advocate articulating BI requirements as business questions so External BI can be characterised as answering questions like;
B2C businesses might also ask questions like;
It is important that the answers to the first block of questions are detailed so that you get answers from editorial sources, blogs and tweets that might include 'Our #1 competitor has changed their advertising agency' or 'One of key accounts is rumoured to be making an acquisition' The second block may also need detailed answers but it is surprising how much can be determined by monitoring the volume of traffic or 'buzz'.
A solution we recently built for a pharmaceutical company gave us some fascinating insights based on buzz. During the first two weeks of the implementation one of their drugs was associated with cancer. As you might imagine, the volume of posts, news stories and tweets spiked dramatically. Over the next few days, the volume decreased as the facts became known and rumour and speculation were displaced. Eventually the buzz quietened to normal patterns. Unusually, the following week, a second rumour surfaced. This time, that the very same drug was associated with weight loss. The same pattern emerged with a pronounced spike over a few days followed by a calm induced by rational and factual information dissemination. What was surprising to us was that the spike associated with weight loss was higher and longer. In other words, there was more interest, more conversation and more interaction when a product was associated with weight loss than when it was associated with a terminal disease.
Sigh.
The reputation of CRM implementations is a mixed one but we could say that about many IT endeavours. The good news though is that there seems to be a more balanced take now. Take a look at Lauren May's article, 'CRM is No Longer a Four Letter Word' as an example.
There are many reasons that it has a bad rep. Not least because many organisations focused on IT, systems and process but forgot that it was essentially about the err Customer. And the costs! In the high profile, now failed, EDS implementation for Sky, the original costs before (allegedly) spiralling out of control were estimated at over £40m.
In spite of the misses, CRM is still a purchasing priority for CIO's in 2010 according to Ed Thompson, Gartner Analyst who suggests "For most organizations, the single most logical way to differentiate the business is through great customer experiences, rather than having the lowest cost or most innovative products and services".
However, I can't help think that some of the reputation is based on the classic principle that it was oversold and under delivered. Analytics are a good example of this with many of the platforms promising innovative ways of analysing sales performance. They promise democracy through dashboards but it was never going to be that simple.
CRM implementations are allowing us to capture more about sales processes and activities than ever before. However, valuable and actionable insight will not simply fall out of the CRM implementation. The biggest challenge is that they all treat their own data like an island. Useful sales analytics can only typically come from bringing together information from Sales, Marketing and Finance systems.
Ask a sales rep for the revenue number and they will tell you what was booked on the order. But we all know that a lot can happen between an order and an invoice and the difference is a constant source of frustration to a management team trying to drive the business in the right direction using a gage with one set of numbers and three needles all at slightly different points. And, of course, the cost of a campaign or the profitability of customers is not information captured in a CRM platform but requires information from the CFO and the Marketing Director too. Reporting or dashboard tools in a CRM implementation are great at reporting operational CRM but they cannot bring information together from all those places that are needed in a meaningful way. At least, not yet.
I am not being critical of CRM systems. Their existence has opened up new opportunities for the analysis of sales performance for organisations and that's a very good thing. However, those that expect integrated analytics that provide useful insight into the plan variance, demonstrate which sales tactics are working or identify which products and customers are proving more profitable may not get it from their shiny new CRM dashboards. Meaningful and actionable insight can only come from combining CRM information with other organisational data into a coherent and common framework. It can, as I have seen it done in many instances, look like it is part of the CRM implementation but the real work is done behind the scenes by smart data warehousing and enterprise business intelligence tools.
Do you know where your sales organisation is heading? Sales Leaders take the IBM Sales Performance Management Assessment here;
There are many resources remonstrating with the IT community on the importance of gathering requirements. Failing to gather requirements, they warn, will lead to a poor solution delivered late and over budget. This is largely inarguable.
However, I would warn that simply 'gathering' requirement is as big a risk. Fred Brooks, author of 'The Mytical Man Month' once said that 'the hardest part of building a software system is deciding what to build'. And deciding what to build is a two way process rather than the act of listening, nodding and documenting that we all too often see in Business Intelligence projects.
From time to time, I hear someone cry foul on this assertion. They argue that it seems like the tail is wagging the dog or that the business cannot compromise on the requirement. I usually point out that simply building what the user asked for doesn't happen in any other field of engineering. Architects advise on the cost of materials when planning a major new office building, City officials take advice on the best possible location for a bridge and environmental consultants are actively engaged in deciding exactly if and what should be built in any major civil engineering project.
And this is exactly how we should approach business analytic requirements. As a two-way exploration of what is required, possible solutions and the implications of each. Incidentally, this is particularly difficult to do if business users are asked to gather and document their own requirements without input from their implementation team.
An example of why this is important is rooted in the fact that many BI technologies (including IBM Cognos) are tools not programming languages. They have been built around a model to increase productivity. That is, if you understand and work with the assumptions behind the model reports, dashboards and other BI application objects can be built very quickly. Bend the model and development times increase. Attempting to work completely around the model may result in greatly reduced productivity and therefore vastly increased development time.
So be wary of treating 'gathering' and 'analysis' as distinct and separate steps. Instead, the process should be an iterative collaboration between users and engineers. Requirements should be understood but so should the implications from a systems perspective. The resulting solution will almost undoubtedly be a better fit and it will significantly increase the chance of it being delivered on time, at the right cost and with an increased understanding between those that need the systems and those that build them.
"We fail more often because we solve the wrong problem than because we get the wrong solution to the right problem", Russell Ackoff, 1974
I was in New York a few weeks ago and took the family to the Empire State Building. It's opening in 1931 coincided with the great depression. In fact, so much of its space remained unoccupied that it became known, for a while, as the Empty State Building. Today, no one can argue with its fame or its success. Even if it is now only the 15th tallest building in the world, it stands as an encouraging reminder that many successful projects span economic cycles.
It would be foolish to argue that, a BI project, started today, will still be in place in eight decades. Indeed, many will be replaced in as many years. However, many BI competency centres or departments have been initiated in similar circumstances. Many evolved during the last economic downturn to help businesses identify less profitable parts of the business or simply those areas that could withstand cutbacks without reducing the businesses ability to react when the economic cycle reversed. Accurate insights helps business navigate through a recessionary market and then, once through, help them identify the products, markets and geographies that show signs of growth first.
This goes some way into explaining why last month's Gartner report, 'Market Share:Business Intelligence, Analytics and Performance Management' found that BI continues to outgrow other enterprise software. Year on year, 2008 to 2009, BI grew at a little over 4% to $9.3billion. I am not convinced that anything can be called 'recession proof' but three decades of growth in a market now dominated by SAP (BO) IBM (Cognos) Oracle, Microsoft and the global SAS campus doesn't appear to be over yet. My own view is that the most significant reason for consistent growth in the BI market is rooted in something a colleague of mine reminds me of from time to time. BI, he asserts, is a process not a project. BI as a market continues to grow precisely because its organisational adoption continues to grow. Successful BI implementations satisfy one set of requirements but new ones emerge.
One final parallel between the famous New York landmark and BI projects. Apparently the famous art deco spire of the Empire State was intended to be a mooring mast for dirigibles but this proved wildly impractical once the building was completed. The broadcast tower that replaced the dirigible mooring is a spectacular example of adapting a project as the business around it changed and more about the environment became known rather than theoretical.
Battle lines are being drawn up as we head towards the election and interestingly there is a new point of contention for the major parties. Targets. In relation to the NHS, indeed any Government department, they have become short hand for "too many middle managers", "waste" or "red tape".
In a recent BBC article http://news.bbc.co.uk/1/hi/uk_politics/8538601.stm Professor David Kerr, a political adviser suggests that patient choice has been affected by a "blizzard of targets" and that the NHS has been left "bogged down by process driven targets". A cursory glance might leave many thinking that targets are a fairly bad idea. Valuable resources otherwise engaged in the business of saving lives are redirected to meaningless management of numbers. Even Radio 4 presenters are starting to suggest that a core component of "efficiency" would be to "drop all those targets".
I can't think of any human organisational endeavour where we assume that planning outcomes and taking a reading to measure progress against plan would be considered inefficient. Should we have built Terminal 5 without monitoring current and forecasting future passenger throughput? Fly to New York without (albeit automatically) monitoring the land speed, altitude and current position? Start at either end of the Channel Tunnel without monitoring when (or if) it will meet in the middle? I appreciate that the nature of the news can mean that complex subjects are overly simplified and that politicians need to work with sound bites but to suggest that targets are inherently a bad thing would be to mislead in the extreme. Let's find some other shorthand for overly bureaucratic departments, saying that it is 'all those targets' doesn't cut it. Measuring the wrong things or measuring the right things inefficiently is wasteful but measuring nothing means that a business (or a department) is guessing it's way to the next crisis.
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
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.
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;
The next step was to identify the metrics by which these objectives could be measured which included;
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.
In this series of posts, I will examine how organisations are making the journey from Business Intelligence to Corporate Performance Management. As this is the first in the series let's examine the obvious question 'what is the difference between BI and CPM?'
During my time with a market and thought leader in this field, Cognos, there were a number of views which give us a useful way of examining this question;
Firstly, that BI and CPM are the same thing. I have already given away my own view on this with the title of this post. Let's start with what BI is. A reasonable definition is that BI is the use of information for the purpose of decision making. It is distinct and different from 'reporting' which has an operational focus. BI systems are used by managers across the enterprise to drive informed and accurate business decisions. Strategic BI, using scorecards and dashboards for example, is used by the senior management team as a strategic decision making tool and come close to the definition of CPM. However, not close enough.
Secondly, that Enterprise Planning and CPM are the same thing. This is a view held by some Planning, Budgeting and Forecasting (PB&F) specialists that think of BI as 'just reporting'. Understandably, they hold the view that driving organisational behaviour through the planning process by making it more frequent than the traditional annual 'spreadfest' is at the heart of CPM. If we also consider that PB&F systems do make it easy for profit and cost centre managers up and down the organisation to take an active part in the process then we are certainly getting close to CPM. They are not the same thing though.
Thirdly that BI and Enterprise Planning combined are the same as CPM. An organisation that implements systems for measuring performance, for adapting the plan and for managing the impact on forecasted revenues is clearly looking to both measure and change performance. Implementing the systems to report, analyse, plan and monitor is certainly critical to CPM. However, BI plus PB&F is still not CPM.
Finally, the view that I subscribe to, is that CPM involves the systems (BI and PB&F) but also the business processes and strategic approach to performance management as characterised by methodologies such as Economic Value Add (EVA) or the Balanced Score Card (BSC). An organisation that implements the systems, adapts the strategic decision making process and changes business processes is truly executing on the CPM vision.
CPM is often described as a 'journey'. It is a fundamental change to the way in which many organisations manage themselves today so there are no magic bullets, applications or software features. CPM does not come 'out of a box'. Instead the change may begin with a series of BI implementations that cause an organisation to challenge 'established wisdom' and manage with a much deeper organisational insight. Alternatively it may begin with a corporate initiative to adopt the Balanced Scorecard aligning, at the highest level, strategic direction with organisational activity. What is interesting to me is that many such initiatives are described as failures because they 'didn't make CPM happen' Of course many of these are poorly executed implementations but occasionally they are, in themselves, as successful as they can be. Take a step back, look at them again and they may well be a perfectly reasonable step forwards on a CPM journey that is rarely short or simple but often worthwhile.
In the next post I will describe some of the steps that might be made on the CPM Journey wherever you are today.
