Corporate performance management software got its start in the finance
departments, but now there are opportunities for vendors to branch out. An FAQ
list for IT managers
There’s a lot more to driving a car than checking your dashboard every now and
then.
Similarly, making a company run more effectively may go beyond using business
intelligence software but adopting what is sometimes called corporate
performance management (CPM). Enterprise execs might use BI dashboards to get a
good look at what’s going on in their department, but CPM in theory should
encompass much more detailed information around key performance indicators such
as overhead, revenue and ones that IT departments will be very familiar with,
like return on investment.
Depending on who you talk to, CPM can refer to what sounds like relatively
mundane tasks such as budgeting, planning and reporting. Others see it as a
collection of practices, technologies and metrics used to gather and supply
information. Research firm Gartner has predicted that CPM will eventually
converge with BI by 2010, but overall growth is projected at 14.4 per cent. In a
survey released earlier this year, Gartner also said that 50 per cent of
companies implementing CPM systems will simply automate existing
finance-oriented processes and fail to improve performance management processes
across the organisation. The survey also said organisations that allowed their
finance function to lead a CPM implementation were on average 25 per cent less
mature in their use of CPM than organisations that had an equal partnership
between finance, IT and key business users in their CPM project.
With that in mind, we spoke to a collection of vendors in this space — some well
known, some not — to address the most common questions IT managers need answered
before their CPM strategy can get started.
Who really owns and drives CPM in the enterprise, and what role should IT
departments play?
Very often performance management started from finance users who needed to do
better at budgeting and planning and to align those things with strategy, says
Becca Goren, a product marketing manager in performance management at SAS
Institute Inc. The trend now, however, is that performance management is moving
beyond those confines to other realms of the business.
“Once you start thinking of CPM in a more holistic view, the IT department has a
critical role in helping to spread that throughout the organization,” she says.
“They’re enabling line of business managers to be able to support their
performance management efforts and being that liaison to business and on the
other hand looking at CPM from an enterprise level.”
“Our decision-maker is the CFO or controller,” says Bill Soward, CEO of Mountain
View, Calif.-based Adaptive Planning. “IT will ask some questions about security
and how you integrate with the general ledger system. They’re in more of a
supporting role. In organizations with larger IT, they want to manage this
themselves.”
According to Joe Pusztai, marketing director of IBM Cognos’ TM1 financial
reporting management product, technology professionals play more of a tactical
role, although they also have more expertise about other systems that might be
affected by a CPM strategy.
“All the IT infrastructure stuff is mandatory — there still needs to be security
management, disaster recovery. I would see the role of IT being more
infrastructure-related. They’re handling the plumbing as well as the core
systems,” he says. “TM1 and Cognos in general makes no predictions about
anything you might be running as your systems of record for your GL. That’s
still traditionally in the IT domain.”
How can CPM help deliver on business goals?
Depending on how well you can extract data from disparate systems and
cross-reference them with financial data, CPM should allow users to understand
brand-new relationships between pieces of information. Goren uses the example of
a company that tries to figure out how much revenue is being generated by each
employee, something that could tie into the metrics of a human resources
department.
“One trend we have personally seen is selling human capital management offerings
along with performance management applications,” she says. “We provide that
analytic human capital data mart, which is a consistent point of employee
information. They’re applying the analytics to that. They’re not only looking at
revenue per employee, but what is the turnover of critical employees. That’s
something the CEO cares about. It’s not just from the HR perspective.”
Software Labs, based out of Sacramento, Calif., has been focusing on what it
calls xFusion Insight Packs that provide fast query and export from enterprise
resource planning systems from SAP and Oracle. It also provides xFusion Data
Quality Packs to track missing or duplicate information, which is another
cornerstone of effective CPM. Reed Campbell, the firm’s vice-president of sales
and marketing, says the tools can be used for a variety of business purposes.
“If they need to know what the top five customer territories are, we are able to
run a template very fast. It’s a double-click process,” he says. “You could also
look at the top five open sales orders. A lot of times in a large ERP system,
it’s difficult to find those reports or data extraction rules that are working
out of the box. You have to bill someone to build these rules. The benefit here
is you can cover virtually any system out there with the same utility.”