Enterprise Performance Management: I Can See For Miles

Like the narrator of the song "I Can See for Miles," organizations that implement enterprise performance management solutions have a vision of their operations that extends beyond their corporate horizon.


By rethinking the approach to managing organizations, and using the right performance management tools to support it, it is now possible to provide virtual real-time monitoring and feedback capable of driving, not reacting to, supply chain performance. EPM tools were created to analyze large volumes of daily data from multiple disparate data sources (such as would come from each different internal system, vendor or partner) to reveal underlying problems before management even knows they exist. For the first time, it becomes relatively easy to give management specific insight into things that were extremely difficult before, such as profit per shipment by vendor, region or shipping lane, or the comparative geographic performance per vendor. EPM can even provide management with forecasting insight, determining the areas where the organization will not meet service commitments, or even what specific shipments are likely to fail, while management still has time to do something about it.

The benefits to EPM are clear: it increases management's understanding of the organization and what drives it, essentially composing a clear, complete portrait of the entire business. It allows management to make better, more timely, decisions. Management can finally achieve what it was really after superior organizational performance that tracks, measures and manages productivity, profitability and business velocity.

The Tools Already Exist

Since most organizations are not plagued by a lack of data, they may already have the answers to all of management's questions. What they need is the ability to see the business through the existing data and turn it into knowledge. But how does management achieve this goal when the typical implementation of this technology often falls short?

What most companies do not know is that they need not wait for the latest transactional system functionality to drive performance or gain insight into the transaction process. Many companies are keeping their current, and, in some cases, outdated, transactional systems in place longer; many are avoiding the high cost of replacing them from the ground up. Often these companies may already own the appropriate tools but have not fully leveraged them. The new framework capitalizes on affordable technology to analyze information, improve service, drive sales or cut costs without significant additional investments in infrastructure.

Note, however, that framework and frame of reference can often be at philosophical odds. Organizations tend not to shift readily from historical business practice to the new realm of enterprise performance management by advancing one step at a time. Change occurs by rethinking the organizational needs and getting the entire management team to take one small step at a time toward the ultimate vision. The process starts by focusing away from the daily blocking and tackling, from the hours of generating historic balanced scorecard reports, to ask themselves a few basic questions:

  • Where are we trying to go?

  • What must we do right to get there?

  • How will we measure our progress?

  • What do our employees need visibility over to make managing these things easier?

These sound like big questions that will require endless hours of effort and strategic planning to answer. But, the process doesn't have to be any more complex than asking, How do I get my hands around truck routes and customer lanes that have grown dynamically due to constant growth?

Start by identifying those elements that ultimately help or prevent you from succeeding and the business units that affect them. Limit the list to only the most important elements. Next, agree on how you will measure them and what information your team will need from those measurements. If your information technology systems do not make this information available quickly and easily, then performance management technology can. But, just like ERP applications, each EPM application has different strengths and weaknesses. Remember that it isn't an out-of-the-box solution; it is an out-of-the-box approach. The framework is necessary to structure management decision-making and avoid the common dangers that come with abrupt implementation of me-too solutions. It also helps management understand what life will be like managing in a performance-based environment and facilitates methodical adoption toward greater performance.

These solutions are cost-effective, when implemented properly, because they employ existing transactional systems without the classic protocol to rip and replace infrastructure. EPM can reside as a freestanding application, commonly deployed via a Web browser, and often use development tools that many employees already understand. Programming can often be done in-house, reducing implementation and training costs.

How One Company Uses EPM

Traditionally, EPM technology has been used to automate the current reporting and create wide-ranging graphics in formats that the organization is accustomed to seeing. Although a strength of these tools, it only begins to scratch the surface of EPM's overall power.

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