My “beat” is Enterprise Performance Management (EPM) software applications. I just returned from the SAP Sapphire conference, and I got some good advice on how to bifurcate the EPM space.
- From Strategy to Budgeting (and back): This would include strategy management, planning, forecasting, budgeting, scorecards and dashboards.
- The CFO as a line executive: These functions are the equivalent of vertical software for CFOs and include: consolidation, financial reporting, financial disclosure, revenue management, activity-based costing and profit optimization.
As in my ten years at META Group (now Gartner Group), there is one overriding theme we will focus on in this and future posts. How can:
- Corporate IT executives
- Corporate Line executives
- EPM software vendors
- Professional services firms
work together to substantially improve the performance of the Corporation by utilizing business software applications (with EPM as a subset) most effectively?
OK, let’s get started. In this, my first EPM-centered post, I want to start with Strategy Management (part of Area 1 above). Let’s pose an example. Suppose you run a chain of retail running shoe stores, and your goal over the next three years is to have the largest market share. In order to do this, you have a three pronged strategy to:
- Open ten more stores
- Develop a significant presence on the Web
- Invest heavily in print advertising
This strategy will translate into a number of tasks that must be completed.
Strategy Management software helps companies define their mission, values, vision and goals, develop initiatives and tactics, report on progress around the strategy, formulate midcourse corrections, etc.
Here are some of the questions that will drive our thinking in future posts:
How do we go about defining a strategy? How do we describe the actual strategy in the system? It will need to be linked to the Mission statement (at the high end) and to initiatives and tasks (for day to day activities).
What are some of the relevant methodologies and diagramming techniques? Many companies use Balanced Scorecards and Strategy Maps (Kaplan/Norton). Others use Michael Porter’s “Five Forces Analysis,” or SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. Often, a company will combine approaches. Ideally, your company’s favorite approach will be represented in the software.
How will the strategy management software drive actual work? How can you turn the strategy into actionable initiatives and tasks? How can you assign accountability and responsibility? How do you measure progress on the task assigned? How do you measure the effectiveness of the overall strategy?
Which vendors provide this software? There are the three mega-vendors in this space: IBM/Cognos, Oracle/Hyperion, SAP/Business Objects – broad offerings from all these vendors.
Then there are dozens of capable niche vendors who offer some or all of strategy management and other EPM capabilities.
How does this relate to your existing application landscape? The execution of strategy is likely to involve your current ERP systems, as well as best-in-class applications. For ERP, there are natural hooks to core financials within EPM. And, of course, the ERP system may offer components of strategy management. Moreover, best-in-class applications, (e.g., Workday for Human Capital Management, Salesforce.com for Customer Relationship Management) can be key contributors to EPM as well.
I look forward to your comments. Please visit my website at www.wildermanassociates.com