A Strategic Turnaround at Tollpost – “Seeing is Achieving”

A good deal of our work is focused on the core of Enterprise Performance Management (EPM), and the relationships among budgeting, forecasting and strategy.

However, in the case of a major strategic turnaround at Tollpost*, as we will see below, it was in a way simpler. There were numerous things that were “broken” at Tollpost, and a simpler approach, focused on operational excellence, was deployed. You don’t always need strategy management to drive a return to profitability. But let us start at the beginning.


Tollpost Globe is a mid-sized Norwegian transportation company engaged in providing shipping services for its customers. Tollpost ships full and partial pallet loads, as well as parcels. The almost century-old company moves approximately 12,000 pallets and 60,000 parcels per day. Back in the early 2000s, the company was facing an annual loss of $13 million  on revenues of USD 200 million.

New Executive Team – New Software for Problem Solving

In 2002, a new CEO was brought in. He deployed the early version of the UNIT4 Business Analytic Apps product to help visualize the problems, and return to profitability. First off, he and his team had a look at the metrics that drive the business, and the current values that needed to be improved.

Metrics for Success  (showing starting points in 2004)

 Stops per day:                                   20

Container Utilization:                      5.5 Tons/Year

Items Handled in Depots:               40 – 45/Man-Hour

These numbers needed to improve. In the planning world, the above business drivers were the keys to success and the improvement in business drivers can translate right to the bottom line.

Using the UNIT4 Business Analytical Apps, Tollpost was able to model the situation by business driver, as well as begin to simulate how much the results could improve.

The Devil is in the Details

Tollpost has 60 managers who control more than 800 vehicles. Using UNIT4 Business Analytic Apps, management decided to benchmark and analyze every driver on every route. Now, we don’t recommend this as a general practice, but it is certainly a way to get to the heart of the problem. It was obvious, of course, that drivers had differing skills, that certain routes were more complex, and that not all drivers could achieve the same results. Nonetheless, it provided a first step in aggregating the results, and management could begin to set achievable targets. And, to Tollpost’s advantage, the creation of individual scorecards and aggregate results could be achieved using the UNIT4 Business Analytic Apps.

Taking a Page from Strategy Management

Although the Tollpost initiative is about improving operational performance, the approach they took adopted the best methods of strategy management. Have a look:

You see, it is really all about working on initiatives to achieve objectives. Consider the following example, which could apply to Tollpost:

Objective:      Improve container utilization

Measure:       The number of containers utilized by driver/week

Target:           30% improvement over current utilization


  • Reallocate customers to truckers, by proximity to each other
  • Create incentive programs for customers to accept more items, less often
  • Develop a pallet purchase program

At the end of the day, this is what the Tollpost management team did on an operational level. They created objectives for pallet utilization, trucker efficiency, etc., and defined targets and measures to get there. And, just as trucker activity was monitored, the Tollpost team, using UNIT4 Business Analytic Apps, could measure the work of the team that was charged with improving overall efficiency.

So, what happened?

Metrics for Success (showing starting points in 2004 and improvements)

Stops per day:                                   Originally at 20         now 30 – 40

Container Utilization:                      5.5 Tons/Year           now 8.5 Tons/Year

Items Handled in Depots:               30 – 35/Man-Hour    now more than 50/Man-Hour

Tollpost went from a $13M anual loss to a $30M gain. Revenues increased by 33%, and there was no increase in staff. Quite the accomplishment!

Bottom Line: It is all about great management strategy execution with appropriate software. Utilizing UNIT4 software, Tollpost could visualize the problem, set targets for improvement, empower teams to effect change, and measure the teams along the way.

*With appreciation to Robert Francis Group, for providing details and analysis on Tollpost in an upcoming blog

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Maybe they call it “strategy execution” for a reason

It appears that strategy formulation works well, yet still 70% of all strategies fail. The fault, dear Brutus, must be in strategy execution. Let’s look at some of the reasons:

Strategic Goals: Some key questions. What are the key goals that make up the strategy? How do the goals relate to each other? How do we know when the strategy is complete?  What are the key performance indicators that define strategy success?

Management Fatigue: Once a strategy has been formulated, there is a long road ahead to get the strategy up and running. Perhaps senior management may get bored. Boredom is contagious and can quickly infect the strategy project.

Strategy accountability: One or more executives must be accountable for the strategy. Accountability is a public event, and must be monitored over time. Remember that for many people working on a strategy, this is not their day job. So accountability should also be accompanied by incentives.

Task Accountability: A strategy consists of numerous goals or initiatives. Initiatives require that projects be completed.  These projects have tasks and milestones. Tasks and milestones are complete when there is a tangible deliverable that can be reviewed by management.

“Percent Complete” is perilous: Why is it that we are trying to transform major companies using primitive project management techniques? Real strategies require an Earned Value approach (where each task has an associated value which is earned when the task is complete, and a real deliverable produced) – which is simple to learn. Remember what they say about percent complete: “The first 90% of the project goes much faster than the last 90% of the project.” By the way, I think this blog is 90% compete.

So, when does the strategy really end?

Say one of your major goals is to build a new factory in China. Is the strategy over when the factory is up and live? Is the strategy over when the factory runs efficiently, using KPIs you have defined? Is the strategy over when the products produced by this new factory add materially to the Company’s bottom line?

No strategy is an island: It is important to recognize that many things tie to strategy and conversely. Those things include:

  1. The budget
  2. Cash plan
  3. Capital plan
  4. Human Resources Plan
  5. Operating Plan
  6. Sales Plan

Make sure that the nascent strategy is consistent with all major planning efforts in the company.

What to do: You will need strategy management software. Make sure that the software has the requisite components. Make sure that the customers of the strategy management software vendor have often completed successful strategies. Find out whether the software firm’s consultants or third party consultants were instrumental in the success of the strategy.

You don’t need a boutique consulting firm (unless you are having trouble with strategy formulation). This is all about blocking and tackling for strategy execution.

Make sure that all participants in the strategy have skin in the game. If you keep your eye on the ball, you can win!

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Budgeting and Forecasting – Best Practices

I suppose there are as many jokes about budgeting as there are about mothers-in-law. Many people dread the budget cycle as a necessary evil to be endured. But, it doesn’t need to be this way. Indeed, to many companies, budgets and forecasts are strategic weapons. These companies deploy best practices to lead the way.

Best Practice #1 – Share the Vision

The real goal of budgeting is not to count travel costs per salesperson. That number may need to be computed during the budget cycle. The real goals of the company are to achieve a certain level of revenue attainment, while keeping costs under control. Do they need better products, more products, more salespeople, better supplier relationship management, etc.? The budget cycle should start out with a clear articulation of operational strategy over the next 12 months.

Best Practice #2 – Share the Drivers – Build driver-based models

As stated above, travel expense per salesperson does not drive the operating vision. But, the rollout of new products could have a major impact on the new operating strategy. Suppose you are rolling out two new product lines. When will they be available? What is the sales plan? What are the costs? What are the revenue targets? Will they cannibalize older products? Use drivers to model the new product strategy.

Best Practice #3 – Develop Rational Budget Templates

Budgets will need to be developed across a variety of dimensions: Division, Product, Market, Administrative function (e.g., Finance, HR, IT). The tricks are to: a) keep the number of reporting units to a manageable number, and b) keep the level of detail in each budget relatively spare. The goal is always centered on operational strategy.

Best Practice #4 – Include Capital Projects, New Strategies, Sales Plan HR Plan …

There are likely to be new capital projects in the next 12 months, and they must be reflected in the budget. Moreover, for new strategies being executed, all current work on the new strategy (especially capital outlays) must be included in the budget.  Also, operating plans by department should be developed and linked to the overall budget

Best Practice #5 – Publish the Budget Calendar and Accountability

Here are some of the required components:

–For each individual budget, define who is responsible, who will be reviewing, and when the review must be completed.

–For each individual budget, define how and where the budget will be aggregated. At the aggregation level, each person responsible must ensure that all individual budgets are delivered and reviewed on a timely basis.

–Corporate functions (e.g., Sales, Manufacturing, HR, IT) must align their budgets with the operating units.

–Budgets will be aggregated into budget books, for review with top management. The budget books will include summary reports, graphics, dashboards and scorecards

–After top management review, time should be allocated for revising the budgets.

Best Practice #6 – Visibility

On a monthly basis, management will publish the budgets and actuals. Management will also provide a brief summary on progress on the operational strategy, and any budget revisions that have been done.

Best Practice #7 – Forecasts and Revised budgets

Revising the budget is encouraged if it can materially help the operating strategy for the current year. In addition, it may be quite valuable to create forecasts beyond the current budget horizon. Forecasts with no impact are obviously a waste of time.

Best Practice #8 – Incentives

Managers who are accountable for budget delivery should have clear objectives (and incentives) built into their compensation plan.

Best Practice #9 – Acquire Best-in-Class Software

In order to meet the best practices described above, software should be acquired that includes:

–budget preparation

–forecast delivery

–modeling capability

–data integration

–unified data repository

–team management and accountability

–report writing, graphics, dashboards, scorecards.

Now, best-in-class software will be quite useful for deploying best practices, but not all the software vendor’s customers are deploying best practices.

OK, this is a little tricky:

The “best” best practices improve the operational performance of the company. And, of course, strong budgeting and forecasting software is required.

The “next best” best practices improve the operational performance of the budgeting and forecasting process. Indeed, shortening the budgeting cycle by 60 days/year is a good thing. But, really, if the new budget doesn’t help the company perform better, they may have a lower TCO, but where are the real benefits?

Best Practice #10 – Get educated on best practices

–Ask the software vendors to give you case studies on customers who have deployed best practices

–Ask the software vendor for white papers

–Talk to the software vendors’ implementation team

–Talk to the software vendors’ implementation partners

–Talk to other consulting firms.

–Talk to analyst firms

–Join forums on-line (e.g., Proformative)

Bottom Line: We can’t promise to put the joy back in budgeting. But companies that deploy best practices for budgeting and forecasting earn more profits, which make their shareholders smile.

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“Performance with Passion”

Tagetik, an Enterprise Performance Management (EPM – budgeting, forecasting, compliance, etc.) software vendor, recently announced its new marketing position around the phrase “Performance with Passion”. Of course, as an EPM vendor, this provides two meanings to the term “Performance”. Nonetheless, what is particularly interesting to me are the two words, Performance and Passion, and how high this raises the bar for any software vendor.

Performance – Passion Possibilities

Before we get down to the serious business at hand, we feel obliged to analyze “Performance with Passion” and its alternatives:

State                                                                           Result

Performance with Passion                                    Virile

Performance – No Passion                                   Mechanical

Passion – No Performance                                   Youthful Exuberance

No Passion – No Performance                             Lifeless

Now, to the subject at hand:


Building a Software Company around “Performance with Passion”

As a software vendor, there is an expectation that all parts of the company live by the phrase “Performance with Passion”. This applies to:

  • Core functionality: What does the CFO and his/her staff need to be successful in helping to manage the company? “Performance with Passion” requires dedication to really understand the CFO function and the consequent delivery of the right functionality (not just the coolest technology).
  • Ease of use: There needs to be detailed engineering around the software delivered. Is it easy to use (I like the term inspection usable)? Is it built on modern technical standards? Is it easy to install and maintain (not just initially, but also over the long-term)?
  • Time to benefit: Highly performing software companies have a passion for Time to Benefit. They want to ensure that the customer is up and running quickly, and quantifiable benefits can be obtained.  The long, drawn-out implementations of the past are no longer acceptable.
  • Training and Education: Software companies that perform with passion are very focused on education and training, and ensure that their customers understand both the basics as well as the advanced features of the software.
  • Support: Software companies should be passionate about support and this is where some vendors have stumbled in recent years. Questions need to be answered quickly and well. Development must be laser focused accurate about getting problems resolved.
  • Consulting and business partners: Software companies must also be passionate about consulting; both theirs and third parties. Highly performing companies seek out and nurture their business partners. In fact, with real commitment, these software firms will work together so seamlessly with partners that it will be hard to tell one from the other during problem resolution.

The customers of these software firms must also “perform with passion”. If the software vendor provides the right setting as above, the CFO and staff can also operate efficiently and effectively. It is akin to having a well-fitted suit with enough pockets. You can just operate better. Moreover, other departments served by the CFO also obtain derivative benefits.

Performing with passion also drives the relationship between the customer and the software firm. Annual conferences, webinars, birds of a feather, think tanks etc. improve the performance of both. Vendors and customers profitably learn from each other.

Go Tagetik!  Kudos for linking “Performance with Passion”.  You have set the bar high.

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Business Applications and Analytics

I have been thinking a lot lately about business processes, core business objects, data and information. As we at Constellation Research Inc. explore a series of research themes around critical business issues, I wanted to attempt an approach that brings business processes and analytics together. If we can get this right, then it will help our clients have a uniform way to think about application package selection, and the consequent development of a data and information strategy.

The Objects of Your Desire

Let’s think about the business objects that are important to executives. In no particular order:




New hires (recruits)



And many more

Now, of course, we don’t think of customers and employees as objects, but, in a technology sense, business objects have attributes, relationships to other objects, and are defined in key business processes.

Business Applications vs. Analytical Applications

Business Applications deal with how business objects are managed and transformed through the use of cross-functional business processes. Traditional cross-functional business processes include:

Order to Cash

Procure to Pay

Make to Demand

Hire to Retire

From Prospect to Customer

In each of the above cases, the set of processes are complex. Consider “order to cash”. Once an order is taken, a credit check might be required. It then must be determined whether the order can be filled from inventory. If not, manufacturing may be required, and that can trigger the reorder of materials. Once the products are completed, they must be shipped to the customer, and cash must be collected.

Many business objects change along the way, including the order object, customer object, inventory object, etc.  Business systems, especially ERP, are differentiated by the number and quality of their cross-functional business processes.

Analytical Applications

On the other hand, analytical applications tend to have business objects already instantiated. They are distinguished not so much by cross-functional processes, but by their ability to provide analytics including dashboards, scorecards, graphics and complex reporting.

All Roads Lead to Analytics

Whether via a business application or analytical application, there is a resulting database which represents different instances (database records) of each business object. Indeed, all applications can be distinguished by the quality of their analytics, including:

–How the underlying data is stored

–The power of the analytics offered with the application

–The ability to extract/import third party data.

–Partner applications that can be used for analytics

Finally, of course, this valuable business data, like all data, may be aggregated into a data warehouse for further analysis. Here, the data can be combined with other business application data, as well as third party data sources.


Bottom Line: Business applications can be distinguished by their ability to offer complex cross-functional processes. Analytical applications often have the underlying database already defined. In both cases, these applications must provide strong capabilities for report creation and complex graphics.

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What does it mean to be an industry analyst?


When I first joined META Group, it took me a while to understand what it meant to be an industry analyst. Now returning to Constellation Research Group in 2011, with 10 years of META experience behind me, I find there is still understandable confusion about what industry analysts do. So, in this post, let me give you my view of what it means to be an industry analyst.

First of all, “industry” is somewhat of a misnomer. My area of expertise is Enterprise Performance Management (EPM) – and I worry about things like budgeting, planning and strategy. I would call that a horizontal function.  But there are analysts who handle technology (e.g., Mobile, Social Media) and others who handle verticals (e.g., Banking, Consumer Packaged Goods.

My goal is to understand the dynamics of my industry or my space and to become an expert in it. These questions form the basis of an analyst’s research:

Vendor questions

  • Who are the vendors in this space?
  • What products do they offer?
  • What are the prices of those products?
  • What acquisitions have they made over time?
  • What methodology do they follow?
  • Do they have their own consulting group?
  • Do they have third party consulting partners?
  • Do they have third party product partners?

Working with vendors provides background. The real question is how do these products work in the real world, and for that I must go to customers and consulting firms.

Customer questions

  • What vendors were on your short list?
  • How did you select the final vendor?
  • What were you delighted with?
  • What issues did you have?
  • What was your total cost of ownership?
  • What was your time to benefit?
  • What benefits did you achieve?
  • How well did this product integrate with other products?

Consulting questions

  • What is the nature of your consulting practice?
  • What software products do you represent?
  • Please describe two customers you worked with around this product.
  • Have you published your methodology?

So, the analyst talks to vendors, customers and consulting firms. In addition, the analyst goes to conferences and joins online groups that are relevant. To be successful, the analyst must keep current and be an expert in his/her space.

Then, the analyst writes research reports. The only way to maintain a clear point of view is to write early and often. It is as simple as that. You cannot be a decent analyst without writing. Then, these reports can be sold to vendors and customers.

The analyst is often called upon to give speeches or conduct webinars. Sometimes, the analyst will conduct a survey to gain an understanding across a broad population.

So, here is the real challenge of being an analyst.

1) Customers (like Ford or Citibank) are your clients. It is important (for great research) to have a substantial number of end-user clients.

2) Vendors are your clients – They want help in competitive positioning.

3) Customers and vendors can also be your consulting clients. I helped one customer determine the best consulting firm for a large SAP project. And, I helped one vendor with its initial roll-out of a data warehousing solution.

So, picture this. A vendor becomes a client and hires you to help with a consulting project around marketing positioning. Now, you are retained by an end-user company, and that end user company selects another vendor. It does happen. Without rabid objectivity, you lose all credibility.

So, what makes a great analyst?

  • Business skills and technology skills
  • An unquenchable thirst to know everything in your area
  • Strong verbal and writing skills
  • Ability to ask the hard questions
  • Being tenacious
  • Being fair, but tough minded

So, want to be an analyst? Well, the hours are very long, there is substantial travel, yet, for me, this is the only job I want to do.

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Selecting Strategy Management Software and Services – The Project View

The customer has a clear requirement to be successful at  the two major components of strategy management: strategy formulation and strategy execution. The software vendor must demonstrate how its  software can be deployed for effective strategic management. Moreover, the  software vendor must demonstrate that through its own professional services  group and/or partners, it can help the customer:

  • Formulate strategies
  • Execute strategies
  • Monitor strategies
  • Align strategies with departmental plans and
  • Help the customer become independent over

It is simplest to view this from the logical sequence of  activities that the customer must get right. (In all discussions below, when we  say “vendor”, we are talking about a combination of software and services.)

Creating Mission, Values and Vision:
How can the vendor guide the customer through this process? In particular, the  vision statement should help anchor strategy formulation.

Internal Insight: It  is crucial for the customer to understand the current state of its business before  crafting a new strategy. In addition to deploying formal SWOT, PESTEL and other  analyses, the vendor may offer activity based costing, revenue/profit  optimization and business process management software. Having a clear
understanding of customers, products, channels and profitability is invaluable.

We also have a strong belief that a critical factor for  success is whether departments can “stretch” to support a new strategy. This is the time to understand the roles of finance, HR, IT and operations, and what  might be expected of them.

Strategic Plan, Goals, Strategy and Initiatives:

The customer now begins a logical process for:

  • Building its strategic plan – Does the  software vendor have a working familiarity with the more popular strategic
    planning formulation techniques?
  • Describing “SMART” goals
  • Developing a strategy for meeting its goals
  • Creating initiatives that are consistent with
    the strategy, and, in sum, meet the goals

Most software vendors offer strategy map and balanced  scorecard and strategy map software, as described by Kaplan and Norton across
their five books. (See our post:

Strategy Maps and Balanced Scorecards

 at http://wp.me/p1GSXP-J )

Strategy Execution:
This is a critical area for the software vendor to provide value, in terms of  project management techniques, dashboards and scorecards. We are told that most  customers can create reasonable strategic plans; they just can’t execute on them.

We believe that many initiatives are “big”, and standard  project management techniques won’t work. We have an expectation that the
software vendor will deploy an earned value philosophy to keep projects from  slipping away.

Strategic Planning, Financial, Planning,  Budgeting, Forecasting: Financial planning, forecasting and  budgeting software can be quite useful, but, we believe that the software  vendor must guide the customer in the proper use of these capabilities. For  example, how does financial planning relate to strategic planning? When does a
strategic plan become mature enough to impact the budget?

Ask  the harder questions

As you engage with a vendor, you will see one or more
scripted demos. But “real life” happens outside the boundaries of these demos  and you must ask the harder questions. Here are some examples:

“Tell me more about how I should manage complex initiatives. Surely “% complete” is yesterday’s news.”

“We build a new strategic plan every two to three years.  How does your system account for the old strategic plan, as it works its way
from a conceptual document to part of our daily life?”

“We use Epicor for ERP and Microstrategy for BI. How can  you help me integrate these disparate systems?”

A  last word on Professional Services

The software vendor should have such a group. Moreover,  it is likely to have one or more consulting partners. The vendor’s staff and  third party consulting teams will be skilled in strategy execution (but, of
course, you should ask questions). These groups may be less skilled at strategy  formulation. If you need these skills as well, you may need to retain a firm  that specialized in strategic planning.

Bottom  Line: As you select strategy management software and services, pay attention to  the logic steps from Mission Statement to the completion of initiatives. Make  sure that your strategy formulation and execution needs can be met – ideally by  the software vendor and possibly one of its partners.

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