What really constrains your performance?

Financial and operational planning processes, typically go like this: set targets, apportion the targets to different parts of the business, and then each part of the business further assigns a portion of the target down through their ranks.  Targets are usually set at the top (the board and the senior leadership team) and are usually derived using prior year performance plus a growth factor that’s been vetted by economic, market, and competitive models.  The apportionment can be done by geography (since North America delivered 60% of last year’s results, they get 60% of the targets this year), by product line (the WidgetMaster 5000 accounted for half of our sales, so it gets half of the goal for this year), by headcount, or some combination thereof.

The “ranks” receive their granular targets and sometimes get to negotiate their allotment and sometimes they don’t.  In a ‘top down’ plan, the likelihood of negotiating is low.  Some plans are created from the bottom up: each of the “ranks” looks at their patch and assess what they thing is possible and then all those assessments are consolidated (by geography, or product line, or combination) until you get the top-of-the-house target.  At that point, senior management pulls out the economic, market, and competitive models and compares it to the consolidated plan and then challenges the ranks to stretch what they think is possible and commit to a higher number than they came up with.

Enlightened organizations Read more of this post


Hot off the press

first copyI just got my advance copy.  It’s gratifying to finally hold the thing in my hands and feel it.  It should reach Amazon’s warehouse on Monday April 1 (no joke!)

In the meantime, if you just can’t wait, the kindle and iBook versions are available now.

The Management Operating System

The management cycle

Enterprise Performance Management needs a closed-loop process to be truly effective.  And this process should:

  • Bridge the gap between strategy and execution
  • Support anyone in the enterprise in making better, faster, fact-based decisions
  • Transform all of that data you have into usable insights that will cause more effective actions to take place
  • Help align the enterprise on a common set of objectives, and have everyone focused on the right things

Each part of this closed-loop process should feed off of the other parts of the process.  For example, performance targets (vetted and agreed on in scenarios and what-if models) should feed the planning process, and actual results should be compared to the commitments made (by business unit, by product line, by sales team) in that same planning process.

In EPM Done Right, I use the management cycle pictured here to Read more of this post

Enterprise Performance Management “Done Right”

Welcome to my new blog home.  It has been a while, hasn’t it?

I’ve spent the last two years working on my Enterprise Performance Management book which was just published by John Wiley & Son.

EPM Done Right tells you step-by-step how to make your ERP finally live up to its promise.
This joint CIO/CFO playbook is a must read to:
  • Find the profit in your revenue growth by turning data into action.
  • Answer “what’s possible and what’s next in my business?”
It’s a way to think about performance more holistically and as a business-process that helps you sustainably execute your strategy.

You can order it here.

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