The Management Operating System

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 describe the overall process and the various parts that make it up.  It starts with Strategy and strategic objectives, and includes:

• DEBATE: enabled by scenarios, what-if models, and strategic plans – this is where targets come from
• COMMIT: enabled by budgets, plans and forecasts – which document who is on the hook for what, by when

Then you go off and run your business: get customers, ship products, hire people, and so on.  The cycle continues with:

• GATHER: where you collect your massive amounts of data and turn it into useable information
• UNDERSTAND: analyzing your results and compare them to history, predictions, trends, and so on until you get to the root cause of your performance (both positive and negative)

And the cycle continues as you compare your performance to your strategy and adjust accordingly.

Every organization does these parts in one fashion or another – some effectively and some not so much.  It’s when you bring these parts together using common data, common metadata, common transformations, and so on, and connect them to one-another, then you create the backbone of EPM to help you improve performance every step of the way.