A Management Operating System

I would like to introduce a framework for thinking about Enterprise Performance Management and Business Intelligence. The genesis of this framework came from my days working at Hyperion Solutions (later acquired by Oracle Corp.). It’s been called a management “operating system” for your company because, like the operating system of your computer, it helps govern input and output and manage what applications (or decisions) are being run and helps make the most effective use of resources (memory, disk space, CPU cycles). You can start anywhere on this closed-loop process to tell the management operating system story, and today I’ll share Gather – the most common part of the cycle, with you.

Enterprise Performance Management, A Management Operating System, EPM, Ron Dimon

A Management Operating System

Gather – While you are busy running your business (Execution, which means service customers, making products, selling in markets), you are generating lots of data. You gather that data and transform it into useful information (according to its context) and deliver it to the right people (according to impact and areas of responsibility).

This is the place where managers consume reports about the results of the business. It’s where they answer the question “where are we, right now?” Depending on your industry and your business, there are generally two kinds of reports: mostly financial and mostly operational. The trend has been to combine financial and operational information on one report, which is a good idea since the two are interrelated: financial investments help drive operational results, and effective operations help contribute to financial performance.

Reports are delivered in a variety of formats with a variety of tools and can be categorized as:

  • Canned (static) reports
  • Ad hoc or interactive reports
  • Dashboards and scorecards
  • Spreadsheets

Reports give their readers a snapshot of what results have been produced to date to help them gauge how close to their goals and targets they are.

You can learn more about EPM and how it can help your organization build a common business process to execute its strategy in my book Enterprise Performance Management Done Right: An Operating System for Your Organization (Wiley CIO)


3 Benefits of Using EPM in Your Organization

EPM was designed to fill the strategy to execution gap. It’s the new approach to management that makes strategy everyone’s job, that gives them the tools and processes to execute based on focus, alignment, and accountability. Let’s discuss three of the five benefits of EPM that I share in my book Enterprise Performance Management Done Right: An Operating System for Your Organization (Wiley CIO):

  1. Management Efficiency

    Enterprise Performance Management. Difference between "Run the Business" and "Manage the Businesss"

    Differences between “Run the Business” and “Manage the Business”

EPM enables standard management processes that every company must do well: Budgeting, planning and forecasting Financial consolidation and statutory reporting Management reporting and business intelligence Profitability analysis, and Other financial and operational modeling, planning, analysis, and reporting EPM leverages the investment you have already made in Enterprise Resource Management, Customer Relationship Management, Supply Chain Management, Sales Force Automation, and other transactional systems.

  1. Executing Strategy

EPM can help close the loop between what you want to happen in the business (and how), and what actually happened (and why): Records and documents business model assumptions, constraints, and drivers Connects those models into your annual operating plans, budgets, and forecasts Monitors and alerts exceptional variances from actual to plan Helps you understand the root causes of variance and plug that corporate knowledge Ties it all together with a common business language and common master data to improve visibility, focus, and alignment Giving more stakeholder alignment .

  1. Improving Performance

EPM can have a material impact on the top and bottom line, on the balance sheet, and on overall return on capital: It can improve visibility into the key drivers of value in the business. It can show the cause and effect relationship of operational metrics on financial performance. It helps you focus on the right things in the business. It can bring agility to business models and organizational structures. Giving better business decisions that are based on more timely information

You can learn more about EPM and how it can help your organization build a common business process to execute it’s strategy in my book Enterprise Performance Management Done Right: An Operating System for Your Organization (Wiley CIO)

Oracle OpenWorld Radio Interview: EPM Done Right

Here’s an interview about my book by the Oracle Application Users Group, OAUG from Oracle OpenWorld 2013.  Hosted by Lee Kantor and  Stone Payton of BusinessRadioX:

Click here to listen.

This was a lot of fun to do and we hit on the business value of EPM and some hot topics like Data Relationship Management and Governance, how to get started in EPM, and how to ‘bring it all together.’  As we discuss, EPM is not just for CFO and CIO anymore, this interview appeals to any business manager and leader who is responsible for helping execute on company strategic objectives.

OAUG Interview

CFO and CIO join forces to serve “The Business”

Organizations that have implemented Performance Management more broadly are nearly four times more likely to be among the most competitive organizations in their industry.

—Brian McDonough, Research Manager, Analytics and Data Warehousing Software, IDC, Financial Performance and Strategy Management Survey of Buyer Priorities for 2011, Doc #226261, Dec. 2010

Harvard Business Review advocates that business and IT shouldn’t just be aligned, they should be ‘‘forged together.’’  (David M. Upton and Bradley R. Staats, ‘‘Radically Simple IT,’’ Harvard Business Review, March 2008.)  One way HBR says you can do this is by having the CIO report directly to the CEO or COO, not the CFO. While I have seen this reporting structure in many of our client organizations, it does not automatically mean that IT and the business are forged together, or even aligned for that matter. Certainly the business analyst (BA) role has done much for crossing the chasm, in both directions, for IT and the business. And where I see the most successful financial systems implementations are where there the finance/information systems (IS) role acts as the BA. But this is still not a guarantee for a meeting of the minds between business and IT.

2 way arrows

Photo © Ruth Dimon, 2013

I propose five ‘‘better’’ practices for closer IT/business alignment based on my client engagements over the last 30 years: Read more of this post

Closing the Strategy-Execution gap

In March 2010, Harvard Business Review surveyed

Photo © Ruth Dimon, 2013

Photo © Ruth Dimon, 2013

1,075 readers about strategy and execution in their organizations.
Only 37% said their companies are ‘‘very good’’ or ‘‘excellent’’ at execution.

What is it that keeps us from having a sustainable process for executing our strategy?
On the one hand you have your strategic objectives, including:

  • Profitable Revenue Growth
  • Customer Success
  • Operational Efficiency
  • Employee Engagement
  • Cash cycle velocity
  • And so on.

On the other hand you have available resources at your disposal:

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