CPM: Reaching Back to Deliver Business Benefits

Susan Andre Survival Strategy Column

In today's tough business environment, a corporate performance management (CPM) initiative is an excellent way to "bullet-proof" companies against costly future mistakes.

Corporate performance management (CPM) integrates management planning and control processes, through describing the methodologies, metrics, processes and systems used to monitor and manage an enterprise's performance. It allows companies to link strategies to operational plans and budgets, support continuous monitoring and plan adjustments, and ensures that those involved in decision-making processes have the most up-to-date information and analyses at their fingertips.

Wider vision "Defining a CPM strategy has to be done with the overall company strategy in mind, so a "big picture" view is a necessity." Sounds fairly highbrow, doesn't it? Actually, it's not a new concept at all. The vision of an all-encompassing business information system that manages day-to-day business processes while providing the analytic insight necessary to make timely, informed, proactive business decisions has been around for a long time.

If handled correctly, applying a well-structured CPM strategy can facilitate this vision from both a business and technology perspective, despite being viewed by some as an "old" all-encompassing management approach. These days, when the echoes of the dot-com bomb haven't quite died away and many companies are still struggling to get back to their core businesses, a CPM initiative is an excellent way to "bullet-proof" them against costly future mistakes. There was the time when almost everyone thought enterprise resource planning (ERP) applications would deliver valuable business information, but due to the fact that few – if any – contained decision support capabilities, the massive ERP implementations of yesteryear failed to live up to expectations.

Which is where CPM comes in. By "piggy-backing" a CPM strategy on top of an already-installed ERP application, companies can ensure their decision-makers have all the information they need to move their particular business forward in the future.

However, although technology is the enabler behind a useful CPM strategy, it's not the driver. CPM is business-driven and must be promoted by management teams across the enterprise, rather than be adopted as a discipline for defining, collecting and acting upon performance indicators by isolated departments. These teams also need to recognise that putting a CPM strategy in place across a company's entire IT infrastructure will involve a significant challenge for management teams. Some of these are likely to deal with multiple sources of information both within and beyond the enterprise, a resistance to change by staff members, working across complex organisational structures and dealing with internal company politics. Although the process promises great business benefits, it is definitely not a task for the faint-hearted!

Yet another word of warning – those who try to approach CPM in isolation will find themselves with just another failed "IT project" on their hands. Defining a CPM strategy has to be done with the overall company strategy in mind, so a "big picture" view is a necessity. Going this route requires accommodating operational management activities and the ability to access a relevant business intelligence solution so as to gain an integrated, quality view of all information.

Business intelligence is an essential component of any CPM drive, as most companies still have data scattered across various applications, and stored in different types of databases using different and often incompatible formats. As external data is increasingly available, it too is often difficult to integrate into a company's traditional reporting and analysis methods. In fact, even those IT organisations that have largely mastered the art of data warehousing are now facing a growing backlog of requests for the specialised data sets and "once-off" data needs required for businesses to remain flexible in changing market environments.

Apart from CPM or similar initiatives, other technology drivers come into play as far as collecting data and transforming it into business intelligence is concerned. Mature and advanced storage technologies make it possible to collect large volumes of data, while advances in servers help process this data with sophisticated algorithms that can interpret the data in near real-time. Wireless technologies make it possible to push key performance indicators and alerts to cellphones and handheld devices.

So, by having access to real-time information on critical performance indicators through a BI initiative, managers and staff can play a crucial role in improving the speed and effectiveness of an enterprise's business operations through mapping this into an overall CPM strategy. The net effect will be to improve their ability to react faster to changes in business environment, execute strategies more successfully, improve operational efficiencies and reduce costs. The bottom line? Any company armed with a newly developed CPM architectural blueprint is ready to advance to the next step of implementing an information-based aid that could propel their business to the next level of success.