Simplifying the Complex Enterprise Performance Management Market
description
Transcript of Simplifying the Complex Enterprise Performance Management Market
The Holy Grail of Enterprise Performance Management
Lee Mashburn
Chief Marketing Officer, Cogniti
April 12, 2011
Agenda Overview
Strategy Management: We Must Close the Gap Between Costs and Returns
Enterprise Performance Management; Where Strategy Fits
The Need for a” Holy Grail” of Enterprise Performance Management
Defining and Realizing the “Holy Grail” of Enterprise Performance Management
About Cogniti
Key Strategies are Not Being Executed . . . And at great cost
90% of U.S. organizations fail to execute their strategies successfully
Estimated that U.S. managers spend more than $10 billion annually on strategic analysis and strategy formulation – which means . . .
$9 billion wasted annually on strategy that is not successfully executed
Another statistic: Fortune 1,000 companies spend an average of $7 million per organization per year
The Importance of Building Accurate Plans has Increased
Source: Accenture – Authors Bergstrom, Batchelor, and Marcotte
The Need for a New Planning Approach
Traditional Planning Flexible, Dynamic Planning
Driven off historical performance and internal operations.
Schedule-driven annual exercise.
Weak link to operations.
Labor-intensive data collection.
Emphasis on short-term profitability.
Grounded in market expectations and external trends.
Probabilistic scenarios including risk factors.
Real-time adjustments.
Planning tightly integrated to front line.
Broader planning scope to cover balance sheet and cash flow.
Source: Planning for Success in Dynamic Environments, Accenture, 2009
Accenture Conclusions
Embed Flexible and Dynamic Planning Processes Focus on what matters most – tie it to financials Incorporate a range of scenarios Involve your operating staff in planning
Renew the Focus on Strategic Planning Helps to prioritize bets
“Forecasts are 33% more accurate when Operations is an integral part of the process”
Flavor
Nuances
Adopters
Relative Public Mindshare per Google Search
BPM, CPM, EPM: Simplifying a Complex Market Place
Enterprise Performance Management
Flavor
Nuances
• Often confused with business process management.
• Alienates the public sector.
• Least leveraged by consultants and analysts.
• Most widely embraced by the “office of finance.”
• Alienates operations.
• Pushed heavily by Gartner, a leading industry analyst.
• Widely embraced by largest management consultants and
software “mega-vendors.”
• Alienates SMB.
• Infers large, multi-national.
Corporate Performance Management
Business Performance Management
Adopters
• BPM Partners
• Capgemeni
• Gartner• Infor
• Prophix• Tagetik• PwC• E&Y
• Aberdeen• Oracle• SAP• IBM
• Cogniti• Accenture
• CSC
Relative Public Mindshare per Google Search
Lots of Google search results
23% of business performance management
Attracts larger organizations
BPM, CPM, EPM: Simplifying a Complex Market Place
EPM, CPM, BPM . . .
At the end of the day, it’s all really the same!
The Evolution of EPM – Where are you on the maturity curve?
Gartner estimates that 40% of large organizations and up to 75% of mid-size organizations still heavily on spreadsheets
EPM Market . . . Large and Growing Fast
Compound Annual Growth Rate (CAGR):
Subscription: 15.7% Maintenance: 14.2% License: 9.5%
TOTAL: 12.7%
Source: Forrester Research, Inc.
FY 2008A
FY2009A
FY 2010F
FY 2011F
FY 2012F
$0 $1,000 $2,000 $3,000 $4,000
EPM Market Size
Subscription Revenue
Maintenance Revenue
License Revenue
Annual Revenue ($ millions)
EPM Market Size by Application
Strategy Management: Planning Scorecards Strategy Maps Objectives and Goal Setters Performance Measurement
Fastest growing EPM application:• Projected CAGR of 18%
Planning, Budgeting, and Forecasting
Financial Reporting
Strategy and Measurement
Cost and Profitability Analysis
$0 $500 $1,000 $1,500
EPM Market Size by Application
FY 2012F
FY 2008A
Annual Revenue ($ millions)
Source: Forrester Research, Inc.
Top Reasons for EPM Projects
Source: BPM Partners 2010 Pulse Survey
Improve Management Reporting
Enhance Planning
Improve Operational Analysis
Fix Painful Processes
Improve Company Performance
0 50 100 150 200 250 300 350 400
Top Reasons for EPM Projects
Number of Respondents
The Need for the Holy Grail of EPM
Operational PlanningPlan Type
Traits
• Typically an annual C-Suite exercise
• Minimizes operational input
• No common toolset to tie the pieces together
• Budget preparation exercise
• Prior year results plus 10%
• Manual grind for cash impact
• Jam down operations’ throat
• Wait for the bad news
• Bet on last year plus 10%
• Prepare to negotiate
• Prepare to assign blame
Financial PlanningStrategic Planning
Standard Tools
• Spreadsheets
• PowerPoint slides
• Strategy maps
• SWOT analysis
• Analyst/market intel
• Spreadsheets
• Financial management tools
• BI tools
• Last year’s actuals
• Email, intranet
• Spreadsheets
• Last year’s actuals
• E-mails
• Conference calls
• Sales and Ops Planning
Results
• High cost, low return
• Difficult to assign value
• Overpromise, under-deliver
• Hard to communicate
• High cost, low return
• Negotiations with operations
• Strategy gets lost
• Just a budgeting and forecasting exercise
• Unclear strategic direction
• Little to no collaboration
• Financial plans cannot be executed
• Business processes not improved
Conventional Planning – Types, Traits, Tools, Results
To Compound the Problem
Gartner 2011 BI Magic Quadrant
“Ongoing dissatisfation among IBM, Oracle, & SAP Business Intelligence (BI) customers
suggests that chronic dissatisfaction may be the new
normal.”
• High cost of ownership
• Poor Performance
• Implementation difficulty
• Not achieving intended business objectives
• BI is being increasingly promoted as a performance management tool.
• Big mega-vendors are failing to properly integrate BI acquisitions with the many performance management modules they offer.
• Improving performance is not being reached by measuring, analyzing, and reporting everything.
• Historic performance results are not helping to achieve business objectives.
The Holy Grail of EPM
Suppliers
Departments
Divisions
Corporate
Geographical Locations
EPM Must Help You Manage the Ripples
Aligned EPM (Marketing Example) . . . The Metrics Must Roll-Up
CEO, CFO, COO
Head of Marketing
Mid-Management
Front-Line
EPS, ROIC, shareholder value
ROMI, return-on-sales, retention
Sales pipeline, win/loss ratio, h/c costs
Leads, emails opened, event attendees
Event Management CRM Time Management Email Management BI
Strategic Value to Company
Tactical Value to Company
Data Sources
Role Performance Metrics
Achieving the Holy Grail of EPM – An Integrated Continuum
Processes
2. ALIGN &
MERGE
1. PLAN & ASSIGN VALUE
Strategic OperationsFinancialOperations
Strategic
Financial
Extract Key Measurement
s
Alert Off-Plan Performance
Project Forward
Consequences
Advise Corrective
Action
3. MEASURE4. EXECUTE & ADJUST
Conclusions
About Cogniti
“Cogniti gives you all the pieces in one place to pull together strategic,
operational, and financial plans and then follow through with the execution
and management of those plans.”
Craig Schiff
President & CEO, BPM Partners