Ask any corporate executive the secret to success and there's a good chance you'll hear that the management team must work
on the same goals using the same assumptions and facts -- with transparency to the CEO and board. Yet most companies don't
work that way, setting the stage for missed opportunities, hidden problems, and political gaming that uses siloed data and
its analysis as a departmental weapon rather than as an enterprise asset.
One way to get closer to the goal of a company that knows how it's really doing -- which means being fully transparent and
working toward the same goals with the same assumptions and data -- is through the deployment of a CPM (corporate performance
management) system. Such a system analyzes data related to business performance and presents it as a collection of KPIs (key
performance indicators) aggregated into a "dashboard" of simple graphical readouts, using metaphors such as stoplights and
gas gauges. From the dashboard, managers can drill down to study performance data in detail.
Performance can be anything important to company strategy: employee turnover and satisfaction; defect reduction in manufacturing;
net profits on new business or product lines against expectations; and so on. What's key is that the company is measuring
performance -- not merely process statistics -- and is gauging it against such metrics as goals, past performance, and competitive
baselines. Furthermore, to understand the complete picture, senior managers are looking at these performance areas across
the entire company, not just within specific functions or departments. Typically, department managers use CPM tools within
their areas, but a CPM system "rolls up" information to give senior managers a broader view of enterprise performance.
"It helps you ask the right questions and validates that the data is based on a single version of the truth," says Graham
Mackintosh, vice president of strategy and business development at BI provider Cognos.
Effective CPM systems also gather and crunch data in a more targeted way than conventional BI systems do, meaning that "we
don't have to say, 'Gee, I wish we'd done this two weeks ago,' " says Dan McGowan, vice president of financial reporting and
analysis at Southeast Corporate Federal Credit Union, which provides financial processing services to other credit unions.
Along with helping an enterprise manage itself more effectively, CPM can also help it meet regulatory requirements -- such
as Sarbanes-Oxley -- that require the CEO and other senior managers to sign off on the truth of their disclosures and to disclose
"material events" within 48 hours. "How can you report to what the laws require if you don't know what is happening?" asks
Jonathan Hornby, practice director of performance management at analytics provider SAS.
Known by several names -- business performance management, corporate business management, enterprise performance management,
and, in some circles, real-time BI -- CPM requires a strong underlying data architecture. That requirement is one reason most
CPM providers are also BI, data-analytics, or ERP vendors, such as Applix, BusinessObjects, Cognos, Computer Associates' CleverPath
division, CorVu, Hyperion, Lawson Software, Outlooksoft, SAS, and SRC Software. (Many other vendors use one of the "performance
management" labels but offer analysis systems only for specific tasks such as financial, IT, or supplier management.)
Only approximately 20 percent of companies have both the technology infrastructure and the commitment to transparency necessary
for a successful CPM deployment, SAS' Hornby says. And as Meta Group Analyst Jonathan Poe notes, perhaps only 5 percent to
10 percent of large companies have been implementing CPM for a long time, often using homegrown tools for tapping into and
analyzing their data stores.
"A lot of companies don't have the formally defined processes or a common set of metrics across the organization," adds Kevin
McAuliffe, director of strategy and business performance management for the software group at IBM.
Building on a Solid Foundation
Typically, a CPM deployment builds on existing data repositories, data integration efforts, and departmental systems such
as ERP, CRM, and SCM. "CPM is not a revolutionary way to reinvent your technology infrastructure," says John Colbert, vice
president of service management at BPM Partners.
Instead, it usually overlays those systems and is used for gathering information across them by breaking organizational silos,
says John O'Rourke, senior director of product marketing at BI provider Hyperion.
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