CPM software: an elegant way to measure business indicators

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.)