Choosing an enterprise performance management (EPM) tool can be a complex process. That's because EPM functionality emerged from different product areas, all coming at the problem from different angles.
For example, traditional business intelligence vendors such as Cognos and Business Objects are addressing EPM from the perspective of reporting and query/analysis tools. Vendors such as Hyperion are taking a budgeting and activity-based costing slant, while enterprise application vendors such as Epicor, Oracle, and SAP are offering built-in analytics to help customers better understand the business-critical operational data that resides in their systems. The enterprise route can be a good option for mid-size manufacturers that don?t have the time or money to become enmeshed in a best-of-breed implementation, according to John Hagerty, vice president of performance management at AMR Research Inc. (Boston).
No matter which approach they take, companies beginning an EPM journey pass through four distinct phases, according to Hagerty. The bad news is they often have to start at the lowest level and get through each before they have any hope of graduating to the next one -- no line-jumping.
According to AMR, the four levels of EPM maturity are:
1) Operating: At this stage, performance management projects are geared to the line of business. Projects are tactical, designed to provide emergency aid to a pressing management need. The good news: projects here are relatively low risk and high reward.
2) Integrating: Having achieved high-profile wins at the first levels, companies in stage two are eager to expand on their success by spending lots of cash on more sophisticated EPM tools. Companies here continue to simplify business processes and extend the infrastructure to provide broader capabilities, such as formalized data integration, event monitoring, and data mining. Measurable benefits and rewards are harder to come by at this level, though that should not be taken as a sign that the effort should be abandoned.
3) Optimizing: Here, the business is being driven by a few clear operational and financial performance metrics. Departmental KPIs are mapped back to corporate goals. Companies optimize performance one department at a time, taking a very systematic approach.
4) Innovating: Companies at the highest level are innovators, and they adjust their performance and business model to address shifts in the market. Few companies have reached Level 4 performance maturity. A top-down, goal-setting approach cascades from the C-level to the VP level to the managers to the direct reports. Companies invest resources to expand the infrastructure to scale enterprise-wide.