Bettina Pickering of PA Consulting Group shows how you can ensure corporate performance management and business intelligence systems get accepted within your organisation.
Most companies have experienced the following scenario: a great deal of work has gone into the design and implementation of a new system and new or changed processes, the implementation was successful and the system and new processes have gone live on time. However, after a while, this perfect picture starts to break up: users insist they need different reports or additional non-standard functionality. They continue to use other programs such as Excel and Access to build their own reports and databases, in addition to those in the main system. Staff revert back to the old processes fully or in part or they create their own deviations from the new process.
This scenario applies not only to ERP systems but even more so to corporate performance management (CPM) and business intelligence (BI) systems and processes.
In my 10 years of helping clients troubleshoot and implement CPM and management reporting approaches and systems, the three main reasons why organisations fail to make these systems and new processes ‘stick’ are:
- Only scratching the surface rather than embedding the CPM and BI concepts within the organisation.
- Putting a disproportionate focus on technology, which is seen as the magic bullet without looking at the ‘real’ business needs.
- Underestimating the continuous effort involved to ensure good-quality outputs and keep up with changing business needs.
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How can these challenges be overcome and how can CPM and/or BI concepts be implemented successfully? Looking at each in turn:
Embedding CPM and BI concepts within the organisation
Once the technology has been acquired, most organisations embark on a phase of configuration, data cleaning and migration, changing their reporting and system update processes, and user training. What is generally missing in all of this is the people aspect.
People operate systems and processes, and even though users are trained in the technology and new processes, it does not mean they have committed to the new system and processes – or even understood and committed to the goals and benefits of CPM or BI.
As an example, take a professional services organisation I worked with. A new BI system had been implemented, relevant processes were changed, a central BI department was formed, and users across departments were trained in the use of the software and the new processes.
However, employees were still measured by the same criteria (such as speed in providing a report to a senior manager or providing the report in the format the senior manager wanted) and followed the same reporting lines as they did before BI was implemented.
The central BI department received some requests for reports from various departments. But as they provided standard reports and the majority of senior managers wanted customised reports, most departments retained or created their own reporting units and systems (often bespoke databases and spreadsheets).
This not only resulted in duplication of effort, staff and systems, it also made it difficult for the management team to establish ‘one version of the truth’ concerning their financial and performance data. Each senior manager would arrive with their own version of reports at board and management team meetings, making it extremely difficult to compare performance of different departments.
This organisation had failed to ensure that its senior managers were committed to the new central BI system and reporting function. Departmental budgets no longer included the additional headcount for reporting staff, and the right measures were not put in place to monitor success of the solution (such as the number of scrapped reports, total number of reports produced and effort to produce a report).
The project team who implemented the BI system also failed to fully understand what level of flexibility senior manager required of their new BI solution. And while this is just one example, this kind of situation has occurred in the majority of organisations in some form or another.
Keep technology in its place
Most CPM and BI solutions now come with a large number of pre-configured standard reports, metrics and key performance indicators (KPIs). In addition, CPM and BI vendors and implementors offer clients a methodology on how best to implement their chosen software, while a number of vendors offer industry-specific versions of their systems.
Because of this extensive choice, CPM and BI systems are often seen as the magic bullet that will solve the current data and process-related issues, and a whole host of other reporting and analysis-related business problems.
But what the vendors and their methodologies cannot provide an organisation with are the answers to the crucial question: what are the strategic KPIs for this particular organisation? This will help the organisation measure the success or failure of its strategy. Choosing the right KPIs could mean the difference between bankruptcy and profitability.
For example, I worked with a manufacturer with a highly sophisticated BI system, focused only on sales-related KPIs (sales revenue growth, volume, cost of sales). However, as the company did not look at product profitability per product, it was unable to concentrate its efforts on increasing volumes of high-margin products in favour of high-volume but unprofitable products. As sales staff were also measured by number of sales, sales revenue and volume, there was no incentive for them to focus on high-margin products.
Needless to say this organisation was making a loss. Fortunately it managed to turn round the situation after an extensive review of way it was managed and staff were rewarded.
This case history illustrates that technology cannot solve a problem – it can only enable a solution. So organisations should firstly look at what they need to measure in order to help them achieve their strategy and become or remain profitable; and secondly look at getting the right technology to support these requirements.
In addition, CPM and BI systems put equal emphasis on each KPI; they contain generic best practice and must still be tailored to the organisation. Managers are often in awe of what is possible and therefore ask for everything they are told is available. However, some KPIs will be more important than others in an organisation, and some will be easier to implement than others, requiring more or less data cleaning, more or less data sources and more or less data restructuring. This will be different for each organisation as application landscapes, data quality and data structures and even KPI calculations may differ.
Therefore, to avoid spending time on enabling little-used or irrelevant KPI reports, organisations must be clear which KPIs are vital. Otherwise, they will waste effort, and users will not use the system as they feel they cannot find what they need due to information overload.
Be prepared for continuous investment in CPM and BI
Once a major systems implementation has been completed, most organisations continue to maintain the system technically but tend to cut back on the effort they put into maintaining and improving data quality and data structures.
They do so in the mistaken belief that once trained, users will understand the ramifications of bad data and will ensure that only good-quality data is entered into the BI and CPM feeder systems. There is also an unwillingness to incur personnel costs for staff to maintain the data model, monitor and ensure data quality; and a view that ERP and other systems will provide best-practice data conventions and structures – which they do, but someone still needs to maintain this and correct errors.
Unfortunately, data is one of the key ingredients for BI and CPM, and without clean and well-structured data any reports or other outputs become difficult to interpret and less meaningful for management decision making. Often the reason why BI and CPM systems are seen as failing lies in the quality of the underlying data. Staff lose confidence in the outputs of these systems and resort to using their own Excel and Access-based solutions.
Ensuring continuous data quality within BI and CPM and their feeder systems requires a combination of automated data quality routines for all data required for reports, and a dedicated data management function responsible for overseeing data quality, data authorisation and the organisation’s data model.
Automated routines can be gatekeeper programs that are implemented as add-ons to core ERP or business systems, to prevent duplication of customer, supplier and other records.
For example, Dun & Bradstreet and similar software can be used to keep customer and supplier records clean. Workflow programs built into ERP systems and available as add-ons for other systems can support data creation and change authorisation before a record is available for use. This of course requires limited manual intervention by expert staff able to assess whether a new or amended record should be authorised. For example, a European manufacturer followed this approach and saved €20 million annually in data-related costs. This was achieved by cutting the effort to resolve data errors, duplicate marketing material, duplicate and erroneous purchasing orders, excess stock and the size of the supplier base.
Conclusion
When implementing CPM or BI, it is first vital to ensure that the whole organisation is committed to the concept. Everyone must support the changes that are required not only to processes and systems but also to the way managers and staff are using data, to senior managers’ and their staff’s objectives, and the organisation’s performance measures.
Technology should never been seen as the magic bullet. While IT can enable an overall solution, it can never be the solution. It is therefore critical to ensure the organisation’s key measures supporting its strategy are clearly defined before embarking on a CPM or BI systems implementation.
And while it is not considered the most riveting of topics, good data quality is one of key success factors for a successful CPM or BI solution. Without data of the right quality, the CPM or BI solution will be unable to provide reliable information for management decision making.
