Analytics-based Enterprise &
Risk Performance Management

 

"I help organizations increase value with practical, customized & long lasting solutions at a reasonable cost. I help inspire, train & motivate executives, managers, employees & also partners."

    Enterprise Performance Management (EPM) is the integration of multiple managerial methods to improve an organization’s strategic & operational performance. (Enterprise & Corporate Performance Management [CPM] are synonymous.)

    The individual methods comprising EPM are described in this website, but remember that seamlessly integrating the EPM methods is as important as using the methods themselves.

    Embedding analytics into each method makes EPM even more powerful.


    Pain & Problems that EPM Solves

    • Did you know the vast majority of organizations fail to successfully execute their strategy? (per Dr. David Norton, co-author of the Balanced Scorecard)
    • Organizations often have key performance indicators (KPIs)…
      • that are not aligned with the strategy.
      • that are far too many in number.
      • that do not cascade down into operational measures useful to employees.
    • Do you know which 20% of your products, service-lines, channels, and customers may be unprofitable? Which 20% are truly the most profitable?  
    • Accounting systems lack reporting transparency and visibility of costs.
    • Do managers and employees know and effectively manage root cause cost drivers?
    • Few companies, if any, know which types of customers are most profitable to retain, grow, win-back, and acquire. There is an illusion that the highest sales customers are also the most profitable ones.
    • The annual budget process is ineffective. Budgets are quickly obsolete. Volatility and uncertainty are here to stay. There is poor preparation to shift to capacity-sensitive, driver-based, rolling financial forecasts.
    • There is a lack of insight, knowledge, and business intelligence data. There is excessive reliance on intuition and gut feel rather than fact-based decision making.
    • There's an inability to anticipate trouble early on, and an absence of reliable forecasting and predictive analytics.
    • Many are unable to identify the cause for low productivity, high costs, or questionable lean management initiatives.

    How do EPM Methods Solve these Problems?

    • A strategy map and its companion Balanced Scorecard communicate the orngization’s mission and strategic objectives in terms everyone can understand. Combined, they identify KPIs essential for accountability and to align employee behavior and priorities with the strategy.
    • Progressive managerial accounting practices, including activity-based costing (ABC), provide accurate costs (with detailed visibility of causality) of processes, products, services, channels, and customers, for profitability analysis, decisions, and actions. 
    • Reliable forecasting with calibrated, driver-based cost consumption rates allows a shift from the annual budget to continuous capacity-sensitive rolling financial forecasts.
    • Analytics (e.g., regression, segmentation, correlation) provide insight and foresight with fact-based information.
    • Analytics enable investigation and testing as well as moving from possibilities to probabilities (e.g., what-if scenario analysis).
    • Modeling with software is foundational in EPM methods to reflect the reality of cause-and-effect relationships.

        Benefits to You and Your Organization

        • Improved strategy execution. Relevant KPIs.
        • Ability to retain and grow the more profitable and valuable customers.
        • Enhanced business planning, forecasting, and analysis.
        • Developed employee capabilities and skills with analytics and modeling techniques.

        Next Steps

        Contact me for a free consultation on which EPM method(s) can most improve your organization to more effectively reach your goals. I can help you identify which are the most appropriate articles to read and share with your colleagues (or clients) to make your (or their) organization smarter.

        If you're looking for business planning, forecasting & analysis services, visit Analytics-Based Performance Management to learn more.