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Corporate performance management best practices, from end-users and experts

The leader of a Cognos corporate performance management (CPM) software project at Moët Hennessy and an expert consultant share four best practices for implementing CPM.

Corporate performance management (CPM) software can help organizations optimize business processes, but Moët Hennessy USA discovered that careful collaboration between business and IT, among other things, is required long before breaking out the bubbly.

The New York-based company represents and markets Moët Hennessy's portfolio of champagne, wine and spirits in the U.S., working with a national network of distributors. Two years ago, some internal changes led the company to revamp its IT infrastructure. In the process, executives wanted to update Moët Hennessy's pricing management application, according to Bob Smith, director of information services and technology.

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The price management application helps the company set liquor prices across the U.S., Smith explained, which is often a complex planning exercise because of differing regulations and unique markets. For example, some locations are managed by state-run liquor commissions, and the economics of different markets often dictate how much of a price increase they can handle. The company had an existing business intelligence and CPM platform from Ottawa-based Cognos Inc. -- and chose to build a new pricing application using the Cognos Enterprise Planning platform. Now, after a pilot project and successful rollout, many people access the new application, Smith said. It's greatly improved productivity, internal communication and visibility into pricing data. But there were a few challenges along the way.

"The issues we encountered were typical," Smith said, "like not getting good requirements and business [users] expecting changes to be incorporated into the models but not giving us information until late in the process when we were halfway through development."

The solution, he found, is staying "100% engaged" with the business departments driving the project. This can be challenging, he acknowledged, especially at smaller companies where employees are juggling many priorities. But it's critical that IT departments don't try to develop CPM applications "in a silo," he said. IT can help business users execute on their vision, but businesspeople need to take full ownership of the project.

This sentiment was echoed by William McKnight, senior vice president of information management with East Hanover, N.J.-based Conversion Services International Inc. McKnight has worked on many CPM projects as a consultant and shared his top best practices.

Corporate performance management best practice: Focus first on business goals, and involve management

CPM efforts can mobilize companies around their unique corporate strategies, McKnight said. But it's critical that CPM implementation teams are working with the correct assumptions about this corporate strategy as they design the system, he explained, and that requires close communication with management. Similarly, management should also be very involved in defining the key performance indictors (KPIs) that will be used to measure success.

"[Goals] might be around high customer satisfaction or high product quality or quick turnaround time," McKnight said. "But then you have to ask: 'How do we quantify that?'"

Corporate performance management best practice: Carefully consider the data infrastructure

After management provides the desired KPIs, CPM teams need to figure out where the data will come from -- and what state that data is in. Accurate, clean data is a critical foundation for a sound CPM system, McKnight said.

One important consideration in the data infrastructure is the source and latency of the CPM data, often presented in an executive dashboard interface. Some CPM dashboards have KPIs based on "post-operational" or analytical data, often stored in a data warehouse, McKnight explained. This is fine, but organizations should be aware of the implications for CPM dashboards, he said, since many data warehouses are batch loaded and may not refresh during the day. This means that KPIs based on this data won't change during the day, either. Alternatively, some CPM "operational dashboards" pull data directly from source systems and tend to change throughout the day as source systems change. Both methods are valid, he said. Organizations should choose approaches suitable to their goals.

Corporate performance management best practice: Create analysis objectives

A common pitfall of CPM projects, McKnight said, is that IT creates visibility into metrics that the business is not prepared to act on.

"It does no good to see data and just acknowledge it -- that's not enough. We want to know what [employees] are going to do with the information," he explained.

So, during the implementation process, McKnight recommends benchmarking potential situations that a CPM system may uncover -- such as sales or inventory problems -- and discussing what steps employees should take to mitigate the issues. This may require operational adjustments or process changes, he said.

Corporate performance management best practice: Customize CPM systems

Organizations should customize CPM software to their unique infrastructure and culture, McKnight said.

At Moët Hennessy, Smith said, a pilot phase of the project was very helpful in the development process. It helped the business users understand how the system would work when it was deployed and helped them see how their requirements translated into the application. Users' feedback after the pilot led to a re-engineering of the CPM application, proving that it was a very valuable step in the project, Smith said.

"Putting things on paper and actually seeing how something works are two different things -- especially if you're dealing with salespeople," Smith said. "By making them feel it and touch it the first time around in a pilot mode, they really understood that what they were asking us to do was much more complicated than they ever even imagined."

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