Sunday, November 3, 2013

How to Understand Enterprise Performance Management Holistically?

Enterprise Performance Management is an Overarching Umbrella for other Management Disciplines.

Corporate performance management is not just about managing numbers with metrics, so what’s exactly corporate performance management regarding for, and what’s it related to other key components of corporate management such as strategic management, risk management, information management., etc.?

Corporate Performance Management is a management control from strategy till shop floor. Managing performance means understanding results, setting metrics, fixing plans, and making decisions to ensure it happens. This also means: 
  • Translating strategy into operational terms 
  • Aligning the organization to create synergies 
  • Making strategy everyone’s everyday job and a continual process 
  • Mobilizing change through executive leadership anticipation, monitoring results and act.
Enterprise Performance Management is more as decision management: All company’s performance is directly related to the decisions people make every day—from executives to the frontline, across functional areas and regions. Performance management facilitates the flow of the right information to the right people at the right time to get these questions' answers, to help and coordinate your STRATEGY, TACTICS, AND RISKS. Enterprise Performance Management is the integration of multiple methods with each embedded with business analytics, such as segmentation analysis, and especially predictive analytics … to achieve the strategy and to make better decisions.

Enterprise Performance Management is critical: Because new competitive challenges and active market changes underscore the strategic imperative of managing performance more than ever. But the various activities are needed to manage performance— STRATEGIC and OPERATIONAL plans, METRICS, day-to-day decisions. Enterprise Performance Management methods include strategy maps, scorecards, customer profitability analysis using activity-based costing principles, customer intelligence, driver-based budgeting / rolling financial forecasts, lean management, and quality management. Enterprise Performance Management integrates them as a large umbrella.

Strategic Management, Operations Management, Risk Management are ALL part of good Enterprise Performance Management (EPM), in essence: EPM is the tree, Strategic/ Operations/Risk Management are the main Branches. A company benefits most when it executes Enterprise Performance Management (EPM) and Enterprise Risk Management (ERM) in a complementary fashion, as two elements both critical for achieving the vision and mission of the company:
(1) Under EPM one looks at what one wants to take place. One translates the company vision and mission into a strategy with objectives; then translates the strategy into operational plans to achieve the strategic objectives; then execute these plans and monitors actual performance. The classic PDCA-loop.
(2) Under Enterprise Risk Management (ERM), one then looks at the things one essentially does not want to happen. The things that would prevent the execution of the strategy or operational plans from achieving the stated aims or that would even make the strategy and operational plans completely obsolete.

Metaphorically, if the enterprise is a vehicle, Enterprise Performance Management is like the gas pedal with speed scoreboard: Enterprise Risk Management is like brake, and governance is like steering wheel, to keep the business in the right direction; while ‘EPM's "strategy map" component could be the GPS for direction setting. The motor might be the organization's assets and capacity (including its workforce). Predictive analytics might be what is seen through the windshield. The purpose of all such management disciplines and practices is to ensure enterprise vehicle running at optimal speed in the right direction.

Enterprise Performance Management is a management discipline to run numbers in context, use data to tell stories, and getting results related to business goals.


Post a Comment