Analytics-based Enterprise and Risk Performance Management
Analytics-based Enterprise and
Risk Performance Management
Enterprise performance management (EPM) is the integration of multiple managerial methods to improve an organization's strategic and operational performance. (Incidentally, enterprise and corporate performance management, EPM and CPM, are synonymous.)
The individual methods comprising EPM are described in this website. But remember that integrating the methods is as important as using the methods themselves.
Imbedding analytics into each method makes EPM even more powerful.
Pain and 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 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 driver-based rolling financial forecasts.
- There is lack of insight, knowledge, and business intelligence data. Excessive reliance on intuition and gut feel rather than fact-based decision making.
- An inability to anticipate trouble early on. Absence of reliable forecasting and predictive analytics.
- Not being able to identify the cause for weak productivity or high costs or questionable lean management initiatives.
How do EPM methods solve these problems?
- A strategy map and its Balanced Scorecard communicate a 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 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 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.
What I do for Organizations
I help organizations increase value with practical, customized and long lasting solutions at a reasonable cost. I help inspire, train, and motivate executives, managers, employees and also partners.
Who is Gary Cokins? (full bio)
I am an author of books and articles, speaker, and consultant in EPM and analytics. I graduated with degrees in industrial engineering and operations research (Cornell University) and an MBA (Kellogg). I held senior positions at FMC Corporation, Deloitte, KPMG, EDS (now in HP), and SAS (a global leader in EPM, business intelligence and analytics).
I was fortunate to have been involved with Harvard Business School Professor Robert S. Kaplan and Dr. David Norton in the 1980s with the inception of balanced scorecards, dashboards, KPIs, and activity-based cost management (ABC/M) for cost and profitability analysis as well as financial projections.