IDC Connecting Plans and Performance Managing the strategy development, planning, budgeting, performance tracking, and forecasting for an organization is extremely challenging. Typically, the strategy is set by the board of directors and C-level executives. The plans, budgets, and performance goals are determined by company executives and sometimes approved by the board of directors. Once determined, the goals are rolled out to employees, with defined plans, budgets, and performance to be monitored across the enterprise. Connected EPM systems are a strategic competitive advantage when coupled with traditional ERP systems because they automate five aspects across the enterprise: strategy, plans, budgets, performance, and forecasts. Normally an annual (and sometimes quarterly) exercise, strategic planning is not for the faint of heart. The process itself is extremely time consuming from a discussion and mapping aspect, in addition to requiring input from individual business departments. Some of the various business departments where information is needed and collected for an effective enterprise performance management are: ? Finance looks at cash flow, revenue, and profit projections as well as the impact of expenses on earnings. ? HR coordinates hiring in accordance with the head count needs of individual departments and develops plans to maximize employee productivity. ? Marketing focuses on planning for product launches, pricing, and promotions and on market share and growth forecasting. ? Sales conducts forecasting and territory and quota planning, which can be broken down further by product and region. Sales compensation, planning, and distribution are also tracked closely and integrated into expense and profitability. ? Supply chain planning encompasses the timing and availability of manufacturing capacity and raw materials, supply and demand planning, and the impact of adding equipment on product production. ? IT looks at the selection and integration of technology solutions toward the deployment, maintenance, and governance of an organization`s business processes. Planning and performance tracking activities are project based. While finance, HR, sales, marketing, supply chain (operations), and IT perform different functions, they are all intertwined and rely upon each other to succeed. In an ideal world, all departments would collaborate to create company forecasts, budgets, and targets to meet the desired performance level. The finance function, in particular, drives the financial management and planning process across the entire business, tying into each area of the business as needed. This process can take months, is extremely labor intensive, and must be verified, audited, and approved. The EPM process encompasses the entire business so that the business can manage revenue, costs over multiple time horizons and, ultimately, profitability. From boardrooms to Wall Street, EPM is critical to the health and survival of a business; without it, companies leave their market, revenue, and profitability to the competition. ©2017 IDC #US41964916 3 EPM Systems Developed to Improve Enterprise Planning and Performance Management On-premises software applications were developed by vendors to solve enterprise performance management problems. However, these legacy applications focus only on a single business function such as enterprise performance management under finance, supply chain planning under operations, and sales performance management under sales. As a result, they act as point solutions, solving planning and performance problems only within the respective area and without integrating into other areas across the enterprise. Although companies have invested heavily in these expensive legacy solutions, many continue to see low user adoption rates, long cycle times, and inaccurate data. In addition, as we mentioned previously, many of these legacy EPM systems automate only the periodic budgeting and planning processes such as annual budgeting or the monthly supply chain demand. These automated business processes are nothing more than spreadsheets, passed among participants, utilized exclusively by specific departments, and specific to a particular geographic area. The unintended outcome of this pervasive problem is the number of hours invested into zero-value work, including manually gathering data, connecting spreadsheets and other disparate documents, interpreting and consolidating the data, error checking and, finally, utilizing the data. The entire process is an economic waste that is akin to a tax on every part of the organization, and collectively, it is a massive organizational tax. This organizational tax is really lost employee time and value, sunk cost, and organizational waste, resulting in overall higher operational costs. Legacy EPM systems have stalled organizations` performance planning and measuring and monitoring processes — and ultimately added more costs, complexity, and frustration to the business. The Last Mile of Problems Associated with Legacy EPM Systems Legacy EPM systems have left many unanswered business process gaps. These process gaps have not been resolved, so organizations rely on spreadsheets to offset the technology gap. In many organizations, collaboration is conducted in the form of disparate spreadsheets, which are created by a large number of individual employees and spread across various functions and regions. With an overwhelming amount of data consolidation involved, spreadsheets often exacerbate the problem of too many data points, fields, and definitions to roll up and consolidate. In some cases, inputs from source systems and other spreadsheet models require manipulation of the data since siloed business departments act on their own understanding of the market and incorporate different assumptions into their models. When it comes time to aggregate the information, it`s difficult to connect and reconcile conflicting analyses, plans, and results, resulting in misaligned and inaccurate information. ©2017 IDC #US41964916 4 Please complete the form to gain access to this content Access Now Related Resources Connected supply chain planning Connecting supply chain planning to pro?tability Distribution: A New Planning Solution - FR High Performance Sales Team - DE The Total Economic Impact Building an Integrated Business Planning Capability CFO Whitepaper - 8 Signs Tata Steel connects Sales SC and Finance for the times HBR Intergrated Planning HBR Strategic Planning
Managing the strategy development, planning, budgeting, performance tracking, and forecasting for an organization is extremely challenging. Typically, the strategy is set by the board of directors and C-level executives. The plans, budgets, and performance goals are determined by company executives and sometimes approved by the board of directors. Once determined, the goals are rolled out to employees, with defined plans, budgets, and performance to be monitored across the enterprise. Connected EPM systems are a strategic competitive advantage when coupled with traditional ERP systems because they automate five aspects across the enterprise: strategy, plans, budgets, performance, and forecasts. Normally an annual (and sometimes quarterly) exercise, strategic planning is not for the faint of heart. The process itself is extremely time consuming from a discussion and mapping aspect, in addition to requiring input from individual business departments. Some of the various business departments where information is needed and collected for an effective enterprise performance management are: ? Finance looks at cash flow, revenue, and profit projections as well as the impact of expenses on earnings. ? HR coordinates hiring in accordance with the head count needs of individual departments and develops plans to maximize employee productivity. ? Marketing focuses on planning for product launches, pricing, and promotions and on market share and growth forecasting. ? Sales conducts forecasting and territory and quota planning, which can be broken down further by product and region. Sales compensation, planning, and distribution are also tracked closely and integrated into expense and profitability. ? Supply chain planning encompasses the timing and availability of manufacturing capacity and raw materials, supply and demand planning, and the impact of adding equipment on product production. ? IT looks at the selection and integration of technology solutions toward the deployment, maintenance, and governance of an organization`s business processes. Planning and performance tracking activities are project based. While finance, HR, sales, marketing, supply chain (operations), and IT perform different functions, they are all intertwined and rely upon each other to succeed. In an ideal world, all departments would collaborate to create company forecasts, budgets, and targets to meet the desired performance level. The finance function, in particular, drives the financial management and planning process across the entire business, tying into each area of the business as needed. This process can take months, is extremely labor intensive, and must be verified, audited, and approved. The EPM process encompasses the entire business so that the business can manage revenue, costs over multiple time horizons and, ultimately, profitability. From boardrooms to Wall Street, EPM is critical to the health and survival of a business; without it, companies leave their market, revenue, and profitability to the competition. ©2017 IDC #US41964916 3 EPM Systems Developed to Improve Enterprise Planning and Performance Management On-premises software applications were developed by vendors to solve enterprise performance management problems. However, these legacy applications focus only on a single business function such as enterprise performance management under finance, supply chain planning under operations, and sales performance management under sales. As a result, they act as point solutions, solving planning and performance problems only within the respective area and without integrating into other areas across the enterprise. Although companies have invested heavily in these expensive legacy solutions, many continue to see low user adoption rates, long cycle times, and inaccurate data. In addition, as we mentioned previously, many of these legacy EPM systems automate only the periodic budgeting and planning processes such as annual budgeting or the monthly supply chain demand. These automated business processes are nothing more than spreadsheets, passed among participants, utilized exclusively by specific departments, and specific to a particular geographic area. The unintended outcome of this pervasive problem is the number of hours invested into zero-value work, including manually gathering data, connecting spreadsheets and other disparate documents, interpreting and consolidating the data, error checking and, finally, utilizing the data. The entire process is an economic waste that is akin to a tax on every part of the organization, and collectively, it is a massive organizational tax. This organizational tax is really lost employee time and value, sunk cost, and organizational waste, resulting in overall higher operational costs. Legacy EPM systems have stalled organizations` performance planning and measuring and monitoring processes — and ultimately added more costs, complexity, and frustration to the business. The Last Mile of Problems Associated with Legacy EPM Systems Legacy EPM systems have left many unanswered business process gaps. These process gaps have not been resolved, so organizations rely on spreadsheets to offset the technology gap. In many organizations, collaboration is conducted in the form of disparate spreadsheets, which are created by a large number of individual employees and spread across various functions and regions. With an overwhelming amount of data consolidation involved, spreadsheets often exacerbate the problem of too many data points, fields, and definitions to roll up and consolidate. In some cases, inputs from source systems and other spreadsheet models require manipulation of the data since siloed business departments act on their own understanding of the market and incorporate different assumptions into their models. When it comes time to aggregate the information, it`s difficult to connect and reconcile conflicting analyses, plans, and results, resulting in misaligned and inaccurate information. ©2017 IDC #US41964916 4
