Strategic Intelligence for CFOs, Finance Directors, Controllers and Treasurers in Asia  | 
2014, Apr 25

Enterprise Performance Management in Asia

Enterprise Performance Management in Asia

by Philip Wixon, Third Horizon Consulting Partners , 10 July 2010

The global financial crisis of 2008 seems to have passed into our rear-view mirrors for now, and many companies are settling back into business as usual. However, the crisis has long-lasting impacts, as regulators have become more strict (in areas extending beyond the finance sector), investor tolerance levels have been reduced, and customer expectations have increased.

 

In day-to-day terms, this means the pressure is on for companies to deliver more timely and transparent reporting data, to find more areas of potential value and efficiency across their operations, and to deliver better service quality to retain customers.

 

What then, is the place for considering Enterprise Performance Management (EPM) in the aftermath of the global financial meltdown? What is EPM? How can it be implemented? And is it worth investing in?

 

Broadly, EPM is a framework for managing performance, from the identification of business objectives (and therefore specific goals), to the consolidation of information relevant to these goals, to the interventions of management based on this information.

 

To distinguish from “Business Intelligence” (BI), which has tools to analyse specific areas of performance, EPM brings this intelligence together in a holistic mix of process and technology to enable management teams to identify, monitor and manage areas of risk and areas for improvement. In these days of increased and diverse market pressures, identifying risk and improving operational performance have become less of an “option” and more central to delivering results and shareholder value.

 

In our view, implementing EPM has three key success factors. Firstly, an organisation structure that supports EPM. Secondly, enabling technology. And, thirdly, a commitment to act on the data. In the context of Asia Pacific companies, all three of these factors are a little more complex to achieve.

 

Finance and EPM

In our experience, the company’s finance department needs to lead the way in implementing an EPM framework. Already the home of financial reporting, finance has the basic processes and the discipline for handling data and reporting, which can provide a platform for expanding the scope to broader performance monitoring.

 

In some companies we have worked with, a dedicated performance management group has been established inside the finance function, mixing people with skills in statistical analysis, technology, and operations. Whether a dedicated team or not, someone in the company needs to “own” the EPM framework, and finance is usually the most logical place to house it.

 

There is no question that technology plays a key role in delivering the information required to enable enterprise performance reporting and analysis. The challenge is which solution to choose. Unfortunately, there is no simple answer to this, because there is no one “silver bullet” system that can deliver all.

 

Enterprise Resource Planning (ERP) software is touted by the major players as being “enterprise wide”, but SAP’s purchase of BusinessObjects (a well-known BI vendor) in 2007, hot on the heels of Oracle and its purchase of Hyperion (another major BI vendor) earlier in 2007, suggests that these companies recognised some of the gaps in their own solutions.

 

Does this mean that an ERP solution is the only way to implement EPM? They certainly present a more integrated solution now, even though some sort of “middleware” (such as Tibco or WebSphere) is still required to stitch all the data sources together.

 

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