Corporate performance management (CPM) is the highest priority in business intelligence (BI), according to a survey by Gartner, Inc. CPM was rated the top issue in BI by two-thirds of EMEA respondents*, ahead of data warehousing and data quality. Yet, through 2011 at least 50 per cent of companies implementing CPM systems will fail to improve performance management processes across the organisation.
Nigel Rayner, research vice president at Gartner and co-chair of the Summit said: “BI needs to transition from measuring performance to proactively managing performance to achieve business goals and a key enabler of this transition is CPM. CPM includes metrics, methodologies, processes and systems used to manage performance targeted at the corporate level.”
The last two years have seen rapid growth in the market for CPM suites, which consist of a set of analytic applications. Gartner forecasts the market will grow at a 14.4 per cent compound annual growth rate (CAGR) through 2011.
Despite this healthy maturing, a major challenge persists. “Most business users don’t understand the capabilities of CPM applications,” Mr Rayner added. “As most business users are transitioning from legacy, manual and spreadsheet-based systems, they lack the knowledge of what these advanced applications can do and how they should be deployed.”
Through 2011, at least 50 per cent of companies implementing CPM systems will simply automate existing finance-oriented processes and fail to improve performance management processes across the organisation. “This means that many potential benefits of CPM will not be realised. At the same time, it represents a large unaddressed market for CPM implementations making it very attractive to software vendors,” he added.
CPM success in the organisation depends on several factors. “The most important is to ensure that any CPM implementation does not focus purely on the needs of finance, but encourages finance users to support the performance management requirements of other functions and business units,” said Mr Rayner. Additionally, research that Gartner conducted with Cranfield University’s School of Management showed that CPM is most effectively deployed when there is a partnership between IT, finance and business users. It revealed organisations that allowed their finance function to lead a CPM implementation were on average 25 per cent less mature in their use of CPM than organisations that had an equal partnership between finance, IT and key business users in their CPM project.
It also highlighted the key role of senior executives in CPM projects. Although the chief financial officer (CFO) was most commonly cited as the sponsoring executive, two of the organisations surveyed had their chief executive officer (CEO) personally involved in driving the CPM project forward and took the lead in all aspects of their CPM deployment. “It is clear that the personal involvement of the CEO makes a major impact on success with CPM,” said Mr Rayner. “However, our research showed that in many cases CEOs are still disconnected from sophisticated systems like CPM, preferring instead to manage strategy using a combination of manual processes, spreadsheets and gut feel.”
Consequently, success of CPM relies on chief information officers (CIOs):
- Discussing the scope of any proposed CPM project with CFOs and ensuring the focus is not purely on finance users and financial processes.
- Building a three-way partnership between the finance function, IT and business users and ensuring personal involvement of the CEO and senior executives.