Organizing the Corporate Performance Management Function in Product Enterprises

An excerpt from the forthcoming book “Organizing and Managing Insanely Great Products” by David Fradin with RN Prasad.

We have already seen the strategic role of IT in the business functions of an enterprise.  As enterprises embrace decentralized operations in different geographical regions, many business support functions move closer to local decision-makers.  This helps business teams close to customers to make decisions quickly and become agile in business activities.  The corporate headquarters will have the role of integrating lines-of-businesses across geographies and support them in the execution of agreed strategy and tactics.  The business value of information for decision-makers at all levels is all about “providing the right information to the right decision-maker at the right time on the right device”.  With large business enterprises, this information delivery is not an easy task unless the enterprise implements robust information delivery architecture leveraging IT.

Today, running a large business enterprise is like navigating an airliner safely to the predetermined destination. Just like the captain relies on critical flight measurements like altitude, speed, cabin pressure, aircraft functions, etc. business leaders depend on measurements that help them navigate the enterprise. You will recognize that all the work is not carried out just by the flight captain; it’s the responsibility of a large team and the systems starting with the ground staff to a series of control towers that guide each aircraft to its destination. Drawing a parallel with the business, business leaders depend on key functions such as human resources, finance, sales, marketing, research, production, procurement, facilities, distribution teams, etc. to reach business goals. Each business function will need its own goals and measurements to ensure that the entire company achieves business success together. Every team within each function needs to achieve its goals, and finally, every individual also needs to contribute his/her best for the business to reach its goals. This in business performance terms is called alignment.

Enterprise/ Corporate Performance Management (EPM/CPM) solution is the answer to this challenge. CPM captures data on enterprise strategy and facilitates transforming strategy into financial and other plans, monitoring these plans and acting on the insights, creating continuous strategic feedback to realign actions with strategy and goals.

Tools and techniques used in CPM include Key Performance Indicators (KPIs), Balanced Scorecards, dashboards, advanced analytics, budgeting, and forecasting capabilities, industry benchmarking, quality frameworks like Six Sigma or Total Quality Management, enterprise risk management, financial consolidation, corporate initiatives management as well as compliance/ executive performance reporting.  Modern digital enterprises consider ‘triple bottom line’ monitoring to ensure that the business takes care of community & planet in which we live through Corporate Social Responsibility initiatives.  The triple bottom line is an accounting framework with three parts: social, environmental and financial.

Organizing the Corporate Performance Management Function in Product Enterprises 1

As shown in the diagram above, the entire system of reporting and scorecards are derived from the business enterprise vision and strategy.  The health of the strategy implementation i.e. the health of strategy execution is tracked using scorecards that provide visibility into people, process, customer and financial perspectives.  The higher-order corporate-level goals are cascaded down to departments, teams, and individuals or in other words the goals of individuals roll-up to team goals and many team goals roll-up to department goals.  It is utmost important for the enterprise to define roles and role-specific KPIs in order to implement robust CPM.  The visualization of the status is typically using dashboards.  The organization of information systems called ‘Systems of Insight’ in modern digital enterprises can be seen from the following perspectives:

  • System to represent business strategy, goals and performance measures of success
  • Systems for routine reporting and business intelligence – System of records
  • Systems for advanced analytics, AI-based information – System of engagement
  • Systems for analyzing sensor/ machine-generated data – System of automation

Here are some details of the above classification:

    • Systems of records – This refers to all the IT applications that generate structured data in the form of numbers and character data. ERP, CRM, and others that have data stored in RDBMS or data warehouse represent this category of data. Data may be stored in multiple vendor platforms and cloud and will need to be integrated for reporting, compliance reporting and multi-dimensional analysis or export into spreadsheets, for ad-hoc analysis. Most of the business intelligence systems including strategy representation, tracking, scorecards leverage this basic data source.

 

    • Systems of engagement – This refers to a large collection of documents, presentations, audio files, video files, social media data, blogs, pictures (essentially big data) and is a very important focus area for decision-makers. Tools for analysis and visualization like Tableau play a very important role in this area.  Enterprises may implement mobile apps to leverage this data source of rich insights to augment the above reporting and BI systems.  Group productivity applications like meeting platforms, email systems, portals, messaging applications, voice assistants generate this type of data.

 

    • Systems of automation – Enterprises may have data streams coming from live cameras, sensors, and websites that are of the value of some segment of business decision-makers. Integrating such data and processing needs different tools.  Data interchange between partners and the business enterprise also falls in this category.

 

The other considerations for organizing information delivery are information security (cybersecurity), initiatives like BYOD (Bring Your Own Device), unique devices support like wearables and data latency requirements.

Thus, organizing the business enterprise to deliver information anytime, anywhere and on any device requires an understanding of information consumer personas, robust IT infrastructure & tools, information architecture & governance process, and competent people to support this strategic asset of the business enterprise.

Management of information delivery

 As we have seen digital enterprises generate a huge volume of data round the clock and the variety today includes multi-media, very large documents, emails, social media conversations as well as machine-generated data.  Information management is the process of collecting, storing, processing, distributing, securing digital data, backing-up and maintaining information in various forms until it is required by the business enterprise.  This lifecycle leverages many technologies including digital networks to receive or transmit data, database systems to store data, host of programming languages & business logic for processing and presenting insights through visualizations or voice assistants.

As seen in the diagram below the business enterprise decision-makers expect the data to be processed not just for reporting but predicting what will happen type of insights.  This is the realm of analytics & AI.  Making information available 24x7x365 on all approved user devices based on their role and preventing any information misuse is the secret of the successful information management team in business enterprises.

Organizing the Corporate Performance Management Function in Product Enterprises 2

Some of the critical information management activities that happen all the time in digital enterprises include:

 

Read the full article on Spice Catalyst >>