The Holy Grail of Enterprise Performance Management

1. The Holy Grail of Enterprise Performance Management Lee Mashburn Marketing & Product Management Executive Advising Consultant to Cogniti lee.mashburn@aol.com September ‘12

2. Agenda Overview • Strategy Management: We Must Close the Gap Between Costs and Returns • Enterprise Performance Management; Where Strategy Fits • The Need for a” Holy Grail” of Enterprise Performance Management • Defining and Realizing the “Holy Grail” of Enterprise Performance Management • About Cogniti

3. Key Strategies are Not Being Executed . . . And at great cost • 90% of U.S. organizations fail to execute their strategies successfully • Estimated that U.S. managers spend more than $10 billion annually on strategic analysis and strategy formulation – which means . . . • $9 billion wasted annually on strategy that is not successfully executed • Another statistic: Fortune 1,000 companies spend an average of $7 million per organization per year

4. The Importance of Building Accurate Plans has Increased Source: Accenture – Authors Bergstrom, Batchelor, and Marcotte

5. The Need for a New Planning Approach Traditional Planning Flexible, Dynamic Planning • Driven off historical performance and internal operations. • Schedule-driven annual exercise. • Weak link to operations. • Labor-intensive data collection. • Emphasis on short-term profitability. • Grounded in market expectations and external trends. • Probabilistic scenarios including risk factors. • Real-time adjustments. • Planning tightly integrated to front line. • Broader planning scope to cover balance sheet and cash flow. Source: Planning for Success in Dynamic Environments, Accenture, 2009

6. Accenture Conclusions • Embed Flexible and Dynamic Planning Processes • Focus on what matters most – tie it to financials • Incorporate a range of scenarios • Involve your operating staff in planning • Renew the Focus on Strategic Planning • Helps to prioritize bets “Forecasts are 33% more accurate when Operations is an integral part of the process”

7. BPM, CPM, EPM: Simplifying a Complex Market Place Business Performance Management Corporate Performance Management Enterprise Performance Management Flavor • Often confused with business process management. • Alienates the public sector. • Least leveraged by consultants and analysts. • Most widely embraced by the “office of finance.” • Alienates operations. • Pushed heavily by Gartner, a leading industry analyst. • Widely embraced by largest management consultants and software “mega-vendors.” • Alienates SMB. • Infers large, multi-national. Nuances • BPM Partners • Capgemeni • Gartner • Infor • Prophix • Tagetik • PwC • E&Y • Aberdeen • Oracle • SAP • IBM • Cogniti • Accenture • CSC Adopters Lots of Google search results Relative Public Mindshare per Google Search 23% of business performance management Attracts larger organizations

8. EPM, CPM, BPM . . . At the end of the day, it’s all really the same!

9. The Evolution of EPM – Where are you on the maturity curve? Gartner estimates that 40% of large organizations and up to 75% of mid-size organizations still heavily on spreadsheets

10. EPM Market . . . Large and Growing Fast Compound Annual Growth Rate (CAGR): • Subscription: 15.7% • Maintenance: 14.2% • License: 9.5% • TOTAL: 12.7% Source: Forrester Research, Inc.

11. EPM Market Size by Application • Strategy Management: • Planning • Scorecards • Strategy Maps • Objectives and Goal Setters • Performance Measurement • Fastest growing EPM application: • Projected CAGR of 18% Source: Forrester Research, Inc.

12. Top Reasons for EPM Projects Source: BPM Partners 2010 Pulse Survey

13. The Need for the Holy Grail of EPM

14. Conventional Planning – Types, Traits, Tools, Results Strategic Planning Financial Planning Operational Planning Plan Type • Typically an annual C-Suite exercise • Minimizes operational input • No common toolset to tie the pieces together • Budget preparation exercise • Prior year results plus 10% • Manual grind for cash impact • Jam down operations’ throat • Wait for the bad news • Bet on last year plus 10% • Prepare to negotiate • Prepare to assign blame Traits • Spreadsheets • PowerPoint slides • Strategy maps • SWOT analysis • Analyst/market intel • Spreadsheets • Financial management tools • BI tools • Last year’s actuals • Email, intranet • Spreadsheets • Last year’s actuals • E-mails • Conference calls • Sales and Ops Planning Standard Tools • High cost, low return • Difficult to assign value • Overpromise, under-deliver • Hard to communicate • Unclear strategic direction • Little to no collaboration • Financial plans cannot be executed • Business processes not improved • High cost, low return • Negotiations with operations • Strategy gets lost • Just a budgeting and forecasting exercise Results

15. To Compound the Problem Gartner 2011 BI Magic Quadrant • BI is being increasingly promoted as a performance management tool. • Big mega-vendors are failing to properly integrate BI acquisitions with the many performance management modules they offer. • Improving performance is not being reached by measuring, analyzing, and reporting everything. • Historic performance results are not helping to achieve business objectives. • “Ongoing dissatisfation among IBM, Oracle, & SAP Business Intelligence (BI) customers suggests that chronic dissatisfaction may be the new normal.” • High cost of ownership • Poor Performance • Implementation difficulty • Not achieving intended business objectives

16. The Holy Grail of EPM

17. EPM Must Help You Manage the Ripples Corporate Geographical Locations Divisions Departments Suppliers

18. Aligned EPM (Marketing Example) . . . The Metrics Must Roll-Up Role Performance Metrics Strategic Value to Company CEO, CFO, COO EPS, ROIC, shareholder value Head of Marketing ROMI, return-on-sales, retention Mid-Management Sales pipeline, win/loss ratio, h/c costs Front-Line Leads, emails opened, event attendees Tactical Value to Company Event Management CRM Time Management Email Management BI Data Sources

19. Achieving the Holy Grail of EPM – An Integrated Continuum 2. ALIGN & MERGE 1. PLAN & ASSIGN VALUE Strategic Operations Operations Financial Financial Strategic Processes 4. EXECUTE & ADJUST 3. MEASURE Project Forward Consequences Alert Off-Plan Performance Advise Corrective Action Extract Key Measurements

20. Conclusions

21. Thank You Please visit my website at: http://www.leemashburn-com.webs,com/