| | January 201619CIOReviewBy Gary Cokins, Founder & CEO, Analytics-Based Performance Management LLCEPM ­ Many Good but Few Truly GreatQuite naturally, many organizations over-rate the quality of their Enterprise Performance Management (EPM) practices and systems. In reality they lack in being comprehensive and how integrated they are. For example, when you ask executives how well they measure and report either costs or non-financial performance measures, most proudly boast that they are very good. Again, this is inconsistent and conflicts with surveys where anonymous replies from mid-level managers candidly score them as "needs much improvement."Every organization cannot be above average!Transforming Good EPM Systems into Exceptional EPM SystemsLet's not attempt to be a sociologist or psychologist and explain the incongruities between executives boasting superiority while anonymously answered surveys reveal inferiority. Rather let's simply describe the full vision of an effective EPM system that organizations should aspire to.First, we need to clarify some terminology and related confusion. EPM is not solely a system or a process. It is instead the integration of multiple managerial methods ­ and most of them have been around for decades and some arguably even before there were computers. EPM is also not just a CFO initiative with a bunch of scorecard and dashboard dials. It is much broader. The purpose of EPM's methods are not about just monitoring the dials but rather moving the dials.What makes for exceptionally good EPM is that its multiple managerial methods are not only individually effective but also are seamlessly integrated and imbedded with analytics of all flavors. Examples of analytics are segmentation, clustering, regression, and correlation analysis. Collectively the EPM methods are like meshed gears in a machine with a purpose to improve, not just manage, an organization's performance.EPM is like Musical Instruments in an OrchestraI like to think of the various EPM methods as an analogy of musical instruments in an orchestra. An orchestra's conductor does not raise their baton to the strings, woodwinds, percussion, and brass and say, "Now everyone plays loud." They seek balance and guide the symphony composer's fluctuations in harmony, rhythm and tone. Here are my six main components of the EPM methods -- its musical instrument sections:Strategic planning and execution­This is where a strategy map and its associated balanced scorecard fit in. Together they serve to translate the executive team's strategy into navigation aids necessary for the organization to fulfill its vision and mission. The executives' role is to set the strategic direction to answer the question "Where do we want to go?" Through use of correctly defined key performance indicators (KPIs) with targets, then the employees' priorities, actions, projects, and processes are aligned with the executives' formulated strategy. The EPM methods answer the follow up question, "How will we get there?" The answer includes the projects to be selected or core processes to improve to achieve the strategy.Cost visibility and driver behavior­For commercial companies Many Good but Few Truly GreatGary CokinsCEO INSIGHTS
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