With the market size of enterprise performance management expected to grow from $6.44 billion in 2017 to $11.72 billion by 2023, you know that to ignore it is to ignore something monumental.
Enterprise performance management lets you plan, structure, track, and improve your performance across the board. This isn’t something you want to ignore.
You might want to know what’s going well and where the biggest improvements can be made. Otherwise, you may want to create achievable goals that don’t leave you overreaching or improve your tracking metrics with apps like Process Street. Either way, enterprise performance management is essential.
That’s why, in this Process Street post, I’ll be breaking down precisely what it is, why it’s useful, and how to use it:
- What is enterprise performance management?
- What makes a good enterprise performance management system?
- Enterprise performance management benefits
- How to carry out enterprise performance management
- Process Street: The perfect addition to your enterprise performance management software
Let’s dive right in!
What is enterprise performance management?
Enterprise performance management (EPM) is a practice which lets you measure and control the performance of your enterprise through disciplines such as:
- Measuring KPIs (Key Performance Indicators)
By using EPM you can see and manage how your enterprise is performing in relation to your goals and strategy. This links managerial knowledge with enterprise resource planning (ERP) – a more day-to-day way of managing the resources your enterprise needs, uses, and produces.
I could reel off any number of related fields and acronyms to show the importance of EPM but, instead, I’ll put it in terms that we can understand.
Let’s say that you want to improve your enterprise.
You have a rough idea of what you’re doing wrong and what you need to start doing, but you’re not sure of the specifics, nor of what you can realistically achieve.
This is where enterprise performance management comes in.
What makes a good enterprise performance management system?
Enterprise performance management isn’t too difficult to understand. It’s a system and practice that lets you see what you could be doing better and improve it in a measurable, tangible way.
Creating an enterprise performance management system, however, is much more complicated. This is mostly due to EPM being a combination of several different practices and the efforts of pretty much every department you have.
An effective EPM system needs to cover:
- Strategic modeling (planning)
- Consolidation and closing
- Tracking and reporting
- Assessing and analyzing performance
As such, it needs to have the combined efforts of at least the following departments (especially their management):
Anyone who’s tried to get more than one team working together effectively and efficiently knows how much of a headache it can be. Now we’re talking about a combined effort from practically your entire enterprise.
Starting to see why it’s more complicated in practice?
Not to mention that the EPM cycle can only give an accurate view of your enterprise for the snapshot of time during which your measurements were taken. If, say, marketing was to deploy a new standard operating procedure or tweak a process with their continuous improvement plan, the whole EPM report will be inaccurate.
However, that doesn’t mean it’s not worth the hassle.
Enterprise performance management benefits
Put simply, EPM lets you plan, measure, and improve the performance of your business. Not only does it force your teams to work together (at least on a management level), it also gives you an accurate picture of what’s happening on the ground level.
If your plans and measurements are good enough you should even be able to predict problems and prevent them from taking place.
In other words, it’s unlikely that you’ll reach the stage where you’re surprised by bad performance or at the point where radical changes are needed to save your enterprise.
But you can expect other benefits, like:
- All of your important data is consolidated into one source;
- The requirements of EPM encourage your teams to communicate closely;
- More accurate and realistic plans and strategies can be made;
- Teams should have fewer unforeseen problems;
- Performance should be able to consistently match predictions;
- Increased transparency between managers gives your teams more flexibility;
- Budgeting and forecasting is easier, faster, and cheaper.
Among all these benefits, it just makes sense to have an EPM program in place. Why? The last thing that you should be doing when managing an enterprise is to fly by the seat of your pants.
You need a solid plan in place so that your team can be sure that they’re always working on the most important tasks available. Getting complacent about your task list and assuming things will remain the same is a recipe for stagnation.
That said, there’s little point in chasing better practices and processes if you’re not certain of your current performance. You need to know exactly what’s being done to improve your results. Acting on incorrect or idealized information will only make things harder to accurately plan, predict, and respond to.
That’s one of the biggest advantages of having a solid EPM scheme.
The system itself doesn’t necessarily have to cause any changes. If you find that everything is performing as intended and to a high level, you won’t need to alter anything. But that doesn’t mean you don’t need a solid EPM scheme.
Without putting that EPM system in place, you can’t verify your performance levels and why and how those results are being reached. So you won’t be able to say for sure if you are indeed performing as intended.
It forces you to get concrete evidence of what’s happening across your business and present it in a way that everyone can see why you’ve drawn the conclusions you have. This makes the EPM cycle especially useful when trying to sum up the performance of your enterprise to key shareholders or even your CEO.
Plus, since you’ve pulled together all of the up-to-date information on how your teams carry out their tasks, you have much greater flexibility to adapt your methods at short notice.
For example, let’s say that a new business process management tool (such as Process Street) comes out and revolutionizes the field as you know it. Implementing it would supercharge your teams’ productivity but would usually cause massive problems and reduced performance during the adoption period.
Or, rather, it would if you didn’t have your practices laid out in your EPM system.
Looking at the data you’ve gathered in your latest EPM cycle you can see precisely how tasks are currently carried out and where the new tool could stand to improve operations the most. Deploying it in this limited area to increase performance can then serve as a litmus test for the rest of the business, with lessons being learned, recorded, and incorporated into deployment.
How to carry out enterprise performance management
The enterprise performance management cycle is made up of five steps:
- Strategic modeling (planning)
- Consolidation and closing
- Tracking and reporting
- Assessing and analyzing performance
Let’s look at each step more closely.
EPM Step 1: Strategic modeling (planning)
First, you need to have a strategy. This means that you need to know what your goals are and how (at least roughly) you’re going to reach them.
“The essence of business is the achievement of some purpose for some stakeholder […] In all cases, businesses are responsible for the allocation and direction of scarce resources used to achieve their purpose. That allocation and direction of scarce resources means one thing: Choices must be made. Choice is the essence of Building Strategy.”– Lean Methods, Business Strategy Model
As Lean Methods shows above, the goals you have will largely come down to what you’re expected to deliver for your shareholders. While this is usually higher profits, it will depend on what kind of enterprise you’re running.
If you need some help with setting good goals, try using the free workflow below to set SMART goals. This Process Street workflow will run you through everything you need to create Specific, Measurable, Attainable, Relevant, and Time-bound (S.M.A.R.T.) goals that will let your enterprise thrive.
In any case, take those goals and meet with your team leaders to see how you could best reach them.
This could mean planning for hiring a new round of employees to extend a team’s capabilities, training existing employees to expand their abilities, purchasing better equipment, or simply looking for ways to improve performance through cost-cutting.
Remember when I said that you don’t always have to start with strategic modeling to have an effective enterprise performance management system? This is precisely why you need to know where your enterprise stands in order to create any kind of realistic goals or achievable strategy.
If you don’t already have verifiable reports for the performance of your various teams (and where inefficiencies, weaknesses, and opportunities lie), you might want to start with the “tracking and reporting” section.
Finally, the goals that you set should relate to the scope of your EPM cycle. That is, if you’re intending to run it monthly, then your goals should be simple enough to achieve in a single month while working towards a more long-term strategy.
If you’re only intending on running it every quarter or year, it’s worth creating some overall goals for that time. You can then split them into smaller, monthly goals.
EPM Step 2: Budgeting
I’ll be the first to admit that I’m bad at budgeting. Heck, I had to move back to England after spending two months living in Italy for that very reason.
Pro-tip: Don’t move house (especially to a different country) if you haven’t accounted for how expensive living costs will be! Turns out that in Florence groceries were much more expensive than expected.
Personal stories aside, the next step to managing your enterprise’s performance is to budget the plan that you’ve created.
Like many individual steps in EPM, there isn’t too much to say here. There aren’t any fancy tactics – it’s all about working with your finance team to figure out an accurate budget for your ongoing operations and any changes that you’re planning to make.
However, if this is the first time that you’re carrying out enterprise performance management, you may struggle to create an accurate budget. Without having tracked, analyzed, and reported how things are currently being carried out, you won’t have an accurate idea of how much should be assigned to your departments.
This is another reason to first analyze your enterprise and then go on to start with your planning and budgeting.
EPM Step 3: Consolidation and closing
So, your plan’s been put into action (with the help of your team leads) and the ball is in motion. Now it’s time to start collecting data to later analyze your performance.
This is the consolidation and closing part of EPM. As CCH Tagetik puts it:
“Consolidation and close is the process of collecting and combining data from different activities, departments, or business activities so that they may appear in financial statements, like the income statement, balance sheet & cash flow statement.”– CCH Tagetik, Consolidation and Closing
Over the month in which your plans have been deployed you need to be gathering the financial data from across your enterprise to make sure that you’re ready to pull them together when it comes to your monthly report.
Much like with budgeting, there are no special tricks here. Just keep an eye on your activities and track expenses, income, assets, and so on. As long as your financial team keeps working with the rest of your business then things should run as smooth as butter.
The only other thing worth noting here is that if you’re running your EPM cycle for the first time it can help to start here rather than with your strategy. While that may seem counter-intuitive, this (along with the following steps) will give you a realistic idea of how your enterprise is performing.
In turn, this will let you create a strategy that is not only more achievable, but also addresses the core weaknesses and failings you’re currently struggling with.
EPM Step 4: Tracking and reporting
Next comes tracking and reporting. This is precisely what you’d expect.
Over the month, you need to be tracking your KPIs to get a sense of how your teams are performing. This will involve working with the heads of your various teams (marketing, sales, IT, etc), as they will be the most knowledgeable when it comes to their deliverables.
If you’re only planning to run your full EPM cycle every quarter (or even once per year) then you need to make sure that your teams are tracking their progress towards their monthly goals. This will allow you to relate their progress towards your long-term goals when later analyzing their performance.
EPM Step 5: Assessing and analyzing performance
It’s time for the big moment! You’ve gathered financial data and the progress of your teams towards their goals – now you need to combine the two and assess their overall performance for the time period.
The key here is making sure that you assess the performance of your teams in relation to your original budget, monthly (and overall) goals, and the final financial figures for the period you’re looking at.
Make sure that you give credit to teams who’ve performed well and assess why you’ve ended up with the results you’ve got.
While it may take some time and management to gather and assess your data, the real challenge comes with thinking of ways in which you can improve performance. These ideas should then play a role in your next cycle of enterprise performance management in the strategic modeling phase.
For example, let’s say that your marketing team didn’t manage to hit their goals but also didn’t end up spending everything in their budget. To make sure that they reach their potential and hit their targets in the next cycle, you could create a short-term goal to look into tools, resources, training or even new hires to use the budget on and improve performance.
Process Street: The perfect addition to your enterprise performance management software
Enterprise performance management software takes many forms. Financial software helps you keep things in-budget. Project management apps let your team organize their time effectively. Support portals let your IT team manage customer and internal issues alike.
Yet, among all of this, there’s something vital missing.
All of the invoice accuracy and time management won’t help you if you don’t know how your teams are carrying out their tasks. How are you combating human error? What’s stopping them from taking shortcuts? How would you know if they were to ignore your SOPs?
That’s where process management tools, like Process Street, come in. Process Street is a business process management software designed for you to create superpowered workflows that enforce accountability.
By documenting your standard operating procedures as process templates inside Process Street, you create a centralized resource that all your employees can be granted access to. Employees can then run workflows from these templates to track individual instances of your processes and display their progress.
In other words, everyone will have precise instructions to follow for every task and show their progress by ticking off tasks as they go. Having everyone on the same page is what Process Street can do for you. Early on in this post, I said that EPM is a combination of several different practices and the efforts of pretty much every department you have.
But Process Street is even more powerful. You can easily eliminate many of those single-purpose EPM tools when using Process Street’s integration functionality. That’s right! A world of automation and integration awaits you.
Process Street allows you to integrate with the Slack App and Zapier (among others). Don’t forget all your standard business documentation can be housed alongside your SOP library with additions like Pages.
This transparency when working with a workflow management tool, like Process Street, is exactly what you need to offer good enterprise performance management.
How do you manage the performance of your enterprise? Let us know in the comments below!