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CORPORATE PERFORMANCE MANAGEMENT: An Innovative Strategic Solution for Global Competitiveness

CORPORATE PERFORMANCE MANAGEMENT: An Innovative Strategic Solution for Global Competitiveness

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Published by Babu George

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Published by: Babu George on Sep 16, 2012
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 An Innovative Strategic Solution for Global Competitiveness
K.G. Sankaranarayanan
Babu P GeorgeAbstract:
The present paper attempts to
weave together the piecemeal writings about asignificant innovation in the management of corporate performance, namely, CPM or Corporate Performance Management, which is an umbrella term that describes themethodologies, processes, systems, and matrices used to manage the performance of anenterprise. A typical CPM suit brings together the capabilities existed with its predecessor technologies to produce a superior outcome that is far more than the sum of what the previous technologies could do independently. The paper takes the readers through thehistorical development of CPM, its costs and benefits, and the nuances involved in itsimplementation. A few real life examples on CPM implementation are also provided at theend of the paper.
Corporate Performance Management and its distinguishing features, Historicalevolution of CPM, Dashboards, Key Performance Indicators, CPM implementation, andCase-studies.K.G. Sankaranarayanan, Lecturer, Department of Commerce, NZ College, Goa.Babu P. George, Lecturer, School of Management, Pondicherry University, Pondicherry,India, 605014. (E-mail: myselfgeorge@gmail.com)
 Address all correspondences to Babu P George at the above address.
Introduction: Making Sense of CPM
An ever-increasing uncertainty and chaos in the business environment makeenterprises to look towards investments that will keep them competitive by trimming costsand maximizing the benefits of available resources. Corporate Performance Management(CPM), alternatively known as Business Performance Management (BPM) or EnterprisePerformance Management (EPM), is an umbrella term that describes the methodologies, processes, systems, and matrices used to monitor and manage the business performance of an enterprise, according to Gartner, the research and advisory firm that initially coined theterm in 2001 (
Geishecker, 2002; Genovese and Hayward, 2003). It is an approach thataims to ensure efficiency and effectiveness in strategy execution by bringing in organizedand integrated improvements in the management processes at all levels (Webber, 2003). Ithelps businesses discover efficient use of their business units and financial, human, andmaterial resources. It provides the much-required transparency into the systems and processes of the organization and helps businesses to demonstrate accountability andcompliance. Note that predictable and controllable corporate performance as well as thedemonstration of its ethical roots is of utmost importance given the increased regulatoryand investor pressures.CPM is an integrated package whose usage spans across business planning,financial analysis, and the needs of functional areas like marketing, personnel, andoperations (Williams and Williams, 2004). Thus, for enterprises to make the best use of it,they must take a holistic view, making CPM a part of every segment of their businesses. Atypical CPM suite contains software to help plan initiatives, track progress, and analyze theresults. The software consolidates data from various sources, analyzes the data, andsignificantly aids in managerial decision-making and plan execution (Moncla and Arents-Gregory, 2003). By bow, CPM solutions and expertise have become greatly intricate andhave been fine-tuned to the specific nuances of different industries.One easy way to understand more about CPM is to describe what is not. CPM isn’tsimply business intelligence (BI). It is not a tool implemented in a single department thatanalyses data. Nor is it deployed reactively based on outside events. More over, it does notmerely focus on history. Instead, CPM is the real-world insight delivered across a suite of applications with embedded business processes that essentially sits on top of the reportingfoundation that BI creates. It is an enterprise-wide tool that is used to offer reports andanalysis and also to integrate that data with planning, budgeting, forecasting, andconsolidating. And, rather than a tool used just to analyze history, CPM is most valuablefor its ability to help businesses look to the future and plan appropriate actions. A CPMsolution, if properly deployed and used, can help users regain control over their businesses,increase their organizational credibility and remove barriers throughout the enterprise.Being more sophisticated than the currently employed scorecards and executive dashboard products, CPM enables managers to get an upper hand on their business understanding, touse this understanding in making real collaboration across the enterprise a reality and toconfidently respond to the changes and trends that are taking place in the environment(Moncla and Arents-Gregory, 2003).With all the data at its reach collected and analyzed, enterprises achieve a wholenew method for risk mitigation or more accurately, risk avoidance. CPM offers actual business performance assessment so that users can better understand where and when their  business is at risk as well as when to avoid potentially dicey situations. For example, theintelligence provided by a CPM suit can help managers to understand the probability of impact upon production should a supplier shuts down, and allow them to factor thatscenario and contingency operations into forecasting plans. No wonder, CPM is touted asthe next generation of Business Intelligence (Grigoria,
et al.,
2004).Global competition and the economic uncertainty are all working to squeezemargins for almost any business. As a result organizations are increasingly looking to make2
investments in those areas that will help them trim process costs in the future. The benefitsoffered by CPM are crucial for many types of businesses in today’s increasinglycompetitive economy. A growing number of organizations are realizing that CPM is justthe right tool to help them accomplish the required level of process cost competitiveness.
The CPM Evolution
The evolution of CPM can be traced somewhat parallel to that of computer andcommunication technologies (Baltaxe and Van Decker, 2003).In the 1970s, Decision Support Systems provided a way for organizations to modeltheir futures. Using mainframe-based multidimensional technologies, financedepartments and operations research groups could analyze and plan by distributionchannel, customer, product line, and more, giving them the capability to spot andexploit gaps in the market.In the 1980s, Executive Information Systems (EIS) provided CEOs and their executiveteams with technology that could be used to investigate organizational strengthsand weaknesses, without having to get assistance from programmers.In the 1990s, the pace of businesses accelerated dramatically. Business Intelligence(BI) became the key to speeding up the processes of planning, reporting, andanalysis. Alongside, Enterprise Resource Planning (ERP) systems became a toolevery company just had to have.Almost at the same time, the increasing availability of PCs with online connectivityresulted in the proliferation of end-user systems that could analyze complexdatabases distributed across functional, industry, and community boundaries.The latter half of the 1990’s was an ‘awareness era’. More than the technologicalinnovations that were occurring, which were definitely significant, this era is notedfor an increasing awareness that technology by itself wasn’t the answer. Althoughtechnologies have resulted in the availability of more information, that too faster,none of these technologies had been particularly helpful to senior managers whostill struggled to find ways to enable better strategic execution. It is certainly notenough to have the technological infrastructure to run a business. The rightcombination of technological assets is more important in delivering results. What isrequired is something that is hierarchically superior that can realign the disparatetechnological solutions available to solve functional problems under a commonsuper-system the outcome of which will be an all-encompassing solution. Such asolution achieves more than what is possible with the linear sum total of thosediscreet technologies that are the building blocks of the super-system.This line of thought led to a renewed focus on how to better implement strategy andmany books and articles were published by the end of 1990’s on new managementmethodologies (Neely, Adams, and Kennerley, 2002); the Balance Scorecard (BSC) being perhaps the best known (Kaplan and Norton, 1996). The BSC emphasizedthat organizations must plan and monitor all aspects of their business and not justfinancial outcomes. This included customer retention, internal process efficiency,internal learning, and growth. Specialized solutions like Customer RelationshipManagement (CRM) systems also geared in to the business landscape (Shaw,1999).
Role of CPM in Bridging the Strategic Gap
While the aforesaid methodologies and their supporting technologies were good inthemselves, they were not able to provide a comprehensive answer. It is only when the positive sides of these different methodologies are combined with management processes(e.g., budgeting, forecasting, management reporting) to plan and measure the right things,supported by technology, can organizations really start to influence the implementation of strategy, which is where CPM pitches in.3

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