The Holy Grail of Enterprise Performance Management

Lee Mashburn

Chief Marketing Officer, Cogniti

April 12, 2011

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

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

The Importance of Building Accurate Plans has Increased

Source: Accenture – Authors Bergstrom, Batchelor, and Marcotte

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

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”

Flavor

Nuances

Adopters

Relative Public Mindshare per Google Search

BPM, CPM, EPM: Simplifying a Complex Market Place

Enterprise Performance Management

Flavor

Nuances

• 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.

Corporate Performance Management

Business Performance Management

Adopters

• BPM Partners

• Capgemeni

• Gartner• Infor

• Prophix• Tagetik• PwC• E&Y

• Aberdeen• Oracle• SAP• IBM

• Cogniti• Accenture

• CSC

Relative Public Mindshare per Google Search

Lots of Google search results

23% of business performance management

Attracts larger organizations

BPM, CPM, EPM: Simplifying a Complex Market Place

EPM, CPM, BPM . . .

At the end of the day, it’s all really the same!

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

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.

FY 2008A

FY2009A

FY 2010F

FY 2011F

FY 2012F

$0 $1,000 $2,000 $3,000 $4,000

EPM Market Size

Subscription Revenue

Maintenance Revenue

License Revenue

Annual Revenue ($ millions)

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%

Planning, Budgeting, and Forecasting

Financial Reporting

Strategy and Measurement

Cost and Profitability Analysis

$0 $500 $1,000 $1,500

EPM Market Size by Application

FY 2012F

FY 2008A

Annual Revenue ($ millions)

Source: Forrester Research, Inc.

Top Reasons for EPM Projects

Source: BPM Partners 2010 Pulse Survey

Improve Management Reporting

Enhance Planning

Improve Operational Analysis

Fix Painful Processes

Improve Company Performance

0 50 100 150 200 250 300 350 400

Top Reasons for EPM Projects

Number of Respondents

The Need for the Holy Grail of EPM

Operational PlanningPlan Type

Traits

• 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

Financial PlanningStrategic Planning

Standard Tools

• 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

Results

• High cost, low return

• Difficult to assign value

• Overpromise, under-deliver

• Hard to communicate

• High cost, low return

• Negotiations with operations

• Strategy gets lost

• Just a budgeting and forecasting exercise

• Unclear strategic direction

• Little to no collaboration

• Financial plans cannot be executed

• Business processes not improved

Conventional Planning – Types, Traits, Tools, Results

To Compound the Problem

Gartner 2011 BI Magic Quadrant

“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

• 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.

The Holy Grail of EPM

Suppliers

Departments

Divisions

Corporate

Geographical Locations

EPM Must Help You Manage the Ripples

Aligned EPM (Marketing Example) . . . The Metrics Must Roll-Up

CEO, CFO, COO

Head of Marketing

Mid-Management

Front-Line

EPS, ROIC, shareholder value

ROMI, return-on-sales, retention

Sales pipeline, win/loss ratio, h/c costs

Leads, emails opened, event attendees

Event Management CRM Time Management Email Management BI

Strategic Value to Company

Tactical Value to Company

Data Sources

Role Performance Metrics

Achieving the Holy Grail of EPM – An Integrated Continuum

Processes

2. ALIGN &

MERGE

1. PLAN & ASSIGN VALUE

Strategic OperationsFinancialOperations

Strategic

Financial

Extract Key Measurement

s

Alert Off-Plan Performance

Project Forward

Consequences

Advise Corrective

Action

3. MEASURE4. EXECUTE & ADJUST

Conclusions

About Cogniti

“Cogniti gives you all the pieces in one place to pull together strategic,

operational, and financial plans and then follow through with the execution

and management of those plans.”

Craig Schiff

President & CEO, BPM Partners