Optimizing Performance in the New Business Network
Organizations of every type are under pressure, as never before, to optimize performance. Stakeholders want to see consistent execution against corporate strategy, with organizations fully taking into account the risks they face. Corporations are fundamentally changing their operational models from centralized, vertical organizations to distributed, multi-partner business networks of the 21st century. The trend is clear: The business network is the future.
Despite their enthusiasm for these changes, organizations often lack the tools to foster the cultural and operational changes needed to optimize performance in the new business network. Their processes are isolated; their decisions are reactionary instead of proactive; and they don’t have a clear understanding of how to close the gap between strategy and execution.
The Path to Success in the 21st Century
Performance management — the task of getting more and better information and using it to improve results and manage risk — can optimize every business unit in your organization, whether it’s a community health clinic or a multinational corporation. At SAP, we show business professionals how to “close the loop” on strategy, initiatives, execution, measurement, and improvement. Think of it as the scientific method brought to pragmatic life. We illuminate performance management as the path to success in the 21st century.
While it has come a long way from its origins in finance, performance management still respects its roots: Finance underlies everything a company does. Now, an organization can use performance management as a tool to better manage itself and its partners all over the world. This device is a granular model of performance that can support early problem detection and rapid responses during fast-changing conditions — an essential tool at a time when everything seems to be changing overnight.
No matter what your business is, this is an information economy. A lack of up-to-date information could quickly put your company out of business; several companies have recently folded after highly public product recalls that essentially resulted from information asymmetry across their business networks. A performance management system helps you avoid such pitfalls and build strategic, risk-aware thinking into day-to-day operations.
What Can Performance Management Do for You?
Performance management is not a static, separate quarterly review process, but rather a culture of continuous improvement, supported by processes and systems that are fundamentally aligned with overall strategy. Companies need to apply performance management to all areas of their business, such as HR, IT, finance, sales, and the supply chain. For example, you can use performance management to:
- Attract employees to, and keep them in, a connected culture where success is visible and where social networking provides new ways to connect with the knowledge and skills hidden in (as well as beyond) corners of the organization — and do it all within the information cloud of the Web
- Analyze IT operations to determine their business value and find cost savings
- Extend performance management metrics into the wider business ecosystem, from customers to partners to the supply chain
Let’s look at performance management from a very practical perspective by examining the processes and mechanisms necessary to achieve the differentiation it promises to deliver. For example, how do you extract data from all of the different systems of record in the enterprise, roll everything up into a consolidated view, and then analyze what’s going on? SAP BusinessObjects enterprise performance management (EPM) solutions provide the system needed to automate performance management, thus improving both individual and corporate practice in the most important areas of your company. These solutions combine the disparate disciplines of performance management, business intelligence (BI), and governance, risk, and compliance (GRC) across your business network.
A lack of up-to-date information could quickly put your company out of business.
Understanding the Importance of Enterprise Visibility
The SAP BusinessObjects portfolio provides the BI tools to link individual key performance indicators and strategy, as well as to demonstrate to employees that management recognizes their individual work and contributions toward the company’s strategy. For example, imagine the benefit of providing employees with regular and updated scorecards that show how their work affects their incentive package. BI tools also lessen the need for employees to reconcile data from multiple spreadsheets and then integrate it into the system. Instead, these employees can easily access a cleansed pool of data held in a multi-dimensional repository where business users, not just the IT department, can retrieve the information they need — when they need it.
Knowing Your Risk/Reward Quotient
The SAP BusinessObjects portfolio also includes GRC solutions that are woven into the fabric of the performance management life cycle so that you can truly optimize your business performance. These solutions systematically take account of risks, helping you to choose the best course of action and identify barriers to achieving your goals. For example, compare performance management integrated with GRC to your car’s GPS system. It alerts you to risks in the road ahead, such as accidents blocking the roadways, traffic congestion, or construction closures. You then use this information to replot your route so you can get to your intended destination with minimal delay.
Performance Management in the New Business Network
SAP BusinessObjects solutions provide customers with market-leading software for performance management. The suite of EPM solutions goes beyond budgeting, forecasting, and consolidation to create synergy between business objectives and business risks that other vendors have yet to explore. Our product roadmap is designed to protect customer investments and deliver solutions that are best-in-class for their domains. Our solutions provide the comprehensive, forward-looking support you need for strategic alignment, predictable performance, and confident decision-making. By providing support for financial and operational processes, SAP BusinessObjects EPM solutions can help ensure that you have reliable information, manage risk proactively, and improve visibility across your enterprise.
This article contains excerpts reproduced from Driven to Perform: Risk-Aware Performance Management from Strategy Through Execution, authored by Stephanie Buscemi, Nenshad Bardoliwalla, and Denise Broady, and published by Evolved Technologist Press.
April 01, 2010