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It is a no brainer that many top companies still struggle to get the right, accurate and timely information  they need to make decisions.  

Few reasons why this is still a major problem:

Content is trapped in organization silos – Let us take an example of a large corporation that deals independently with same customer for different products/services. Without a clear enterprise performance management framework, and as their accounting systems are completely separate, there is no business insight about the same customer to cross sell or have a consolidated view of benefits engaging with a single customer.

Lost in transit – Like we have insurance for loss in transit for products, wish there was insurance for the information that gets lost in transit moving from one system to another. This is another major issue if the performance management system is finance/accounting system driven. Lets take an example of analyzing warranty claims for defective engines to be analyzed by an automobile company. Based on the way the reporting systems are setup, the final reporting this automobile company got was more of financial numbers on how many engines have come up for warranty. The data captured by the quality systems that allows analysis of the root cause of defects is lost as it moves into the financial system, and since the reporting is based on the financial system, information required to make decisions is not available to the managers.

Bypass by data collection systems – Often the data is collected for information processing, it is bypassed when it needs to be used for decision making. Classic case here is spreadsheets, where data is collected extensively but due to lack of ability to process the data from spreadsheets into a common bucket from which the reporting can happen, it falls into the bypass category. Another issue with bypass is due to the mandatory/non mandatory fields that is required by financial systems. The architecture of the reporting is framed based on financial system that needs mandatory datafields that are important from a compliance/accounting perspective, but not mandatory from a business insight /decision making perspective. This allows bypass of critical data input that are most important for decision making. Many a times the default field is taken as input field and is completely unreliable.

Unfriendly user interface – In this age of internet, videos, flashy visuals, information presented in a format that is grandma style is often not going to excite. The prime reason for such interfaces may probably be the accounting system interfaces which were prevalent. Microsoft Excel has been a pervasive interface that appealed to many and some of the great visualization that comes from the business intelligence tools are also very appealing. It is very critical to have formatted and appealing user interface for better business insights

It is very important that Extending Performance Management Organization wide initiative is adapted to get the EPM initiative successful, and this should not be just a finance driven though finance is a key stakeholder and user of this.

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4 Comments

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  1. Dirk Herzog
    You’re perfectly right here. But many companies enter financial and logistics data into two different systems which makes integration a nightmare.

    Having the companies adhere to your suggestions would make many BI projects much easier.

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    1. Muthu Ranganathan Post author
      Its very important to have an integrated view. This is the direction SAP EPM solutions are heading towards, while also addressing the needs of supply chain, spend etc.
      regards
      Muthu
      (0) 
  2. Umesh Biyani
    As the RSS FEED message came, looking at the title ‘Pitfalls of EPM being finance driven’ thought its  you and got it right.
    We all know in organizations with large no. of systems sometimes key stakeholders complain about missing out on the information required for the decision making. Most of the information is presented in the form which does not really help in the decision making process. Your BLOG reemphasizes the fact that Business Intelligence is required at all levels in the organization – Operational as well financial.

    Cheers,

    Umesh

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    1. Muthu Ranganathan Post author
      I will try to be more creative with titles in future J

      Enterprise Performance Management startegy/framework should be organization wide to be successful, and as you pointed out rightly at all levels where decision makers exist.
      regards
      Muthu

      (0) 

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