Trend # 3 – Industry Performance Management
Now we get to the top 3 trends in the ePM trends blog series.
Performance management is very specific to a particular business and varies a lot across different businesses/industries. The key to derive value from performance management initiative is going to be identifying the financial and operational drivers, opportunities, risks, metrics/KPIs, strategy in order to put together a good framework. These value creators are often completely different across industry. Therefore, Performance Management (or analytics) varies significantly across industries with respect to these value creators, though it can be mapped to a common performance management framework that cuts across Strategy Management – setting the objectives, defining initiatives and creating metrics to measure the objectives; Planning – identifying drivers, creating annual plans/monthly rolling forecasts, have integrated planning across various functions on demand/supply side of any vertical; Analysis – reporting and analysis by different business lines the actual details, for each LoB business users; Optimization – through factors like customer /product or segment profitability. Applying this framework across various industries through different value creators that are core to the industry can make it very relevant as ‘Industry performance management’.
Building a ‘Industry Performance Management’ model will be one of the key trend as most companies adapt ePM framework over next decade. The performance management frameworks would evolve and become best practice from an industry specific context.
SAP’s current and future direction enables extensive industry specific performance management, given their best of breed Performance management solutions and extensive industry knowledge across all industries that exist. With this direction, SAP would enable true closed loop performance management bridging the gap between strategy to execution, having solutions across this.
Few examples on how SAP is focusing on Industry performance management solutions built internally as well as through extended eco system of partners:
Leading airlines in Europe uses SAP BusinessObjects Profitability and Cost Management to improve profitability analysis by route, flight, aircraft, day of operation, cabin class and sales region. Given the competitive landscape in airline industry, route profitability accuracy was most strategically important. Availability of industry specific scenario was key to bringing value from a Performance management initiative
Planning in Banks is a lot different. Especially the balance sheet planning where asset/liabilities projections and the interest impact of them are very industry specific and unique. SAP BusinessObjects Planning and Consolidations allows planning for banking very effective. Again a key example to have success in Performance Management initiative
Healthcare is another unique industry when it comes to drive planning for revenue. Users in routine and ancillary departments would like to refine the impact of top-level volume assumptions on department workload and patient charges. For example, they can assess projections of patient days against bed mix or capacity, or they can modify the historical rate of services (such as the number of surgical minutes) per admission or per visit. Any resulting changes to gross-charge projections pass to your reimbursement plan. SAP BusinessObjects Planning and Consolidations enables planning in the healthcare environment with solutions to cover healthcare vertical, with wide adoption of customers in this vertical.
Conventional attempts at applying ROI measurements to public sector expenditures involve quantitative methods to perform cost-avoidance or cost-benefit analyses. Such financial measures provide only a one-dimensional view that fails to represent the true value of government programs. ROI measurements in the public sector must include both the tangible and intangible impacts of spending – that is, not only the operational but also the social. SAP BusinessObjects Strategy management covers solutions focused on Public sector to manage ROI holistically.
Industry based ePM is going to be key to drive best practices and getting value from a performance management initiative.
How SAP is helping its customer identifying Industry Analytics as key trend for Analytics