The Corporate Performance Management Practitioner

NDP 5: CHAPTER ONE (U) The Basics of Planning (NDP5)

I am currently working on a logical framework for coordinating Performance Management Processes throughout the firm. There are so many different definitions and viewpoints on CPM out in the marketplace, and I am trying to build a model that ties all these diverse puzzle pieces into one useful whole. I came across this site that outlines the key principles behind the Navy’s planning processes. As CPM practioners, we can learn a great deal from how the military deals with planning around real life and death situations.

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I am always looking for better ways to start implementations, because I firmly believe that the best way to finish successfully is to start successfully. I am looking for better ways to jumpstart Cognos EP projects. In particular,

I am interested in the following areas:

Techniques for the model design process.

1. How do you structure the core team? What role does IT play in the implementation?
2. How do you document the decisions made in a meeting? Flowcharts? Notes?
3. How do you identify risks?
4. How do you break a enterprise-wide comprehensive model into smaller components?
5. Once the design is documented, how do you ensure development efforts follow design specifications?

Project Coordination 

1. How do you coordinate the work of multiple model builders?
2. How do you design for better performance?
3. What do your testing plans look like?
4. Do you use Rapid Application Development techniques?
5. How do you capture knowledge and Lessons learned?

Communcation and Organizational Change

1. How do you train Contributor end users on the software, budgeting policies, and their specific models?
2. How often do the models change? Do you offer continual training?
3. How do you handle help desk activities?

 

I am putting together some whitepapers that cover all these topics…but I can always learn more from all the smart people out there…I will share these whitepapers with all of you!

 

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I don’t know all the details, but I have heard that there is a full-time position in Cincy for an experienced Cognos EP model builder/administrator. I understand from my contacts down there that it would be an attractive position, with good benefits, excellent pay, and excellent quality of life.

Again, don’t ask me for details, because I really have none! I will try to gather more information, but if anyone out there is interested, drop me a line.

 

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Most CFOs Harbor Security Concerns

 Interesting Survey from CSC on the concerns of CFOs regarding their IT functions…as you would expect, the recent rash of security breaches due to stolen laptops, missing hard drives and good old fashioned scams are on the mind of CFOs. Between these embarrassing leaks and compliance issues, data security is more important than ever.

 Other problems include the Business/IT relations, and Communication… 

 

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I personally think that Metrics Studio (formally Metrics Manager) is the single most unique product in the Cognos Suite. I have been involved with many scorecarding/dashboarding/EIS/metrics products over the last 10 years, but none have the flexibility and depth of capability that Metrics Studio has. I am not aware of any other products that come close. 

The key thing that makes Metrics Studio unique is that it handles all the calculations needed to support Metrics analysis internally. All you need to load actuals into the product is the metric id, metric value, and the period in question, and it will handle trending, variances (obviously you need to load targets at some point), and all kinds of other stuff that would be hugely complex to create in a database or report.

 

An interesting question came up during a Cognos Forum session regarding real time metricsâ?¦can Metrics Studio support them? Of course, the answer depends on how you define real time metrics.

 

Ralph Kimball (he dean of data warehouse gurus) once defined ‘real-time’ as “anything faster than existing ETL processes”.

 

In that context, Metrics Studio can be real time, even though there are a number of data processes that must occur before the information appears in Metrics Studio. I would think that sub 5 minute process times are easily possible given the right application design.

 

If the Metrics Studio calculations add to much overhead for real time metrics, you could always do a dashboard report in Report Studio or in Query Studio. Even in this case, the data would have to be present in database before it could be reported on. Loading the database would become the bottleneck in getting real time metrics.

 

When I talk to people who need metrics in less than 15 minutes (lets call them instant metrics) I find that the metrics themselves originate in highly specialized, proprietary electronic data collection devices.

• Gaming:  instant metrics come from the slot machines.
• Emergency Services: The 911 system uses application logic embedded in the call infrastructure switches themselves to provide instant metrics on caller location. Many 911 systems are not capable of locating the point of origin of cell phone calls. Here in Illinois recently, a injured motorcyclist made 2 calls to 911â?¦he died because he could not be located.
• Health care, patients are hooked to sensors that measure heart beat, pulse, blood oxygen levels. If dangerous conditions occur, alarms are sounded. (Code Blue, Code Blue, Report to Trauma Room 3, Stat!)
• High-Tech Manufacturing: Instant metrics are also needed on the shop floor to analyze process quality. Sensors measure individual attributes (temperature, viscosity, density, line speed, flow rates, etc) and send the information to programmable logic controls (PLCs). If there are out of standard conditions, the PLCs triggers alerts or log warnings. For Pharma Manufacturers, the FDA mandates very specific compliance requirements for these types of systems.

 

I cannot think of an example where instant metrics would (or could) be pulled though the traditional data warehouse paradigm (Transaction System-ETL-Data Warehouse-BI tool). There are simply too many data movement processes to guarantee such a rapid response time.

 

For a BI tool like Cognos 8 to provide the presentation layer for instant metrics, the proprietary data collection systems would need to feed the sensor results directly to the report itself, or to the data staging area of Metrics Studio via a streaming mechanism like XML. The same stream would also feed a more traditional data mart for future aggregation and analysis. Composite software has tools that treat XML streams as just another JDBC compliant data source, so there is potential here. I could also imagine that it would be beneficial to hook Event Studio directly to XML streams.  For example, a manufacturer could attach Cognos BI to PLCs monitoring an assembly line. A temperature sensor error condition could trigger Event Studio to run a report that lists temperature variations over the last 7 days for that given sensor and show the temperatures of other sensors on the line in the last few hours. I would imagine this type of background data would be helpful to the manufacturing technicians than a alarm bell.

 

I am curious about how my readers compile “real time Metrics”. Do you need sub 15 minute instant metrics? Are you collecting and analyzing data from data collection systems using the traditional BI metaphor? How are these processes working? Where are the hurdles?

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This website, which apparently was created as part of a better government program which is now obsolete, is a great resource. It cuts through CPM hype and delivers about the most realistic portrait what the benefits and obstacles of a working CPM system. Pay Special attention to the Addendums and links. Tons of good stuff.

 

City of GP - Performance Measurement In Government - City of Grande Prairie, Alberta, Canada, Official Government Web Site

 

 

 

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Accounting Best Practices with Steve Bragg

 

 

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There are a number of reference books available that provide definitions for the hundreds of potential measures that could be rolled into a CPM project, but Steven M. Braggâ??s Business Ratios and Formulas is one of the best.

 

I particularly like the straightforward format he uses for each formula:

1. Description - Why is this measure important?
2. Formula - How is this measure calculated?
3. Example - How is this measure used in a “real world” scenario?
4. Cautions - How can this measure be misused and what are its limitations?

 

He provides a number of useful examples of this format on his website.

 

Certainly most readers have heard the old platitude “Figures Lie and Liars Figure”. As CPM practitioners, we must be aware of how numbers can be misused. The Cautions section of each metric is great for minimizing sub-optimal optimization. (How is that for sounding like a consultant!). I do not recall any other measure definition book having the equivalent to the  Cautions section.

 

This book goes beyond most in exploring measures beyond traditional Financial measures. There are Theory of Constraint measures, marketing effectiveness measures, departmental efficiency measures, and a great deal more. The measures for the accounting and engineering departments are excellent.

 

My only criticism of this book it is that each measure is presented completely independent of all other measures. While this makes perfect sense given that the book is designed to be a measure definition reference, it would be helpful to see how these measures are interrelated.

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Like most professionals involved in this industry (Business Intelligence, Corporate Performance Management, Financial Applications, Decision Support, etc.) I am constantly exposed to marketing messages from the various vendors in the space. All the vendors really have the same message: Our technology helps your organization perform better by improving the usefulness of the information you use to make decisions.
Is this true? Is it possible to actually measure a difference between those firms who use CPM enabling technologies and those who don’t?

The Aberdeen Group thinks it is.
 In a new report, Aberdeen sees some substantial differences between those firms that have adopted CPM and those who have not.

Probably the most compelling factoid is the following:

More than 70% of companies who adopted some sort of CPM program generated high-impact improvements in key performance metrics, and these results were consistent across industry segments and company size:

•  Average Improvement from CPM Initiative:
• 5.0 percentage points gain in return on assets (ROA) 
• 4.9 percentage points gain in Percent Gross Margin

Regardless of how much faith you put into industry analysts opinions, this is pretty compelling stuff.
 

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In the last few months, several customers and prospects have asked for assistance in building dedicated offices for managing their investments in BI, Scorecarding and Financial applications. While it is too early to declare this a full fledged trend, I suspect more organizations will be considering this topic over the next few years. Each of the companies I have talked to have a different take on what they are looking for, but each firm realizes that it simply does not makes sense to build Decision Support/CPM systems in a vacuum. I often say that “CPM is a journey, not a destination.” If you take this concept to its ultimate conclusion, then it makes sense to build the capability to deliver CPM projects as effectively as possible as part of this journey. The firms I am talking to have different thoughts on what the word “effectively” means in the previous sentence. I must admit that my thoughts on this matter are also evolving rather rapidly. I am confident that there is no silver bullet here; every organization is going to have to pick and choose the right answer for itself. (is there ever a silver bullet? No) The term Business Intelligence Competency Center (BICC) has been floating around for some time. I first encountered the concept at a major utility company about 6 years ago. Like many organizations, they owned multiple Business Intelligence tools deployed in departmental and functional silos. Their version of the BICC was called something like “BI Advisory Office.” It was a part of the Information Technology organization and was made up of senior technologists. They had three primary roles: 1. Encourage Standardization They developed a list of “approved vendors” and encouraged (but could not mandate) the use of these vendors for all new development. They advised project teams on vendor selection. 2. Project QA They monitored projects and made recommendations on technical issues. They also got involved in infrastructure issues. They did not do development themselves, but acted in a advisory capacity. 3. Vendor Relationships They were supposed to act as single point of contact for support issues, new license purchases, and so forth. In practice, they usually worked closely with the project teams on support. The purchasing group handled the software buys. The natural next step in the evolution of this BI Office would have been the enforcement of the approved vendor list and development best practices. They could have developed a knowledge sharing capability, perhaps using Knowledge Management software. To move from an BI advisory group to a BI Competency center, at least in my mind, involves a change from a group of advisors to a group of doers. A BICC involves the capacity to actual deliver a working BI application in the context of a broader BI platform. What other functions makes sense in the BICC context? What happens if you move from BI, which is still essentially a technology project, into the realm of CPM? How does the BICC Change?

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