CPM Framework Overview

CPM Framework Overview

By Michael Coveney, Analytics Thought Leader and Author


CPM is concerned with the way in which an organisation manages its overall performance. As defined by Gartner it involves combining the methodologies used to manage strategy, the metrics that evaluate performance and the processes used to direct people within the organisation – all of which should be supported by a technology solution. 
To support organisational decision-making the framework combines the following four areas: 

  1. Content
  2. CPM Business Model
  3. Strategy
  4. Resources

1. Content 

CPM is concerned with the way in which an organisation manages its overall performance. As defined by Gartner it involves combining the methodologies used to manage strategy, the metrics that evaluate performance and the processes used to direct people within the organisation – all of which should be supported by a technology solution. 
To support organisational decision-making the framework combines the following four areas: 

Picture 1: Performance Management Framework 

  • A business model that describes how value is created by the business.
  • Strategic initiatives that are focused on improving parts of the business model.
  • Organisational resources (money, people, assets) that can be applied to enable the business model to function and that allow strategic initiatives to be implemented.

  • Management processes that direct and control planning, funding and monitoring of business operations. 
All four components are intertwined and should operate within a CPM technology solution as a continuous approach to performance management. 
Around this core system will be a range of other Business Analytic solutions, such as BI and reporting / analysis applications, that directly support specific areas within the CPM model. 
Let’s take a closer look at each of these areas. 

2. CPM Business Model. 

At the heart of a CPM system is an organisation model containing the relationship of activities that lead to organisational objectives. 

Although this model will differ between
industries, it will typically include how
revenue/income is generated; how
products/services are manufactured /
created and distributed to customers;
how employees are recruited, trained and assessed; and how the organisation complies with its legal responsibilities. These activities are linked to one or more organisation departments that determine those responsible for their execution. 

Some activities will have a one- to-one relationship with the organisation structure, but other activities will go across multiple departments. 

Quite often the relationships
between activities can be built as
a driver-based model where the
value of an input such as the
number of enquiries can be used
to determine the volume of sales and hence revenue via a set conversion rate. These models can be used to plan or assess the operation of the business by entering a few key values or ‘drivers’. 

Business Model Metrics 
Each activity can have different sets of measures that include: 

  • KPIs that measure success of the activity (e.g. the number of new customers acquired)
  • KPIs that reveal the state of implementation (e.g. the number of mailings made to the target customer base)
  • The resources consumed by the activity (e.g. people time, costs, assets utilised)
  • The risks involved in employing those activities

3. Strategy 

The second area – Strategy – typically has an emphasis on how the performance of the business model can be improved. It focuses on one or more organisational objectives and details specific strategic initiatives that describe how that improvement is to be actioned and who is to be responsible for their delivery. 

The terminology involved depends on the management methodology being employed (e.g. Balanced Scorecard) but most methodologies will show the relationship between the action and the objective being supported as a ‘Strategy Map’.   

Strategy Model Metrics 
The sets of measures associated with strategy includes: 

  •  A set of targets that determine the improvement to be achieved for each supported objective.( 

  • The resources that will be required to implement each associated initiative (

  • The status through which the implementation of initiatives can be monitored.( 

  • Any business assumptions that were made when agreeing on the initiatives and the value of an improvement.

4. Resources 

The third element of the framework relates to the resources (money, people, assets) that the organisation has at its disposal, with financial resources often being the focus of a budget. 

These resources should be allocated to both sustaining the business model and in ensuring that the agreed strategic initiatives are properly resourced at the right time. 

5. Management Processes 

The final area of the framework are the organisation’s management processes that direct and control the way performance is planned, resourced, implemented and monitored. 

These are typically seen and often implemented as the six distinct processes of Strategic Planning, Tactical Planning, Financial Planning, Forecasting, Management Reporting, and Risk Management. 

However, on closer examination, these processes consist of a number of interconnected activities that only together form the basis for managing performance. Consider the following schematic: 

Even within each activity, there are interconnected tasks that each department has to perform, in a specific order and at specific times. 

For example, Budgeting may start off with the setting of a high-level goal to which sales will decide on how this will be delivered throughout the year. To do this they may need to work in collaboration with marketing and production. 

Once this has been completed, other areas of the organisation can start allocating resources that fit in with the sales and marketing plan. 
There are three important things to bear in mind when designing processes: 

  • Although these are often seen as discreet processes, in reality, they are each comprised of multiple activities that have strong links with activities within other processes.
  • For effective performance management, none of these processes can be left out.
  • In today’s volatile business environment these activities need to act as a single continuous 
As a consequence, what goes on within these processes and how they are interconnected will determine whether performance actually gets managed.

6. The Role of a Technology Solution 

As with a car, these four components need to be combined and operated as a single technology solution. It needs to support decision-making through the total integration of driver based business modelling (the engine) and strategy improvement plans (visual indicators showing the intended direction) with organisational resources (the fuel), all controlled through management processes (the pedals and steering wheel).

None of these components can be run in isolation - the degree of integration will determine how ‘smooth the ride’ will be. 

Around this central CPM system will be a range of BI analytical applications that provide insight into particular aspects of each component. This insight is used to formulate plans to improve the operation of the business model. 

The role of management reporting is to bring all relevant information together in context – i.e. to link strategy with the business model and resources, in a format that’s transparent and usable to motivate the many people involved to make the best-informed decisions. Those decisions will typically lead to altering the business model; modifying or developing new strategic initiatives; and where necessary, the re- allocation of resources. All of which is performed under the control of management processes.        


7. Implementing the Framework 

Performance management is all about taking decisions on the operation of both the business model and any associated strategy improvement initiatives. What goals should be set? What things have to be done to achieve those goals? How much will it cost? How much did it cost? What will it cost in the future? Is the outcome worth it? What changes should be made? Why has a past change been agreed? And so on. 

These decisions are typically made through a series of activities based on information that is presented to a user. 

Therefore, when implementing the CPM framework three things are necessary: 

  • The structure of the business model that holds information on its performance and the impact of strategy.
  • The associated workflow through which it gets updated and monitored.
  • The data entry screens and reports are given to users that directly supports the decisions to be made 
The next sections takes each of these in turn.

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loved it Michael - if you cant see the forest for the trees when you start then there is no way to can achieve the CPM objective - this is a great model to follow - but I think the soft skills of the key players and sponsorship and support at the highest level will have a massive impact on the ongoing success of a CPM project - there will inevitably be a need for process/culture change and the required buy-in needs talented collaborators who are openly supported at the highest level with a clear mandate to make it happen.