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SWTCH by Pigment
Three days of predictions, insights, and advice from leaders in finance, sales, HR, supply chain and more
Register now here
By Michael Coveney, Analytics Thought Leader and Author
Workflow is critical to a CPM application in the same way that it is critical to ERP. It is through workflow that users are directed and their attention focused onto their roles and responsibilities through the different performance management processes.
The activities involved tend to be classified into the management processes. To construct the right CPM processes, which together should focus on achieving the organisation’s mission, the following needs to be determined for each:
Each organisation needs to define the purpose of individual processes for themselves. Below are examples that are typically common for most organisations.
Strategic Planning:
To produce a long-term plan that identifies goals to be achieved within set resource constraints for a defined business environment. The decisions to be supported include:
Tactical Planning: To agree a set of improvement initiatives and associated costs for each strategy that ensures the organisation achieves its goals within the defined constraints. The decisions to be supported include:
Financial Planning/Budgeting: To create a financial plan that represents how resources are to be allocated to both the main business model and the strategy model; and the financial results that are to be expected. It should also include how the plan and any capital expense will be funded. The decisions to be supported include:
Forecasting: Unlike budgeting which seeks to determine what the future should be like, forecasting tries to predict the most likely results that may be achieved based on current understanding of the market and current/planned activities. The decisions to be supported include:
Management Reporting: To allow management to review current and forecast results in order to make adjustments to Improve performance. The decisions to be supported include:
Risk Management:
To assess risks and their impact on the current plan and to develop contingency plans that avoid or negate those risks. The decisions to be supported include:
As mentioned earlier, this part of the implementation details:
From the questions shown above in section 4.2, the information required and the people involved can be worked out. Much of the information given to users will come from the output of other users and so the best way to show this relationship is through an activity map of the different tasks involved, their dependencies, and the departments responsible.
The following example shows how this can be applied to one part of the budgeting process, which has been designed to support the decision: “What resources should be assigned to the CPM Business model not covered by strategic initiatives”.
In the above schematic, the time line and order of the activities are shown:
In the above example, the items are not in detail – what is provided to give an idea of what needs to be defined. For example some of the information should relate to market conditions, and sales will probably be split into product groups or services. Similarly, there will be more feedback loops that are not shown, and all budgets will need to be combined to give a total budget situation.
As mentioned this schematic is for one part of the budget process. All parts will need to be defined and linked to show dependencies and the order in which they are to occur. This provides the specification for the workflow software.
For each activity shown in the activity map, the ‘slice’ of data that each user will need to make their decisions, and the slice of data they will need to complete as part of their response, will need to be defined. If the data can’t be defined from the business model, then that model will need to be amended.
Similarly, when presenting or gathering information, numbers don’t tell the whole story. There will need to be provision for handling text that forms the basis of a two-way communication.
The format and layout of these screens should provide the information in the context of the decision to be made. This will require data to be presented from all parts of the CPM model as well as summary analyses that may come from supporting BI models.
Most organisations have an internal management calendar that is used to trigger the different processes outlined for planning and monitoring performance. Therefore for each activity, defined in Section 4.3 there needs to be a timescale in which the user must respond. This will include when the activity can start (which itself may be dependent on the completion of another activity) and when it is to be completed.
But what happens if something doesn’t go to plan? What if the assumptions on the business environment are not right? Or if forecast expenses are going to be greatly over budget? What if a particular initiative is not achieving the right effect?
There’s no point in waiting for the next planning round, which could be in a years’ time, in dealing with these issues. Research into high-performing companies found that: “Best Practice companies decouple their internal management processes from the calendar and provide a set of planning and reporting processes that utilize continuous processing and monitoring of activity. The passage of time becomes (just) one of many criteria for triggering the reporting of information or the initiation of planning or forecast activities.”1
The report goes on to say: “Aspects of strategic planning are not once-a-year events but a continuous process. The pace of change is so great that management needs to monitor the strategic implications of new developments on a continuous basis”.2
To manage performance, organisation’s must take action as soon as potential issues arise. And that means triggering some or all of those activities defined in the activity map, but in the context of putting the plan back on track
To do this a list of possible ‘exceptions’ should be defined along with the activities to be triggered should those exceptions materialise. This should include:
2 Best Practices in Planning and Performance Management, David Axson
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