Building a top-notch corporate performance management (CPM) solution is often a thorny technical challenge. However, most times, technical challenges can be overcome with the right balance of knowledge, resources and tenacity. Unfortunately, the quagmire that affects most CPM projects is not technical; it is political. According to Gartner, "Along with technology and functionality issues, you must address the organizational dynamics and political pitfalls that exist in many organizations. Breaking down the silos that have evolved over the years is a difficult, but critical, part of a successful CPM strategy."1 How do you do that?
A good way to start is by identifying the political challenges that face your organization. Of course, every business is different. However, in the CPM initiatives that I have discussed with my clients, the same problems emerge.
Metric definitions are the first big problem. Many organizations are not able to clearly articulate their business and technical strategies. Therefore, they can't identify what they need to measure and how important those measurements may be. Also, different divisions of a company may produce different products or offer different services. Therefore, they legitimately have some different metrics.
However, even when the metrics are the same, division representatives often have huge disagreements about the metrics' definitions, as well as their thresholds and goals. For example, finance, manufacturing, marketing and sales may all define customer profitability differently; therefore, gaining consensus on the metric "profitability" may be enormously difficult. Unfortunately, there is often so much independence between the divisions in the organization that there is too much consensus building needed to ever get the CPM project off the ground.
Corporate technical and political cultures often also pose a problem. On the technical side, the lack of data governance and stewardship procedures frequently derails CPM projects. It's the old axiom, "garbage in equals garbage out." No one believes the information coming from the system, so no one trusts it. On the political side, there is often an absence of cultural support and buy-in because the people whose performance is measured by and whose job security depends on the CPM system are not part of the process of defining its metrics and goals.
What should you do? As one of my favorite TV characters of all time, Barney Fife, was inclined to say, "Nip it, nip it in the bud!"2 From the inception of any CPM project, prospective political challenges must be planned for and dealt with, with the same seriousness and attention given to any technical problems that might arise.
It is absolutely essential that the project from day one have strong executive sponsorship. A strong executive sponsor will provide effective leadership through the life of the project and act as the champion of the project throughout the organization. The executive sponsor needs broad support from a steering committee that guides the overall strategic development and integration of the CPM project within the organization.
As an aid to the sponsor and steering committee, however, there must be a strong CPM collaboration committee, made up of cross- functional teams, that deals with tactical issues. This committee ensures that the people that are measured by a CPM system are part of the group that defines the metrics and goals. It also deals with such issues as system ownership, resource allocations from business and information systems, and data issues.
The CPM collaboration committee should also have the authority to make final decisions about the content of the system. Because that content is ever- changing, the collaboration committee will have to draw the proverbial "line in the sand" at some point to establish a cut-off for adding new functionality at least until the system is up and running or a new release is presented.
Finally, there should be an identified arbitrator for metric-definition conflicts. As I've said, metrics can be a contentious issue, and there needs to be a final authority in deciding what metrics will be included in the system and what the exact corporate-wide definition of those metrics will be.
Actually, there is one final thing. You must ensure that each committee you create, and each sponsor you endow with decision-making capabilities, has the full support of senior management because it's often the case that the people who know the business best are the most passionate about the system and the ones who hold most dearly to their points of view. Therefore, it's crucial to the success of committee-based leadership that the arbitrators have full authority to make and implement decisions regardless of how unpopular those decisions might be for some.
1. Frank Buytendijk, Lee Geishecker and Brian Wood. "Corporate Performance Management Client Issues for 2004." Gartner, Inc., 19 September 2003.
2. The "Barney Fife" character reference and attributed quote used here is the property of The Andy Griffith Show and copyright 1998 by Mayberry Enterprises, Inc. All rights reserved.
All information provided is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. The views and opinions are those of the author and do not necessarily represent the views and opinions of BearingPoint, Inc.
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