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INTEGRATED STRATEGY
CPM SOFTWARE SUPPORTS BUSINESS GOALS
by Mike Ferguson
OVER THE LAST FEW YEARS
the tough economic climate has forced executives to proactively
control costs, manage resources, retain customers and respond
to market events in order to remain competitive. To meet this
challenge, many companies have begun adopting more robust and
accountable governance procedures that use methodologies such
as the Balanced Scorecard and Six Sigma to help set business strategies,
monitor business performance and create budgets and plans. Companies
are also investing in corporate performance management (CPM) software
to support these initiatives and become more objective driven.
CPM products help define business strategy
and monitor business performance. A typical CPM product allows
users to “apply” their business strategy to software
that creates scorecards. Scorecards help define business objectives,
objective owners, key performance indicators (KPIs) to measure
business performance at strategic and tactical levels, KPI threshold
rules to detect performance problems, and more.
Current CPM products make it possible to associate
KPIs with specific objectives and group these objectives with
KPIs into Balanced Scorecard perspectives (e.g., learning and
growth) or themes for easy management. Many products allow users
to relate specific objectives for a better understanding of how
changes in certain KPIs affect other parts of the business strategy.
Once all these elements have been defined in
the software, users can look at the business strategy in the form
of a strategy map (figure 1) and, if necessary, zoom in to specific
KPIs to analyze the performance of these metrics over time. This
allows users to see if they are on track to achieve specific objectives.
To investigate specific alerts, users can drill down into lower-level
detailed metrics to understand the root cause of performance problems.
The latest releases of CPM software support
collaboration and guided actions so that users can share objectives
and KPIs and collaborate with others for joint decision-making.
Guided actions use rules to guide users in carrying out specific
tasks to correct performance problems.
Such features open up CPM products to a wider
user base and encourage the development of a performance “culture.”
As objective sharing and collaboration progress, people in operational
functions—such as a customer service representative—can
see their departmental scorecard, the objectives their manager
has set for them and how these objectives relate back to strategic
objectives.
CPM limitations
While CPM software is beneficial, it is not enough on its own.
For example, a CPM product running on top of a separate summary
KPI database limits drill-down capabilities because not all detailed
data can be stored in such systems. Ideally, it would be better
if CPM products integrated with existing analytical applications
that run on top of data warehouses so users can leverage detailed
metrics when calculating scorecard KPIs (figure 2). This integrated
BI strategy leverages existing investments and links them directly
to business strategy.
Although many companies require core operational
business processes to align with business strategy, CPM integration
with business process management software is still not readily
available. For a successful future, CPM software must be integrated
with analytic applications, reporting and planning tools, portals,
rules engines and action/problem management software:
> to allow CPM scorecard builders to access the metadata in
underlying BI tools, packaged applications and DBMSs associated
with existing BI systems. This makes use of the existing metrics
definitions when defining KPIs and guarantees that trusted lower-level
metrics are being reused in KPI “roll up” calculations.
> to allow seamless drill-down from high-level KPIs into detailed
data if a scorecard indicates a situation that should be investigated.
> so reports can be produced quickly and introduced for discussion.
> so dashboards showing KPI graphics can be “attached”
to business-strategy objectives (figure 3).
> to allow users to share BI before decision making. These
collaborations can be stored alongside the information for others
to leverage.
> so users can associate rules with
objectives and KPI thresholds.
> so the software can detect problems and deliver an alert
on the scorecard, on dashboards or on mobile devices.
> so the software can recommend actions and track progress.
> to allow views of objectives and KPIs to be personalized
for users throughout the enterprise.
> so users implement strategy (i.e. activities in business
processes should be aligned with business objectives).
These requirements show the importance of integrating
CPM with existing systems and services in order for the CPM software
to effectively communicate and manage a strategy across the enterprise.
Figure 4 illustrates how CPM spans both the
operational and analytical aspects of a business in order to achieve
strategic objectives. At the same time, this system shares and
centrally manages the rules associated with managing the business
at strategic and operational levels. It also makes BI services
(tools and packaged analytic applications) available to provide
the necessary metrics to roll up KPIs for CPM scorecards.
BI services can provide just-in-time, on-demand
BI directly to operational applications used in business processes.
Business activity monitoring (BAM) services monitor operational
processes as they execute in order to manage operations as part
of the business strategy. This concept puts BI at the heart of
the enterprise and integrates operational and analytical systems
under a common, intelligent business strategy.
CPM implementation
What must happen during CPM implementation in order to meet these
requirements and deliver business benefits? The need to integrate
CPM with existing BI systems takes priority over all other requirements.
This doesn’t just mean integrating with the data in existing
BI systems. CPM products must be able to leverage metadata about
metrics in BI systems so they know what metrics already exist
in underlying systems. Using the industry-standard common warehouse
metamodel (CWM)—XML metadata interchange XMI and/or proprietary
metadata bridges—allows CPM products to import lower-level
metric definitions from these systems. Such definitions allow
users who create the scorecards to reuse existing metrics when
defining the formulas (expressed as metrics trees within CPM products)
required for calculating scorecard KPIs.
For example, figure 5 shows a metrics tree
in Business Objects’ Performance Manager. Here, the metrics
tree shows the metadata describing lower-level metrics so that
the product knows how to calculate higher-level KPIs. The objective
is to let the underlying metrics in existing BI systems be used
in as many KPI formulas as required to guarantee the CPM/BI systems’
integration.
From a metadata point of view, if the CPM software
and all the underlying BI systems are built on a single-vendor
BI platform, then CPM/BI metadata integration should be easier
because all the metadata will likely be in a shared CPM/BI repository.
From a data integration perspective, you also
need to leverage data in existing BI systems to calculate scorecard
KPIs and facilitate drill-down on metrics in underlying data warehouses
and data marts. If a central data warehouse exists that holds
all lower-level metrics, then integrating CPM with existing BI
systems should be relatively easy as long as common data—such
as customer, product and channel data—is shared across applications
that run on top of the data warehouse. With the Teradata Warehouse
being a single, centralized data warehouse, integrating CPM on
this platform may be easier than if you are using multiple BI
systems that each have their own data store spread over a number
of heterogeneous platforms.
Data integration is more complex if the underlying
metrics data is distributed across multiple BI systems. A number
of solutions to this problem exist. You can use on-demand data
integration via enterprise information integration (EII) software
with federated queries on the underlying data. Many ETL tools
now support EII by making it possible to invoke them as a Web
service (figure 6) or via open database connectivity (ODBC) or
Java database connectivity (JDBC).
In this case the CPM application, not a database,
is the target for data integrated by an ETL tool. ETL tools that
support XML sources can request metrics data from packaged analytic
applications and BI tools via Web service interfaces to calculate
KPIs on-demand. Alternatively, CPM products with a built-in federated
query support dynamic KPI calculation. Users who need to drill
into one or more data stores in search of detailed data can do
so because scorecard metrics trees make the scorecard aware of
the location of the data needed for high-level metrics. Data mart
consolidation may reduce the number of heterogeneous BI “islands”
that have to be accessed. Again, many companies have used centralized
data warehouses like Teradata to achieve this goal.
Integrating CPM software with enterprise portals
requires that the CPM software have a “portlet-based”
user interface. Support for industry standards such as Web services
remote portals (WSRPs) and JSR 168 allow portlet-based user interfaces
to work with any enterprise portal. If the CPM software is not
Web-enabled, then scorecards and dashboards can be integrated
into a portal as long as they can be published to the Web.
Support for the WSRP Web services interface
and JSR 168 portlet standards also makes it possible for CPM products
to integrate with reporting tools using portlets. For example,
a red traffic light on a scorecard may result in investigative
“drill-down” with a user wishing to produce a report
for collaboration with other people. Adopting a standard Web service
integration between different front-end tools facilitates “mix
and match” user-interface integration across tools.
CPM scorecard and dashboard integration can
be achieved in a similar fashion. However, a simpler approach
is to “attach” dynamically updated KPI dashboards
to objectives in scorecards (figure 3) using a simple URL that
links to a KPI dashboard. This provides a way to use dashboards
to create easy-to-visualize KPIs for scorecard users. CPM support
for action management is also needed to track action progress.
Several CPM products support the listing of guided actions but
many companies already have applications to manage actions (e.g.,
help desk or customer contact center). Such applications can be
integrated with CPM, allowing companies to get more value out
of existing investments. Again, integration via Web services and
portal technology could bring these elements together in a standard
way.
Rules and rules/decision engines also play
a major part in performance management. For example, managers
can set thresholds and define rules to create alerts if KPI thresholds
are exceeded or not met. In this case automatic analysis, rules
and a rules/decision engine are used to alert managers at the
strategic level.
In some cases this functionality is built into
the CPM software. However, there are also standalone rules engines
available that are often positioned as enterprise-wide rules engines
that can be shared across multiple technologies and applications.
While not the subject of this article, integration with a rules/decision
engine is more than just a CPM requirement. BAM has precisely
the same requirement. The only difference in this case is that
alerts and automatic actions in BAM are driving operations on
a day-to-day basis rather than flagging strategic alerts in CPM
scorecards. Regardless of whether a rules engine is embedded in
CPM products or implemented as a separate enterprise-wide service,
the rules themselves matter most.
 As
discussed, there are a variety of software options and implementations
that will vary based on your current BI environment. But, with
the end goal being corporate performance management, both the
business and IT must define the “rules” in the context
of the business objectives in order to guide the organization
toward achieving its business goals.
T
Mike Ferguson is managing director of Intelligent
Business Strategies Limited, an IT analyst and consulting company.
E-mail him at mferguson@intelligentbusiness.biz.
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