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July 2012
Effective Enterprise Performance Management:
Reducing Data Bottlenecks
and Accelerating Time-to-Decision
In light of competitive pressures, companies are increasingly scrutinizing their
performance at every level of the organization. Financial transaction data
continues to grow and requires quick and precise calculations, despite the
technological limits of data analysis tools. Advanced data analytics are increasingly
being leveraged to perform real-time business health assessments. From an
operations perspective, executives are striving to identify variables that attribute
to failed objectives or performance deficiencies, as well as factors that enable
success. The purpose of this Analyst Insight is to identify the pressures and
challenges that prompt companies to implement effective EPM, and the
corresponding capabilities and enabling technologies that help them improve
financial and operational management.
This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and
represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc.
and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.

Effective Enterprise Performance Management
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Effective Enterprise Performance Management
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Effective Enterprise Performance Management
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Drivers for EPM
In an environment where business applications and platforms continue to drive
"big data," the struggle to meet business objectives by leveraging only the "critical
layer" of information becomes quite prominent. The concept of: setting the right
goals, measuring progress against these goals, and improving future performance
towards these goals, can become more disconnected and less formal on an
executive’s agenda. What the modern executive should realize, in light of an
increasingly data-centric environment, is that the lack of information prioritization
could send an organization into a downward spiral in terms of planning, execution,
and outcome. In the April 2010 Aberdeen Business Review study, organizations, in
various revenue sizes, remain focused on profitability and business sustainability
through the economic downturn, with small companies obviously struggling to
establish their own identity and brand equity (Figure 1).
Figure 1: Top Business Goals for 2010 for Various-Sized Businesses
Percentage of Respondents, n = 1786
60%
50%
40%
30%
20%
10%
0%
51% 50%
Large Midsize Small
36% 35% 35%
27% 27%
15% 16%
14% 15% 19%
Profitability growth Improve brand awareness Increase market share Sustain business growth
Source: Aberdeen Group, April 2010
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Effective Enterprise Performance Management
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This study discusses information management in EPM from two standpoints:
financial and operational. Together, these segments cover spending management,
profitability and cost management, financial reporting, corporate planning
and consolidation, and strategy management. Feedback from industry
executives was collected to determine which strategies and capabilities are
used by the top-performing organizations to achieve success in EPM. Figure 2
looks at the top concerns that prompt executives to implement business
performance management.
Figure 2: Pressures Driving the Adoption of EPM
All respondents
Growing costs that
impact profitability
Budgets are misaligned with
business objectives
34%
36%
Lack of organizational
accountability
32%
Decision-cycle times
are too long
24%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Percentage of Respondents, n = 159
Source: Aberdeen Group, March 2012
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Effective Enterprise Performance Management
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Together, these pressures are prompting companies to re-evaluate their current
procedures for managing their information lifecycle. A high number of surveyed
companies are expressing their concern for unauthorized access to corporatesensitive
information, growing costs in managing data, and unclear methods of
consolidating / prioritizing structured information (data generated from enterprise
applications), and unstructured information (data generated from less formal
means, such as social media and e-mail). The challenge of making informed
decisions remains well-known: there exists disparate information, scattered across
the enterprise, all while its volume continues to grow without a focused means
to prioritize.
For any department head and their respective staff to be accountable for what
they are doing, they must first understand what is asked and expected of them.
Often it is easy for a CFO, COO, or even CEO to task their department with
cost-saving initiatives. But what does this mean to the engineering director, the
procurement manager, or even the manufacturing staff on the shop floor?
Translating the cost-cutting initiative, in this scenario, could mean for the
engineering director to look closely at reducing engineering labor, cutting the
number of projects, or employing “leaner” methodologies in product design.
Similarly, this initiative could mean the procurement manager needs to change
suppliers, and focus on cheaper materials / parts that still meet production and
schedule requirements.
Lastly, for the manufacturing staff on the shop floor, this cost-cutting initiative
could mean less over-time hours at the facility, turning off equipment that is not in
use, or looking at Just-in-Time (JIT) production methodologies that reduce
inventory. These examples demonstrate that translating executive initiatives is
critical to organizational understanding, and that proper execution by all
stakeholders could be critical to ensuring accountability and the achievement of
these objectives.
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Effective Enterprise Performance Management
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Strategies in Managing Performance
Implementing enterprise performance management can significantly improve
operational and financial control, but many organizations lack the initiatives,
capabilities, and technological enablers to realize such opportunities. Organizations
earning Best-in-Class status possess elaborate enterprise performance
management capabilities as defined by: a strong alignment of staff accountability to
corporate objectives, and robust solutions that provide stakeholders with access
to performance data and information for effective decision-making. The strategic
actions of the Best-in-Class are identified in Figure 3.
Figure 3: Strategic Actions of the Best-in-Class
Percentage of Respondents, n = 159
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
43%
31%
Best-in-Class
40%
All Others
31%
27% 26%
0%
Define business
objectives
with supporting
performance metrics
Communicate
business objectives
clearly across
the organization
Promote accountability
within the organization
through effective
communication
Source: Aberdeen Group, March 2012
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Effective Enterprise Performance Management
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While the Best-in-Class are nearly 40% more likely than their competitors to
define business objectives with supporting performance metrics, the most
importance difference lies in their approach to communicating these objectives
clearly across the organization. By understanding the metrics that impact the
objectives, executives of these top-performing companies are able to effectively
define these objectives in relevant terms to the department heads, and
subsequently in relevant terms to the department staff. This hierarchal line of
communication not only supports organizational governance, but promotes staff
accountability. More importantly, the structured communication from the top
down is just as valuable as that from the bottom up. Employees who are
accountable for certain performance metrics can validate the success of their
executive’s strategic plan through active feedback.
Managing the Critical Layer of Information to Drive Decisions
As the economy continues to recover, the series of industry consolidations has
prompted many corporate mergers and acquisitions, resulting in the pressure to
centralize various databases. Integrating a large volume of disparate information
may be a daunting task, but it is only the beginning. After having established a
centralized repository, Best-in-Class companies have demonstrated their abilities
to provide secure information transfer, enable access control (enabling effective
segregation of duties, or SoD, management), archive or dispose of information and
data per corporate or regulatory requirements. The compliant management of this
end-to-end information lifecycle is what distinguishes the Best-in-Class from all
others, and its success is reflected in their respective enterprise performance
results (Table 1).
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Table 1: Best-in-Class Performance Results
Definition of
Maturity Class
Mean Class Performance
Best-in-Class:
Top 20%
of aggregate
performance scorers
• 23% reduction in risk value in the past two years
• 23% reduction in compliance-related costs in the
past two years
• 90% positive compliance audit success rate (yielding
favorable results) in the past twelve months
• 84% success rate in execution of management
directives in the past twelve months
Industry Average:
Middle 50%
of aggregate
performance scorers
• 6% reduction in risk value in the past two years
• 2% reduction in compliance-related costs in the
past two years
• 59% positive compliance audit success rate (yielding
favorable results) in the past twelve months
• 64% success rate in execution of management
directives in the past twelve months
Laggard:
Bottom 30%
of aggregate
performance scorers
• No change in risk value in the past two years
• 10% increase in compliance-related costs in the past
two years
• 50% positive compliance audit success rate (yielding
favorable results) in the past twelve months
• 50% success rate in execution of management
directives in the past twelve months
Source: Aberdeen Group, March 2012
© 2012 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897

Effective Enterprise Performance Management
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The pervasive nature of mobile devices, such as smartphones and tablets, have
created new opportunities by enabling decision-critical information to be shared
remotely, further facilitating collaboration. In Aberdeen's March 2012 GRC survey,
61% of respondents cited that the User Interface (UI) of the mobile application -
implying the method in which the information is shown on the screen - is a critical
driver towards adoption. Given the limited size of mobile displays, it becomes a
fine "balancing act" for solution providers to maximize information relevancy to
the target stakeholder, while minimizing the volume of information being
displayed. This supports the underlying value of effective information extrapolation
and prioritization.
Finally, companies operating in heavily-regulated industries, such as healthcare,
pharmaceuticals, or finance, maintaining a proper system of records and / or
transaction history is extremely important. Having such audit trails available (and
easily accessible), not only promotes transparency to regulatory bodies, but
reduces government audit risks and protects against malicious litigations.
The Importance of Accountability
EPM, in general, should not be viewed as static. Companies often react to a host
of dynamic competitive, regulatory, operational, and financial pressures by
changing their strategies (and in some cases, their objectives) to adapt and grow in
their respective industries. That said, companies can better position themselves
for growth if they become proactive in their performance management initiatives:
making sure that objectives, milestones, performance information, and
accountability information are made visible to stakeholders ahead of time to
enable informed decisions. Effective decisions made at the right time could yield
performance improvements.
The concept of organizational accountability is nothing new. But creating an
effective accountability system continues to be challenging for companies. The
mere concept of defining corporate objectives, and translating them into strategic
/ meaningful assignments for the employees, does not guarantee positive
performance. An important element to ensuring achievement of company goals
rests within the employees themselves. Leaders should understand their staff’s
motivational factor(s) to best create a performance evaluation structure that
© 2012 Aberdeen Group. Telephone: 617 854 5200
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ultimately aligns with corporate objectives. In most cases, financial incentives are
put in place to encourage employees to achieve their personal performance
metrics. Other incentives include organizational recognition of staff achievements,
and / or the establishment of staff promotions. As simple as it may appear for
senior management to issue organizational directives, thinking that the
corresponding tasks would be executed down the organizational hierarchy by role
and responsibility, it actually becomes a monumental feat if the staff is not
engaged. With effective incentives and performance evaluation systems in place,
companies become more capable of achieving goals, and diligent in ensuring
employee understanding of organizational objectives.
© 2012 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897

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© 2012 Aberdeen Group. Telephone: 617 854 5200
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Effective Enterprise Performance Management
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Key Takeaways
From the data gathered for this document, implementing enterprise performance
management can significantly improve financial and operational performance, but
many organizations lack the initiatives, capabilities, and technological enablers to
realize such opportunities. Organizations earning Best-in-Class status possess
elaborate enterprise performance management capabilities as defined by a strong
alignment of staff accountability to corporate objectives, and robust solutions that
provide stakeholders with access to performance data and information for
effective decision-making. The following are some key recommendations:
• Establish value-based criteria for prioritization of strategic and
operational plans (currently, 40% of Best-in-Class companies have this
procedure in place). To maintain industry leadership, the Best-in-Class
should continue to encourage executives to prioritize corporate objectives
based on the financial and operational impact. An example of how this can
be done is to weigh the potential cost of failure against the potential gain of
success for each corporate initiative, then rank the initiative based on the
risk versus ROI, with the highest rewards at the lowest risk up top. This
prioritization system can be applied across both financial and operational
objectives, and is most valuable in organizations where budgets are tight
despite a growing set of initiatives.
• Continue to involve executives to ensure future improvements
(currently, 71% of the Best-in-Class companies have this initiative in place).
Best-in-Class companies should continue to encourage executives to take
action based on performance data / information. Although this may prove to
be more difficult in a large and / or geographically-dispersed organization,
enterprise-class performance management solutions have become effective
in enabling information visibility to expedite and facilitate executive
involvement. As mentioned previously, to maximize productivity among
executives and their constituents, the direction of executive intervention
should originate from the bottom up. When senior management has
identified the culprit for performance deficiency, the change in plan should
be properly translated in actionable terms for stakeholders.
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Effective Enterprise Performance Management
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• Implement a more robust system for maintaining performance
information and data (currently, 71% of the Best- in-Class companies
have this system in place). To maintain industry leadership, the Best-in-Class
should continue to provide up-to-date performance data / information for
their stakeholders. In a globalizing economy, where companies are
continuing to outsource / offshore their operations, it becomes increasingly
important to ensure a streamlined exchange of performance-based data
among distributed teams. If possible, partner and supplier performance
information (those affecting an organization’s objectives) should be captured
as well to provide an accurate assessment on financial and operational
impacts.
For more information on this or other research topics, please visit
www.aberdeen.com.
© 2012 Aberdeen Group. Telephone: 617 854 5200
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Effective Enterprise Performance Management
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The ROI of Information Governance:
Reducing Corporate Liability and
Enabling New Market Opportunities;
June 2012
Related Research
Effective GRC Management: Strategies for
Mitigating Risks and Sustaining Growth in
the Tough Economy; May 2012
Financial Executive's Agenda in 2012;
March 2012
Author: William Jan, Senior Analyst, Financial Management & GRC,
(William.Jan@Aberdeen.com)
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This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies
provide for objective fact-based research and represent the best analysis available at the time of publication. Unless
otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be
reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by
Aberdeen Group, Inc.
© 2012 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897