Prioritizing and Investing in Performance Management

At SAPPHIRENOW today SAP customers including Steelcase, Forest City Enterprises, Dow Corning, Under Armour and USDA came together with leading industry analysts from IDC and Aberdeen for a lively and interactive debate about the performance management market looking at why EPM is important to them, how it helps drive value and what the future holds for this exciting growth market.

One element of the debate focused on the economic climate with customers focusing on why they invested in EPM during a period of economic uncertainty. Steelcase, a manufacturer of office products open the debate explaining how their business is one of the first to be impacted and last to recover from an economic downturn. They explained how their investment in SAP BusinessObjects Spend Performance Management was the only software investment allowed during the recession as part of a wider project to increase visibility and lower costs. Dow Corning, a joint venture between Dow Chemical and Corning, implemented SAP BusinessObjects Planning and Consolidation to insure greater visibility which was critical for them during this period. Under Armor who was seeing huge growth chose to implement SAP BusinessObjects Planning and Consolidation version for SAP NetWeaver to drive greater visibility and model new business opportunities. The US Department of Agriculture (USDA) added that for all federal government organizations the key words are “accountability” and “transparency”. This has become even more important where funding is at a premium in a tight economy but also where government mandates increase the focus on these areas. They explained how SAP BusinessObjects Profitability and Cost Management is used to help them comply with the mandates and demonstrate value to key stakeholders.

Aberdeen’s Cindy Jutras commented on the importance of investments suggesting that organizations are showing greater optimism and that is now feeding back into their planning processes. She cautioned that the recovery may take longer than people think which may require them to be ready adjust plans and have the mechanisms to cope with this if and when required.

IDC’s Brian McDonough took the debate one step further to look at how companies are looking to expand beyond a point EPM investment into a broader portfolio of solutions. Forest City Enterprises suggested that this is about doing things in the right way for the business. Moving beyond SAP BusinessObjects Planning and Consolidation they see their EPM expansion moving toward SAP BusinessObjects Spend Performance Management and SAP BusinessObjects Strategy Management. Dow Corning added that today it’s even more important to bring together investments as part of a broad EPM and BI strategy and see how these assets can be leveraged together. This prompted a quick survey of where investment priorities lie and the results speak for themselves – expanding beyond planning to support Strategy Management and Profitability and Cost Management, the continued inclusion of BI and a new focus on sustainability. All good news for SAP then.

Is Now the Time for Driver Based Budgeting?

Although the publication of ‘Budgeting for the Agile Enterprise – a driver-based budgeting toolkit’ a couple for years ago was met with enthusiasm from the advocates of new ways of budgeting, it gently sank without trace. However the uncertainty of the last couple of years, during which many companies have been frustrated at their inability to re-forecast with the speed or frequency they would like, seems to have given new impetus to the search for a better way of budgeting.

So during this morning’s EPM breakfast meeting at SAP Sapphire here in Orlando, it was a plesaure delight to listen to Sandy Rogers, Director of Financial Systems at Qwest Communications talk on their adoption of driver-based planning and budgeting that consulting organization Column 5 Consulting helped them implement in SAP BusinessObjects Planning and Consolidations. Being a numbers business, telecoms is an ideal industry in which to implement a driver-based approach to planning and budgeting and Sandy shared some of the benefits of the approach as well of some of the change management issues in helping financial analysts and business folk move away from the ultimately false security that comes from a traditional approach to budgeting with its endless line item detail.

With Sandy and other like minded folk sharing their success, who knows, this common sense idea may finally gain the wider adoption it deserves.

Real Value Lies Beyond Numbers

One of SAP’s best kept secrets is its Value Engineering team, a group of specialists who work with customers to build business cases for investments in technology and software. Ultimately this hidden jewel seeks to demonstrate the value of an investment through the use of an extensive library of benchmark data and their experience of working with other SAP customers in similar verticals.

The fact that a group like this exists underlines the importance that prospective customers place on the business case for their project and ultimately their ability to demonstrate long term value and return on investment (ROI). In highly competitive and rapidly maturing solution areas, like the Enterprise Performance Management (EPM) market, this becomes even more important as customers seek not only to build a business case but lower perceived risk by understanding the value of a given solution by learning from peers who have already deployed the same solution.

Gartner highlighted this when in May of 2009 it published a report titled “Finding the Fast Path to Corporate Performance Management Value” which examined the sort of ROI and payback customers could expect from an investment in EPM solutions. While the report provides some very valuable data it struggles to provide real specific examples citing for example ROI in a range of 50-200% for one particular EPM domain. This highlights that there is no better alternative than talking to one’s peers and hearing about their experiences.

If there was ever an event which provided a forum for this then it’s SAPPHIRENOW which takes place this week in Orlando and Frankfurt. This event is the perfect venue for customers and prospective customers to come together and learn about SAP solutions, the value they create and how best to leverage them. By way of a few examples then SAP EPM team will be hosting approximately 100 customers for a special interest group breakfast on Enterprise Performance Management and organizations like the Campbell’s Soup Company will present on how they achieved better planning and budgeting processes using SAP BusinessObjects Planning and Consolidation version for SAP NetWeaver.

This is great if you’re one of the lucky people that were able to be in Orlando and Frankfurt but what if you’re not? Well to start with, SAP is making the event accessible online but it’s also committed to sharing customer experiences through as many channels as possible and making this accessible all year round with case studies, webcasts and customer videos. For example you can learn about customers like DWP, Tesoro, Swiss Post and Desjardin’s and how they use SAP’s EPM solutions directly on the SAP website.

It’s through customers stories like this and a forum like SAPPHIRENOW that real leadership is demonstrated. It’s not about broad sweeping statements about vague numbers of customers which are almost impossible to prove or and even harder to disprove but about providing real tangible stories of how customer use a given solution, their experiences and the value they were able to realize.