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Overview: Many organizations are far from where they want and need to be with improving performance, and they apply intuition, rather than hard data, when making decisions. Enterprise and corporate performance management (EPM / CPM) is now viewed as the seamless integration of managerial methods such as balanced scorecards, strategy maps, enterprise risk management, driver-based planning and budgets, rolling financial forecasts, activity-based costing (ABC), customer profitability and relationship management, supply chain management, lean and Six Sigma quality management, and resource capacity planning. Each one should be embedded with business intelligence (BI) and business analytics (BA) of all flavors; such as correlation, segmentation, and regression analysis; and especially predictive analytics. This presentation will describe how to complete the full vision of analytics-based enterprise performance management to improve organizational performance.

Regarding planning, the annual budget is often perceived as a fiscal exercise done by the accountants that is: (1) disconnected from the executive team's strategy and risk management mitigation plans, and (2) does not adequately reflect future volume drivers.

The budget exercise is often scorned as being obsolete soon after it is produced, and biased toward politically muscled managers who know how to overstate and "pad" their budget request. To complicate matters, traditional budgets are typically incremented or decremented by a small percent change from each cost center's prior year's spending level, but "use it or lose it" behavior by managers in the last few months of the fiscal year to unnecessarily pump up their prior year's costs and serves to confuse analysis of who really needs what.

Some organizations revert to rolling financial forecasts, but these projections may include similarly flawed assumptions that produce the same sarcasm about the annual budgeting process. Two components of the enterprise and corporate performance management (EPM / CPM) framework, strategy maps and activity-based costing principles, can be drawn on to resolve these limitations. Ideally, the correct and valid amount of future spending for capacity and consumed expenses should be derived from two broad streams of workload that cause the need for spending - demand-driven and project-driven. Demand-driven expenses are operational and recurring from day to day. Their requirements are typically from customers. In contrast, project-driven spending is nonrecurring and can take from days to years in time duration.

Building a core competency in strategy execution creates a competitive advantage for commercial organizations and increases value for constituents of public sector organizations. This competency links the strategy to the resources required to achieve plans.

Why should you attend: Many organizations struggle answering these types of questions:

• How well do our managers and employees understand our executive team's strategy?
• Are we measuring the right metrics?
• If we are measuring key performance indicators (KPIs), are they "balanced" between financial outcomes and the non-financial measures related to customer loyalty, process improvement, employee learning & growth, and innovation?
• Are we measuring too many strategic KPIs where many are arguably operational performance indicators (PIs)?
• Are our product and service-line costs accurate? Or are our accountants mis-allocating indirect expenses (i.e., overhead support)?
• Do we measure non-product channel and customer costs to report profit or loss by each customer?
• How effective is our annual budgeting process? Does its benefit exceed the costs to produce it?
• Is the budget out of date within a few months after it is published?
• Do experienced managers "pad" their department's budgets?
• Is consolidating cost center budgets bottom-up cumbersome?
• Do we understand incremental / marginal expense analysis classifying the behaviour of our resource capacity expenses as sunk, fixed, step-fixed, or variable based on the planning time horizon?
• Are many of our decisions based on intuition or experience rather than on fact-based data?
• How much competency does our organization have with analytics?
• How much resistance to change does our organization have that is slowing our adoption rate of progressive managerial methods?
  

Areas Covered in the Session:

• What the pressures are compelling organizations to adopt EPM (eg, greater volatility, uncertainty, insights for problem solving)
• Why business analytics, with emphasis on predictive analytics and pro-active decision making, is becoming a competitive advantage differentiator and an enabler for trade-off analysis
• How strategy maps and their companion balanced scorecards communicate strategic objectives with target-setting to help cross-functional employee teams align their behavior to the strategy and better collaborate
• How all levels of management can quickly see and assess how they are doing on what is important using key performance indicators (KPIs)
• How activity-based cost management (ABC/M) provides not only accurately traced calculated costs (relative to arbitrary broad-averaged cost allocations), but more importantly provides cost transparency back to the work processes and consumed resources, and to what drivers cause work activities
• Why measures of channel and customer profitability and customer value now supersede profit and service-line measures - and shifting from product to customer-focused organizations including future potential value - customer lifetime value
• How managerial accounting enables internal chargeback invoices of shared services (eg, information technology services)
• How analytics-based enterprise performance management solves the problem of poor budgeting
• How three types of project-related costs are included in the budget: capital, risk mitigation, and strategy execution projects
• How improvements to the managerial accounting system not only provides accuracy and visibility to costs, but they enable predicting required future resource capacity expense requirements
• The increasing need for probabilistic financial projections
• The increasing need for "what if scenarios"
• How effective planning increases productivity from processes and reduces costs
• How to overcome implementation barriers such as behavioral resistance to change and fear of being held accountable

Who Will Benefit:

• CFO
• Financial Controller
• Accounting Staff
• CIO and Information Technology Staff
• Strategic and Business Planning
• Marketing and Sales Managers
• Budget Managers
• Risk Managers