Ironclad Data and BPM

Quickly connecting decision-makers with accurate, meaningful information is the core purpose of world-class business performance management.

One of the most important pieces a manager can use to successfully solve business puzzles is up-to-date -- and accurate -- data. Unfortunately, many organizations continue to patch together their strategic plans using spreadsheet-generated performance information that is outdated by the time it reaches the desks of senior executives.

Coda Financials Inc., a software provider in Bedford, N.H., surveyed over 100 midsize to large companies in June 2003 and found that more than 60 percent of CFOs feel their current accounting systems fail to provide the information they need to measure business performance effectively. "The reason for this is that most of them still use basic, manually updated spreadsheets to analyze complex financial data -- a practice that is not only time-consuming, but also prone to error," says Steve Pugh, Coda's CEO. "The survey found that, on average, spreadsheets were being updated only once a month, often forcing business decisions to be based on data [that was] weeks out of date."

Business performance management (BPM) software is designed to deliver data to the right people far faster than they could get the same information from spreadsheets. In theory, at least, BPM systems lead to smarter business decisions.

"Suppose a sales rep has a hot prospect. They don't want to lose this opportunity, so they take the order, then do a credit check later," suggests Guy Creese, research director at Aberdeen Group in Boston. "With BPM, they could conduct a credit check online and may decide on the spot not to take the order or determine that this order is not worth as much as one with stellar credit. With the old way, you'd eventually figure it out, and in the interim it may cost your company money. Now you can figure it out on the spot and make the right decision immediately."

In the mid-1990s, Lockheed Martin Corp. faced inefficiencies in performance management because it had engaged in numerous mergers and acquisitions. "We had 120 companies operating at one time, and each one had different auditing standards," says Mike Gabaly III, director of enterprise performance management in Clarksburg, Md. "It took 14 days to generate the financials, and by the time the data reached senior management it was frequently outdated."

Lockheed Martin needed a single chart of accounts with metrics-driven reporting, Gabaly says, so in 1999 it purchased a BPM system from Longview Solutions. "Now it takes one to two days to produce financial reports," he says. "The system is Excel-friendly, so our people became comfortable with it, but with one single source of information. We're looking at real-time data, which we use to make quicker decisions and to conduct what-if scenarios to assess the impact different courses of action would have on our balance sheet."

But real-time analytics present challenges as well as opportunities, Creese points out. "Queries must operate on data only seconds old, rather than days old," he says. "Increased analytical speed means companies can keep and review the raw data rather than summarizing it in an effort to save space and time. However, systems must not just deliver the data rapidly; data models must be so malleable that enterprises can run 10 what-ifs in the same time that they used to run one."