Business Challenges in creating an effective EPM platform
Guest Post by
Sanil Kumar Bhaskaran, Consultant, Oracle Business Intelligence practice, Enterprise Solutions, Infosys Technologies Ltd.
I do not intend to start this blog enumerating the enormous benefits an enterprise can reap out of an EPM investment. The fact that meager 23 percent of the companies have been able to get higher returns on their equity owing to their EPM initiatives, itself makes us ponder about the underlying challenges in having an effective EPM platform. Let's look at these challenges from the other side of the table - from a Business perspective and not as a System Integrator.
One of the main reasons why EPM initiatives fail is the lack of focus on key value drivers over the long term, which results in the wrong choice of metrics to measure performance .This is more of a strategic choice. Challenges appear in various aspects of an enterprise. Let's take a look at them one by one.
Management
The biggest challenge in any EPM initiative is to find the right Sponsor, who is influential enough in the organization to mobilize resources across functions as the success of any EPM initiative lies in an effective cross functional team, which is a snapshot of the whole enterprise. The sponsor needs to be a visionary, who believes that the investments made in Technology can give the organization a cutting edge over its competitors. It is also critical where the EPM team is placed in the reporting hierarchy; it should be positioned high enough to demand attention and low enough to stay with the real world.
Financials
While the drivers for an initial EPM investment may be a short term objective like Financial Consolidation/Planning and Budgeting or reporting solution, the EPM platform should be supporting integrating capabilities across business processes to realize long term value of the investment. Having said so, the challenge in appraising an Investment decision in an EPM Platform is determining the ROI, as the tangible financial gains out of an EPM investment is tough to measure and is bound to give an unrealistic picture. In most of the cases there is no direct relationship between an increase in top line/ bottom-line and an investment in EPM solution, the gains are usually attributed to it, hence not quantifying the gains This in turn is a crucial factor in deciding on the continued funding of the project.
Operations
The underlying business model of an enterprise could be a hindrance to an effective EPM Platform. In most of the cases the challenge that the team faces is to address a plethora of Point solutions, multiple business intelligence systems and fragmented implementations owing to a decentralized management. It takes significant effort to convince others to embrace a preferred program and to justify it. The EPM team will need to understand the line of business needs in the context of the company's overall business objectives, as well as cross line of business issues. There could be conflict of interests between the Business units /Functions in this regard .The best approach to address this is to have an EPM Center of Excellence/Competency center being driven across the enterprise. The EPM center could be funded by any of the three models available: Overhead, Pay-per use or subscription based to address the needs of each BU's or Functions.
Human Resources
The success of such an initiative will be largely determined by the quality of its people. To serve its end users the team should acquire a wide range of business, IT and analytical skills from various departments within the organization. Recruitment could be challenging in finding the right candidates with the right skill sets.
Any transformation project is bound to have a reduction in headcount owing to streamlining of processes. The challenge that organizations would face on this front is relocating/training the displaced personnel and managing expectations with them. This should be handled through effective change management.
Firms which overcome these challenges and have a long term vision on their EPM investments lead the way! I would be interested to hear some of the typical challenges that your organization might have faced during an EPM implementation.
