Frank Buytendijk Blog

"So what?" That's the key question for every technology and business trend or innovation. For a long time the "so what" has been hard to answer for service oriented architectures in business intelligence and enterprise performance management. Although everyone touted they had one, the benefits consisted of having a more efficient development environment for the software vendor. This should not be underestimated, as it means lower cost of development, higher productivity and shorter development cycles, but what's the point for the customer?

The answer to that question was often in information delivery. A SOA enables software to be more layered of nature. The infrastructure layer can be separated from the functionality layer and that functionality layer can be separated from the presentation layer. This allows reports, queries and analyses to be shared using the web, being embedded in Office, using specific client software where applicable, mobile devices, or -- new on the list -- desktop gadgets. The list of possibilities is endless.

Ok, that's something. It leads to lower cost of ownership for the users, and more flexibility.

But I think there is a much more important benefit. Service oriented architectures are the key to unparalleled innovation. In my view, Oracle is not only the  largest enterprise software vendor, but we enable a complete ecosystem. It has never been so easy for small and innovative software vendors. They can build their analytical software for a specific vertical or functional domain, their special visualizations, their unique adaptors to specific data sources. All the stuff that facilitates it running, such as security, database, authentication and other infrastructural tasks has been done already. And for users, there's less risk working with small, innovative software vendors where their offerings have been certified to work within this environment.

With the SOA based approach, the open standards Oracle uses and Oracle's "hot pluggable" strategy, users get more choice.

--frank

Enterprise Performance Management is usually seen as a tool for strategy management. It assumes there is a corporate strategy, and EPM helps translate this into concrete goals, monitor progress, analyze deviations and report feedback back to the strategic level. Strategy formulation and strategy management are seen as two separated disciplines.

I wonder if this is still a correct view. Traditionally strategy formulation has been defined as a deliberate process, leading to 5-10 year visions and 3 year plans. Complete strategy departments studied markets and made projections. I am not sure how things are going in your organization, but I don't see many of these departments any more, they are a relic of the 1980s and before. Direct competition, adjacent markets, customers, suppliers and regulations are changing continuously, making any detailed, deliberate strategic plan outdated.

A more modern view on strategy formulation is to see this as a continuous process, based on "grow as you go." There is a strategic intent, on where to be in a number of year (5-10 is still fine), but unlike the old way of working the way how to go there is only sketched in broader terms. Through a process of continuous adaptation current and new ways are explored to reach those long term goals. Instead of following the path from the master plan with iron discipline, there is room for continuous experimentation, focusing on different ways to reach the goals.

Thinking of it like this, EPM becomes a tool for strategy formulation as well. But a few things need to change to use EPM in an effective way. A balanced scorecard strategy map becomes a living document. Scenario analysis is the basis for planning, not the budget. Competitive intelligence and market research need to integrate with business intelligence.

In short, EPM needs to become less navel gazing. EPM today is often used for internal control, and as a consequence has only tactical benefits. A strategic EPM initiative takes an outside-in approach. Who are our stakeholders and what are their evolving requirements? Which markets are we in, or should we be in? Which partners can help us reach our goals faster than we could do ourselves? Which new business models can we introduce to accelerate our progress? That's Enterprise Performance Management 21^st century.

--frank

Marcel Wiedenbrugge wrote a nice response to my blog, and he posted some interesting questions. So here's my 2 cents worth. . .

Marcel: I noticed that in the IT business, for 'outsiders', we still (increasingly) use incomprehensive words and concepts (hidden in all kind of - sometimes - abstract English shortcuts): even among experts this sometimes causes (communication) problems. Why not make language (communication) easier and focus on the user instead of the technology (solution driven, reliable technology based). I am anxious about your point of view.

Frank:  There is indeed a lot of jargon out there, but let me pushback a little. Jargon has a reason: being concise and precise at the same time. Having a term for something makes it easier to address it and minimize the chance of misinterpretation. This is common in all professional fields, did you ever try to communicate with a financial expert on IFRS terminology? Or with a doctor? There is a point to calling the collarbone "clavicula" in Latin, so that doctors speaking different languages have the same understanding and not have to translate "sleutelbeen" into "collarbone." So we should not get rid of jargon, the confusion would be enormous. Having said that, ofcourse it makes sense to take a solution driven approach when implementing IT projects. What are the business benefits? What strikes me as odd, that it is usually IT that is responsible for that too. Shouldn't the business take an active and committed role in that?

Marcel: Despite the fact that a lot has changed over the past decade, I believe there still is limited focus on intelligent solutions such as, analytic and predictive modelling and intelligent real time optimization of processes (most of the so called BI is still about 'analyzing' static data).

Frank: I agree. . . and I don't. It is a strong misconception, popping up every few years, that analyzing static data is old-fashioned. You see, every organization has two loops of management. In the first loop of management you monitor if you are doing well against established targets and parameters, in the second loop of management you ask yourself if you have the right parameters, measure the right things or if you are still managing the right process. The second loop of management requires off-line analysis. Imagine you are looking into customer segmentation, and every time you do a new analysis, there's new records in the database. How can you compare the various analyses with each other? You can't. Analysis requires a stable data set, regardless of what is technically possible. On the other hand, static data analysis is not everything. Of course, the first loop of management needs analytical power as well, as real-time as possible. Have a look at Oracle Real-Time Decisions (RTD), or the data mining capabilities right within the database. I agree with you that this is an exciting area of innovation.

Marcel: About communication: I recently heard a very interesting webcast on the influence of organzational culture and the implementation of BI. I think that's true. If BI is implemented without thorough understanding of the business culture, chances of failure significantly increase. What do you think?

Frank: Couldn't agree more. In fact, I have written about that a few times already in my blog. Check:

http://blogs.oracle.com/frankbuytendijk/2008/03/epm_and_corporate_cultures.html and http://blogs.oracle.com/frankbuytendijk/2007/10/16. In fact, my upcoming book will largely deal with the behavioral aspects of business intelligence and performance management, and in my workshops world-wide I am teaching how to use various dimensions of cultural aspects, based on Hofstede, Trompenaars and a few other frameworks, to come to better BI and EPM implementations. So am totally on board with you there.