EPM and Strategy Management
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markets, customers, suppliers and regulations are changing continuously, making any detailed, deliberate strategic plan outdated.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 21st century.
--frank
