In my earlier post on Enterprise Performance Management (EPM), I had enumerated the six steps of a practical EPM strategy in an organization. They were:
- Business Process Maps – Understand the business process
- Metrics Identification – Get hold of the metrics
- Metrics Profiling – Understand the metrics in depth
- Metrics Maps – Understand the cause and effect relationships between metrics
- Metrics Visualization – Implementation of Metric Maps on BI Tools
- Watch and Improve – Monitor Metrics and Improve business process as required
It is important to realize that building a data warehouse (enterprise wide) or data mart (functional area wise) or simply an integrated, subject-oriented data repository (without getting lost in semantics!) is implicit in the set of steps outlined above.
Steps 1 and 2 (Business Process and Metrics identification) are self-explanatory. Though getting hold of the right metrics is easier said than done, it is fairly well understood that the measures/metrics selected for analysis should align itself with the organization’s mission, business model and value creation aspects.
Step 3 – Metrics Profiling, in my opinion, is the step often missed out in EPM implementations and arguably is a major cause of failures in such programs. Metrics Profiling stated simply is a way of understanding your metrics in depth. Given below is a sample template for profiling your metrics and can be customized for each organization.
1. Metric Name – Name of the metric
2.Metric Definition – Brief definition of the metric
3.Metric Type – Is it a ratio, absolute number, trended value, etc.
4.Sources of data – Identify the source of data for the metric and the owners
5.Application – Brief description of how the metric helps in managing the business better
6.Potentially Affected Metrics – Identify the other metrics that are impacted (positive or negative) by this metric.
7.Example – Provide an example of metrics usage. (For example: ABC Computers released three new product lines during the last 12 months, generating $15 million in new revenue out of total annual revenue of $125 million. New Products Index = 15 ÷ 125 = 12%)
Metrics Profiling is a very important step in the implementation of enterprise wide performance
management system. I will discuss the other aspects of EPM in my subsequent posts.
Thanks for reading .