back to the main page
New Management Strategy Goes Beyond Operational Excellence to Make Companies More Competitive
In an article titled "Strategy to Success: The Management Process Value Chain," published in the January 2008 issue of the Journal of Performance Management, authors Thomas Oestreich, senior director, EPM concepts and strategies, and Frank Buytendijk, vice president, EPM strategy, define a new competitive mandate to move beyond business process optimization to establish what the article calls the "management process value chain."
According the authors, companies across entire industries are already squeezing maximum operational efficiencies from business processes such as order-to-cash, develop-to-release, and invest to retire. To compete these days, companies must achieve what the authors call "management excellence," not just optimized transactional processes.
"Operational excellence is not a differentiator anymore," write Oestreich and Buytendijk. "It has become a license to play. For winning, more is needed."
S2S: A Prescription for Success
The authors argue that when it comes to management processes, companies tend to satisfy themselves with the so-called PDCA cycle (plan, do, check, adjust).
"The problem with most of these management cycles is that they are financially oriented," write Oestreich and Buytendijk. "They tend to be inward-looking, not taking market dynamics into account."
To move toward what the authors call S2S (strategy to success), management processes must encompass three factors to differentiate one company from its competitors.
First, companies need to make smarter use of both external and internal analytics, rather than just depending on information available to all their competitors.
Second, they must be more agile in responding to evolving market conditions in increasingly complex, global markets.
Finally, they must align the contributions, requirements, and relationships among various stakeholders inside and outside the enterprise, from employees to partners to shareholders.
The Role of EPM
Enterprise performance management can help companies achieve these three success factors, according to the authors, but only if they move their EPM systems beyond what they call "a controlling activity in the back office" to support strategic decision-making, not just tactical management execution.
This is possible by adding both stakeholder alignment and smarter analysis to the EPM equation, say the authors. At the same time, they write, "Business planning should be more operational in nature, continuously balancing the needs of the market and stakeholders with the capacity of internal resources and activities."
That is why the agility of rolling forecasts is so important, they argue, since every change in the market or in internal capacity leads to a new operational forecast and financial prognosis.
To read more about S2S and its relationship to EPM, visit the “Thought Leadership” section of Oracle’s EPM Solution Space at http://launch.oracle.com/?yes2epm
|
