Oracle’s Hyperion Software is transforming how companies think about performance management.
by Anne Ozzimo, August 2008
If history is any guide, only about one-third of today’s large organizations are likely to survive as major players over the next 25 years. Many observers cite external forces such as globalization, increased complexity, and economic uncertainty as reasons why corporate stars often lose their way. Yet according to management guru Jim Collins, truly great companies use adverse times to their advantage, finding opportunities to excel while competitors struggle. Their management teams don’t find external scapegoats for poor performance but rather take direct responsibility for the health and direction of their organizations. And the organizations they build are not only focused on delivering exceptional results but also on making meaningful contributions to employees, customers, partners, and society at large.
For Oracle President and Chief Financial Officer Safra Catz, exceptional management is needed to create an organization that is “built to last” in today’s fast-paced economic environment. “It used to be that operational excellence was really enough, but it isn’t anymore,” Catz notes. “I’m hearing from customers that competition is really heating up at both the local and global levels, and so is the pressure to do more with less. Good managers have to make better decisions, and they have to better align themselves with their customers, employees, partners, and the community at large. You really have to differentiate yourself by being smarter and being more flexible, agile, and able to really respond to your customers’ needs more quickly.”
From Operational Excellence to Management Excellence
Over the past decade, most companies have done a good job driving costs out of the business and improving operational efficiencies through business process re-engineering projects and enterprise software implementations. Enterprise resource planning (ERP) implementations in particular have contributed to the bottom line by automating complex processes, improving product quality, and lowering infrastructure costs. With the broadscale adoption of ERP systems, operational excellence is no longer seen as a key differentiator but rather as the cost of entry into a globally competitive marketplace.
A new frontier in competitive advantage is being created, driven by market-leading companies that understand they must compete on analytics and improve their management processes. “For years, it was all about automating clerks and putting data into systems,” explains Catz. “But the true goals, the high-value goals today, are around enterprise performance management, making the information available and actionable for management teams so they can make changes when changes are needed or stay the course when they’re winning.”
The Three Pillars of Management Excellence
Through its work with world-class customers and its experience implementing performance management systems worldwide, Oracle has identified the three main pillars of management excellence:
Smart. There is no shortage of data, and every organization has access to the same data both internally and externally. The difference is insight and achieving that insight faster than the competition. In their book Competing on Analytics, authors Thomas Davenport and Jeanne Harris describe how companies can make a strategic difference by continuously analyzing internal and external data and experimenting on how to improve business operations or customer contacts. Smart organizations recognize that they must rationalize their analytical tools and management systems to eliminate the noise and provide actionable insights to all the stakeholders of the enterprise.
Agile. Being smart is useless if you can’t turn insights into action. Organizations are constantly changing through global expansion, product lines, and acquisition, so analytical systems need to dynamically plug into the evolving enterprise information architecture through standards. Agile organizations leverage best-of-breed tools that have advanced integration to operational systems and are hot-pluggable with the existing architecture.
Aligned. The third pillar of management excellence is about aligning insights across the value chain and to all the stakeholders of the enterprise. Organizations must evolve from a command-and-control approach to a collaborative model incorporating contributions from all stakeholders and sharing information through integrated systems and processes.