What it takes to achieve Business Agility with TM1

Feb 28, 2017

Performance Management systems covering Planning and Forecasting are special when it comes to operational requirements. While change and update cycles in the range of quarters or months are acceptable for ERP and corporate reporting systems, the name of the game of business modelling is agility. While this is well understood, the path to get there is definitely not.

Change is pervasive, especially with the advent of digital business: forecasting base and logic can change anytime, not to mention corporate structures (metadata) or dealing with new acquisitions or business lines.

The value (the ROI) any Performance Management solution delivers is directly proportional to how quickly it adjusts. For a one-off, spreadsheet based model it is acceptable to open a new workbook for each new year or quarter or whenever there is a significant change in logic or business structure, for an Enterprise Performance Management system like TM1 it is not. Users (rightly so) expect last year’s or before figures to be there and comparable regardless of changes happened since. But they also expect to have their current daily needs and even ad-hoc simulation requirements to be fulfilled - that’s the vision they’ve been sold on.

This places a heavy burden on organisations that sometimes struggle just to keep the underlying systems running.

And while system uptime might be a KPI for IT, for Business it’s different: system is running, accessible and serving valid numbers with reasonable performance.

Operations Pyramid

This is the baseline where all the effort is starting to pay back, where the ROI can be realised. There are of course further steps necessary, like training and change management but this is the base.
Why is system performance so important? Planning and forecasting is an iterative process. A good tool has to allow quick and easy tweaking of the inputs and provide feedback, immediately at best.

The ultimate challenge to achieve business agility with a system like TM1 is exactly this: keep all these base, underlying levels and functions in balance and in the green area all the time regardless how big or small a change the system is going through - and as we all now, change is constant. If it goes yellow or even red often or the current state is not transparent enough for the users, they will loose trust in the system. If that’s gone the value for the organisation and recognition gained will plummet as well.

On the bright side, any effort that allows systematic improvement of day-to-day practice will greatly and on an ongoing basis raise the ROI of the system.

There are various high level metrics that can be used to track the effectivity of such efforts, like number of issues raised, time for issue resolution, time to complete change requests or user adoption being the ultimate metric of any BI and CPM system.

So what are some drivers of these metrics that have potential for systematic (as opposed to one-off) improvements? Manual activities that are repetitive but essential - unfortunately there are plenty of tasks like that:

  • track changes in structure (e.g. a dimension like Profit Center), logic (e.g. cost allocation logic) and data (e.g. inputs made in the system)
  • track how changes are propagated and deployed (e.g. from testing to production)
  • track how users use the system
  • monitor system performance
  • monitor system health
  • data reconciliation
  • documentation

One-off exercises like a health-check can help fix serious issues or disturbances but they are no substitute to systematic improvements incorporated in the daily practice.

While outsourcing (including offshoring) some of these tasks is certainly an option it only addresses the cost side of things, not speed, quality and efficiency - in practice it’s mostly inversely proportional. In reality what happens is that many of these tasks are simply skipped till a user flags an issue. That certainly does not help with the trust in the system and the issue also impairs the user.

A proven way to improve operational efficiency is to automate as much of the manual tasks as possible. Due to the repetitive nature even small gains and savings accumulate and become substantial over time. Decreased marginal costs is just one benefit: more important is that more space and resources can go into improving the quality of the solution.

If the reliable capability to operate the Performance Management solution is there, the organisation can further innovate and incorporate various aspects of the enterprise in its business model gradually coming closer to the holy grail of agility and integrated planning.

ROI can also be increased by optimising the cost structure - that is going to be covered in a subsequent article.

Sign up to our blog to get notified of new articles.