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CPM can help refine a company's strategic focus, but only if the data it uses is accurate and consistent.

It's tempting to view the current buzz around corporate performance management as just the latest in a long line of dashboard-based executive information systems that have overpromised and underdelivered for decades. But the reason so many of CPM's predecessors have failed is not because the products were unworthy; it's because mining and monitoring strategic data is fraught with logistical and cultural problems. And while current CPM products might have made some incremental advances in functionality, they are still at the mercy of the data they render—and the individuals who run them.

Even though many organizations have become more disciplined and methodical about creating strategic plans, they've been far less successful in executing and assessing performance against those plans. That's where CPM, also known as business performance management or enterprise performance management, is supposed to help. CPM is really just a fancy acronym for using a constant stream of corporate data to ensure a company is heading in the right direction. In a perfect world, a company defines specific metrics that best measure its ongoing success, be it sales, profit margins, customer acquisition, delivery times, or any countless data points that make up the business. Ideally, different business units use different metrics to measure their performance, but they all tie into one overriding corporate strategy.

CPM software, increasingly bundled in suites from vendors such as Business Objects S.A., Cognos Inc. and Hyperion Solutions Corp., is designed to help with all these different processes. CPM suites are typically built on top of a business intelligence platform and provide users with easily understood analytical applications, reporting tools and metrics management applications such as dashboards and scorecards.

Research firm IDC estimates that the total market for business performance management applications (financial consolidation, planning and budgeting, and scorecards/dashboards) was $1.2 billion in 2003 and it is expected to grow to $2.1 billion by 2008. But the market is still young, and few organizations have yet calculated a return on their investments in these applications. In fact, many view CPM as a way to extract additional value from their existing investments in business intelligence, data warehouses and the like. All of which underscores the fact that CPM software is only as good as the data that lies beneath it.

This article was originally published on 02-05-2005
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