Two deadly sins of EPM

Here's a career-shortening suggestion: go and ask the company's board for capex to acquire new enterprise performance management (EPM) software.

Here's a career-lengthening suggestion: spend far more on the company's current EPM investment than should be spent.

This is unfortunately the scenario that is playing itself out in many EPM sites across South Africa: companies are spending too much and deriving too little benefit for their overspending.

As a consequence, these companies are not enjoying return on investment from their EPM investment, and in some cases, disillusionment sets in.

In my experience, there are two reasons for this regrettable state of affairs:

* Companies are determined to roll their own.
* Inappropriate software procurement procedures.

Let's start with the first one. Given the state of the economy, one can understand the corporate mentality, which says: "No consultants here." After all, some consultancies have track records of charging heavily for variable quality service, and for letting their consultants learn on the job, while charging top dollar.

But the quality EPM consultancies have experience that simply cannot be equalled - or replicated. These consultancies do nothing else but work on EPM, and as such they have a critical mass of experience that no customer can match.

EPM consultancies have seen it all: which applications to acquire and which not; analysis of business needs; and implementation, including user training and skills transfer.

There are companies that pride themselves on not using the services of consultancies, as they have been burnt in the past. But the correct approach, surely, would be to employ a more rigorous approach to short-listing and selecting a consultancy, not simply to throw the baby out with the bathwater.

In some cases, the real cost of not using consultants is opportunity cost: the wasted time and effort, opportunity, the lost chance to get the project going timeously.

So an internally chosen and developed EPM team can spin for months on issues an expert consultancy could resolve in days. The internal folk can go down dead-ends, make incorrect decisions, and cost their company millions, not just in incorrect decisions, but in the knock-on impact on lost cost-saving and revenue-generating opportunities.

Properly chosen, consultancies can mean the difference between success and failure of an entire EPM project. Given the importance of EPM, it is false economy of the worst kind to decline the services of a quality consultancy to save money, or because it is corporate policy not to do so.

The second critical mistake companies make when considering EPM - and it is related to the first - is choosing an EPM solution without going through the full checklist of requirements.

This is often because a particular vendor has approached the company, and got a foot in the door. It may already be an incumbent, say, with an ERP suite in place, or an existing provider of business intelligence applications. So, as a trusted supplier, it gets the nod.

This is laziness in the extreme. Read some of the influential business intelligence (BI) market overviews and it can be seen that all too often companies choose a BI offering as it comes from its ERP solution provider. This is even though the ERP company has a dismal, even disastrous, track record with BI.

Properly chosen, consultancies can mean the difference between success and failure of an entire EPM project.

Adrian van der Merwe is MD of 8th Man Consulting.

Clearly, EPM software is not low-cost to acquire, or to implement. And its impact, positive or negative, on a company means its acquisition should be the subject of an extremely rigorous evaluation and selection process.

Yet, I have seen many cases where customers view all EPM software as having similar functionality, just because it all belongs in a particular category of software. Nothing could be further from the truth. Some EPM software has been created from scratch; other pretenders have been retrofitted and inappropriately repackaged as EPM, when they are nothing of the sort.

Homework really needs to be done when it comes to EPM, matching the company's carefully elicited requirements against what's available on the market.

Finally, it is easy to buy too much EPM, all at once. There are so many modules in a well constructed EPM suite, and they will map so well to corporate requirements, that a company will be tempted to acquire too many at once: budgeting, planning, forecasting, financial consolidation... the options can overwhelm the inexperienced buyer.

So, two pieces of advice: seek an area of pain (typically financial consolidation), and acquire the appropriate EPM application, and not a jot more until there is another area of corporate pain.

The second piece of advice: buy the correct number of licences by scoping the company's requirements appropriately.

* Adrian van der Merwe is MD of 8th Man Consulting.