Real-World Applications of Successful Measurement Tactics: Perspectives from SAP National Security Services (SAP NS2) Cherreka Montgomery National Vice President May 15, 2013

What does the Strategy to Execution Lifecycle Look Like? In most organizations still today

Strategy Implementation Each business unit develops their

own strategy to support overall corporate directives

Employee Reviews HR conducts annual performance reviews towards the end of the year

Strategic Planning Offsite strategy planning

session

Budgeting Process Detailed financial planning &

budgeting

Data Gathering Pre-planning “firedrill” places heavy burden on finance org

Strategic & Op Reviews Strategic and operational reviews are conducted periodically to compare performance against budget and revise strategy and make resource allocations and prioritization decisions

How well does this work in

your organization?

Typical strategy to execution lifecycle

“42.3% of CEO’s cite excellence in execution as their biggest challenge”

Source: The Conference Board, CEO Challenge 2010: top 10 challenges

Why is there a gap between strategy and execution n  Assume employees understand how the

strategy affects them and how their decisions impact others

n  Fail to make clear who is accountable for ensuring execution of initiatives, projects, and tasks

n  Implement applications which won’t help empower employees to make their own decisions

n  Don’t establish a formal mechanism to influence strategy or to share best practices

n  Forget to link budgeting and strategy and performance metrics

n  Manage strategy with inadequate tools that require much manual tracking and updating

Finance organizations’ top three challenges*

Providing metrics, information and tools to help make better business decisions (54%).

Influencing business strategy and operational priorities (32%).

Ensuring business initiatives achieve desired outcomes (29%).

Strategy

Budgeting Forecasting

CFO’s report they need to be more effective here  

Yet we invest in software to make us more efficient here  

WHY?

*  Deloi(e  CFO  Signals  2012  (q1)  

Best practices for effectively managing execution Linking Strategy to Budget

Budgeting & Planning

Resource Allocation

Strategy Management

Ensure “right” (financial, non-

financial, short, medium and long term) mix of KPI’s

Ensure visibility and accountability for execution across

functions and departments

Budgeting process needs to include separate funding to create value for the strategy that is cross functional in nature and not solely owned by a

single department/function

Strategic planning proceeds budgeting otherwise the strategic initiatives needing budgets won’t be identified

Set priorities outside of the budgeting

process

Requirements Do you need to?…

q  Link objectives to key performance indicators and initiatives that must happen to achieve them

q  Assign owners and teams to initiatives and provide visibility into the status of them

q  Align the organization around common goals, particularly IT and business units

q  Manage a centralized repository of KPIs and best practices

q  Drill into KPIs to determine the root cause of performance problems

q  Collaborate with other stakeholders to proactively discuss critical issues

q  Receive automatic notifications of below-horizon objectives that may be in jeopardy

q  Measure the impact of initiatives to determine how best to allocate resources

q  Compare business unit performance side-by-side or with other relevant benchmarks

q  Gauge performance with easy-to-interpret scorecards and…

q  Engage users – anywhere and anytime – via their mobile devices

Best-Run Organizations

Develop the strategy

Translate the strategy

Plan operations

Test, Evaluate and adapt

Measure, Assess Risk & Learn

1 2

3

4

7

6

Align the organization

3

Define mission, vision, and values Conduct strategic analysis

Formulate strategy

n  Review performance against peers n  Review past achievements

n  Review cost of service delivery of services by customer type and region

n  Optimize plans with shared services orgs

n  Plan for strategic initiatives n  Review past performance

n  Identify key risks and develop contingency plans and measures

SAP Strategy Management

SAP Profitability and Cost Management

SAP Budget, Planning, and Consolidation

SAP Risk Management

3

4 Allocate

Resources 5

Strategy planning and execution - where there is good use of automation

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n  Create a strategy to achieve mission and goals future n  Define specific objectives, measures and initiatives

n  What-if scenario modeling. n  Profitability and cost modeling n  Best case / worse case

n  Cascade strategy throughout the organization. n  Communicate strategy effectively

n  Handle exceptions, collaborate on potential issues, re-allocate resources to meeting changing demands, risks and priorities

n  Track performance (initiative status, KPIs, objective indicators), analyze across multiple dimensions, conduct strategic reviews

n  Revise strategy as you go, based on learning and feedback

Improving Performance at the City of Boston

About City of Boston n  Location: Boston, Massachusetts n  Industry: Local Government n  Products and Services: Multiple City

Departments n  Revenue: n/a n  Employees: Approximately 8,000 n  Web Site: www.cityofboston.gov n  SAP Solutions and Services: SAP Strategy

Management , SSM iPad, CitizenInsight n  Scope: Will be rolled out to all departments

Challenges and Opportunities n  Improve tracking and internal reporting

of performance n  Reporting of performance results to the

city’s citizens

Objectives n  Improve strategic planning and

alignment of performance objectives and actions with goals

n  Support city managers vision for performance management

n  Report performance results to citizens

Implementation Highlights n  SSM branded as BAR – Strategic

Tracking and Reporting System n  SSM iPad application is used for mobile

monitoring and management of performance

n  CitizenInsight will be made available (coming June 2012) to citizen’s of Boston area to view performance results

Why SAP? n  Struggled with implementation and

performance of competitor’s scorecarding solution

n  Evaluated multiple solutions but felt SAP was easier to use, had better aesthetics and covered all key requirements including initiative management, operational reviews, scorecards and mobile capabilities

n  Leverage SAP available City Management content to accelerate implementation

n  Needed solution that offered strong mobile capabilities

Benefits n  Better understanding of and

agreement on performance from the big picture down to the detailed plans

n  Lowered overall TCO of their strategy management solution

n  Improved accuracy, availability, and aesthetics of published performance results

“A successful City is one that delivers for its people. Through

accountability and strategic focus, the BAR program ensures Boston

is delivering on that promise”

- Mayor Thomas M Menino

Under Armour Improves Forecasting, Budgeting, and Planning with SAP

Under Armour, Inc. n  Industry: Local Government n  Products and Services: Athletic Apparel n  Revenue: 1.6 B (2010) n  Employees: 2,700 n  Web Site: www.underarmour.com n  SAP Solutions and Services: SAP BPC

and SAP Dashboards

Challenges and Opportunities n  Improve financial planning and analysis n  Gain a better perspective on business

performance across the enterprise

Objectives n  Reduce time needed for quarterly closes n  Enable financial leaders to play a more

strategic role in the company n  Give business leaders better insights

Implementation Highlights n  Completed projects in less than three

months

Why SAP? n  Usability of software n  Flexibility and scalability of

applications n  Ability to integrate SAP and non-SAP

solutions and data

Benefits n  Decreased amount of time needed for

monthly close from 8 weeks to 2 weeks

n  Gained better insight into drivers impacting financial results

n  Improved understanding of performance via KPI’s and analytics

n  Developed key performance indicators designed to improve operational efficiency

“SAP Business Planning and Consolidation lends itself very

well to our existing infrastructure. It’s flexible, our people find it easy to use, and it provides the best overall fit

with where we see our business going in the future ”

- David Roberts, Corporate Manager of Financial Planning

and Analysis, Under Armour, Inc.

Mission Activity Tracker (MAT) was created

To answer the:

WHAT?

Activities

Themes

Media

Partners Audiences

Programs

Products

SO WHAT? Results

Case Study:

Measuring the impact of global US public diplomacy efforts

*  U.S.  Department  of  State,  R/PPR  

Purpose of the Mission Activity Tracker (MAT)

Meet OMB requirements for Public Diplomacy performance measures.

Example:

(Output) Audience Reached through US Mission Outreach Activities

MAT captures data on foreign audiences reached by PAS and Media Hub sponsored Public Diplomacy outreach.

*  U.S.  Department  of  State,  R/PPR  

Mission Activity Tracker (MAT) Purpose: Timely Public Diplomacy Reporting

•  How many •  With Whom •  Frequency of Engagement MAT data provides evidence of the daily success of U.S. Mission PD outreach to foreign audiences

*  U.S.  Department  of  State,  R/PPR  

Alignment, Communication and ROI Reporting from U.S. Diplomatic Posts worldwide

A high-tech manufacturer reduced the cost of their monthly reporting cycle by > 66%, while adding weekly and daily information

A healthcare company was able to reduce administrative overhead by 25%, achieving leanest operating margins of all of its competitors

A local government was able to reduce the time spent on preparing reports for operational reviews from a couple of days to 10 minutes

Proven experience in aligning execution with strategy running SAP

A beverage manufacturer was able to better prioritize their sustainability initiatives and get national recognition

A local government was able to drive consistency and improve their reporting of performance to executive management

The business case for establishing a rigorous performance management practice

2x MORE LIKELY to attain value “on” or “ahead of” time

1.9x MORE LIKELY

to deliver “on” or “below” budget

benefit achieved

53% HIGHER

return on investment

60% HIGHER

Source: SAP/AMR Value Management Survey Results 2010; 400+ Companies Surveyed

Organizations with strong performance management best practices realize:

(1) Performance of companies with high level of best practices adoption compared to those with low levels of adoption

…and execute projects that are:

Thank you

Cherreka Montgomery National Vice President for Corporate Development Cherreka.Montgomery@SAPNS2.COM Follow me on Twitter @CherrekaM