The business of intelligence

Renee Lorton, Senior Vice President and General Manager, Performance Management Applications, is responsible for leadership of Cognos’ Performance Management Applications business, which includes solutions for enterprise planning, financial management and corporate reporting, and performance analytics.

Lorton has over 15 years of senior leadership experience in the enterprise software and performance management industries. Prior to joining Cognos, she served as Senior Vice President and General Manager at PeopleSoft, in which she led the company’s Enterprise Performance Management, Financial Management Applications and Enterprise Service Automation business units. Earlier in her career, Lorton served as Global Chief Information Officer of the financial advisory services practice at PricewaterhouseCoopers.

BM. What has been your investment/development focus over the last 12 months? And what areas will you concentrate on for the remainder of 2006 and into 2007?

RL. Cognos has been focused on extending its performance management system, which enables organizations worldwide to connect performance management processes across the enterprise for sustainable competitive advantage. First, we have been enhancing our technology capabilities that provide a foundation for performance management.

In addition, we have been supporting the development of exemplary, best practices among industry thought leaders and customers, and developing ‘performance blueprints’ that capture these best practices and help accelerate the customers’ realization of advanced performance management practices and related business value. Developed for a wide range of functional areas (such as sales planning and forecasting, workforce planning, and capital project planning) and industries (including pharmaceutical/life sciences, financial services, manufacturing), performance blueprints are pre-defined data, process and policy models based on proven best practices in enterprise planning and financial management and control.

Finally, Cognos has been establishing relationships with industry thought leaders from The Hackett Group, Palladium/Balanced Scorecard Collaborative and IBM Global Business Services to help organizations turn performance management best practices into everyday, common practice. Through published papers, roundtable discussions and online seminars, Cognos is able to help companies mobilize resources internally to effectively launch, manage, and grow performance management initiatives. Moving forward, Cognos will continue to pursue its strategy of addressing customers’ key priorities through technology, blueprints and partner offerings. Customers should keep watching this space – the next few years are going to be very exciting.

BM. How do Cognos’ solutions enable companies to improve and direct corporate performance? What does effective corporate performance management involve?

RL. Cognos brings together technology, analytical applications, best practices, and a broad network of partners to give customers a complete performance system that provides a single line of sight across all time horizons. Planning and consolidation combine the forward management view of the business with the current and historical view provided by scorecarding, reporting and analysis. Together, these capabilities provide organizations with a consistent corporate and management reporting environment to be able to answer key questions. How are we doing? Why are we on or off track? What should we do about it? This enables organizations to understand and monitor current performance while planning future business strategies.

BM. And which industry verticals are currently benefiting from using Cognos’ CPM solutions?

RL. Customers in a wide variety of industries choose Cognos to improve decision-making, boost performance, and maximize the value of their corporate data. Each industry has a number of specific challenges that are ‘sweet spots’ for performance management, often specific to a particular department. Some of these include pharmaceutical/health sciences (clinical performance measurement, enterprise incentive compensation management and product demand forecasting); financial services (mortgage banking, insurance risks claims reporting, Basel II and risk reporting); manufacturing (supply chain planning, manufacturing performance management, aerospace and defense management scorecarding and dashboarding); retail (retail operational performance management, vendor performance management); and the public sector (TANF public health and welfare, police and corrections performance management, K-12 and No Child Left Behind Act compliance).

BM. The regulatory environment for all companies has been dramatically affected by recent legislation such as Sarbanes-Oxley. How can better corporate performance management help organizations address regulatory compliance?

RL. Today’s compliance agenda is driving customers to seek the productivity efficiencies, process automation and sustainable competitive advantage offered by performance management systems/solutions. Performance management solutions address consolidation, compliance reporting, and management reporting processes, and deliver the transparency and single, accurate view of key corporate information needed for sustained IFRS and Sarbanes-Oxley compliance. It enables organizations to adapt to business and regulatory changes, compresses the time to close, and provides the data and metrics needed to drive better performance management. Performance management solutions also support better planning and forecasting – true, reliable consolidated management data, based on a clear link between statutory and management consolidation, provides a firm foundation for operational and strategic decisions.

BM. In addition, many companies are actually turning this greater focus on compliance into an opportunity for business improvement. How are companies making use of compliance-related software and tools to provide business flexibility, efficiency and financial advantage?

RL. In addition to greater visibility and transparency into operational performance and providing a solid foundation for planning and forecasting, customers are able to reap a performance dividend when their technology investments are designed thoughtfully, surrounded with a supporting best-practices ecosystem and structured to deliver a sustainable competitive advantage.

People are getting smarter within their organization due to all the work that had to be done for compliance. You know they’re getting smarter because they’re pushing into more informative reporting, a more methodical, predictable process for planning and strategy management, and the use of tools like dashboards or scorecards to track metrics and hold the organization accountable.

In addition, they are reducing a significant amount of variability in key processes and eliminating unnecessary ones. For example, we have a customer that unearthed the fact that they had 42 different ways of achieving the same process globally in its organization. Think about the efficiencies it will achieve now by narrowing this down to one common process.

We are also seeing performance management helping to streamline business processes on the business and IT sides; deliver better quality – both better-quality product as well as better quality of information; a more secure environment; providing better visibility into operations; and supporting organizations in their globalization efforts.

For example, imagine the performance dividend an organization could get if everyone was 5% more efficient and accurate in their decision-making. And imagine how much more powerful that would be if all these decisions were being made from a single version BI backbone which could give them a single version of the truth.

BM. Should firms be overly concerned with the ROI of their corporate performance management solution, or are there other, less tangible benefits? How can IT departments/senior management establish whether a CPM solution is providing value?

RL. There are clear efficiency gains in driving standardization and repeatability in recurring performance management processes. But there are still other, less tangible, but significant sources of benefit at all levels of the enterprise. For example, you can think of the benefits of performance management operation at three levels:

• Information delivery (understanding the business): underpinning performance management is the communication of information and strategy – not just one-way, and more than two-way—rather, in multiple directions. Information delivery provides everyone with the information and strategic context they need to do their work. It’s about getting the facts and making informed decisions.
• Performance oversight (managing the business): this is about providing those who are not directly on the shop floor with the information they need to stay connected to the business. It provides these more senior decision-makers with the levers they need to optimize the business. Oversight has two components: Were actions taken that support management’s direction, and were other actions taken that don’t fit with management’s direction? In this way, performance oversight is about managing against goals, defining accountability, and enabling measurement.
• Performance effectiveness (improving the business): quite simply, performance effectiveness is about executives having all necessary information when they make long-term decisions about the strategic direction of the company. It is also about strategic planning, removing constraints, and helping the executive level set new targets and goals.

The gains promised by a performance management vision are realized by the automated and integrated system. Performance management aligns and links plans with metrics with underlying information. In this way, it does more than other approaches such as the Balanced Scorecard, driver-based budgeting, or any other single initiative. Management can model its desired future, set the plans to reach it, monitor its progress along the way, and gain insight from day-to-day results to adjust the course. It is vital that executive management has the agility to change the business through strategy formulation and planning.

BM. Aligning IT with business and operational goals seems to be the mantra amongst senior executives we’ve spoken to recently. Why is IT alignment such a hot topic right now, and what role can CPM play in this?

RL. According to The Hackett Group, who define world-class performance in business processes, world-class companies spend 63 percent less on technology than non-leaders, but get more from it. These companies are lowering costs and being more effective because they’ve been more thoughtful about IT systems’ implementation. A good relationship between the CFO and the CIO can drive that sort of savings and also drive just a better-performing organization. In addition, Gartner explains in a December 2005 report that CPM success requires an enterprise-wide approach that goes beyond finance and financial measures. CIOs have an important role in helping the CFO build a vision of an enterprise-wide planning system, and they should ensure that business analysts are used to bring an enterprise view to any CPM initiative. This will not only increase the success rate of the CPM initiative, but it will ensure alignment with the underlying IT systems.

BM. What are your hopes and expectations for the next 18 months regarding the CPM marketplace?

RL. Today, we are seeing the early signs of significant growth in the performance management technology adoption. With more companies understanding the value and importance of gaining increased visibility and control over enterprise performance we expect investment in core systems to follow. At the market level, analyst projections predict a compound annual growth rate of 9.9 percent through 2009 (Gartner). Our hope and expectation is that performance management will become a ubiquitous technology, completely pervasive for organizations of all sizes, from small and medium-sized organizations to global enterprises.

BM. What trends/developments will drive the continued uptake of corporate performance management solutions?

RL. As you know, we’ve already discussed the link between compliance and performance management. That won’t go away anytime soon. It’s not a Y2K event, instead a recurring process that must be sustained and improved over time. We also see that the pace of change in our modern ‘connected’ economy and exceedingly regulated business environment is torrid, and that our current approaches for addressing these needs are too slow, expensive and error-prone. The ability to adjust business plans or targets fluidly in real-time, within the context of business processes and with the associated global insight into the impact of these changes, is imperative to improved business performance.

Cognos will continue its commitment to category leadership of business intelligence and performance management. In addition, we will continue to innovate to ensure that customer experience in advancing and sustaining performance management practices is best in class. By investing ‘beyond technology’ in expert resources and best practices, our customers will enjoy more success, faster.

Performance management

• With Cognos 8 Business Intelligence, customers gain the full breadth of BI capabilities – from reporting, analysis, scorecarding, dashboarding, and event management – in one product, on one web-based architecture.
• Cognos 8 Planning provides customers with high levels of enterprise participation, models that link operationally detailed plans across functions and help support higher frequency update, rolling horizon, and driver-based planning and forecasting best practices.
• Cognos 8 Controller adds strengthened financial management and control capabilities for enterprise financial consolidation and corporate reporting, driving faster cycles of scrutiny, review, planning and decision-making for overall improved performance and sustainable compliance.
• Cognos 8 Workforce Performance is a configurable application that snaps into your existing technology environment, simplifying the delivery of relevant and reliable information on HR issues such as turnover and attrition analysis, compensation analysis, among others.