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Planning and Forecasting Tips
Cognos Tip: An Example Of A Government Performance Management Model
Cognos.com Tip: Governmental bodies and executive branch agencies and departments are energetic users of government performance management software technologies. Applying the constructs and concepts of BI to the government model is straightforward and compelling.
Imagine a military aviation development program for an innovative surveillance system to be used on a tactical aircraft or UAV (Unmanned Aerial Vehicle). The decision maker is the development program manager and is responsible for technical development, cost, schedule and integration. His team is comprised of government program and technology experts, cost analysts, component project managers, and assorted industry contractors and manufacturers. For the purposes of this summary, all decision processes are assumed to be internal.
During such a development effort, the program manager will be required to make any number of important decisions that depend on answers to these fundamental questions about the project: · How are we doing and where do we stand? · Why are we at that state? · What else should we be doing? The answers are at the heart of performance management. The core capabilities of the government performance management model - scorecarding, reporting, analysis, budgeting, and planning – just as in the corporate world, provide the information needed to answer these questions in the most efficient manner.
If you’re considering government performance management technology, check out the Cognos 8 system. It employs a comprehensive performance comparison capability that integrates scorecarding, business intelligence and planning technologies. Using the Cognos system, the government performance program manager gathers information for decision-making in four typical areas:
·Link plan targets to scorecards: In the planning process performed in the early stages of the development effort, key performance targets - possibly defined through Cognos Planning – were developed and can be converted into scorecards. With such planning, the metrics that guide future development tasks are set; with scorecarding, the manager measures progress towards goals determined from established and specified goals.
·Reporting on plans and budgets: Since many government and industry participants are stakeholders in the development project, the analysis and reporting against planning data sources and published plans from government repositories, as well as those submitted by contract from outside of the government.
·Event management for planning and budgeting: The alerts needed to manage the continuous planning and adaptive control processes. Events for the planning workflow are defined and if a critical value crosses a threshold (e.g., a phase development sub-plan is ready for review), the appropriate owner can be notified and respond.
·Data for plans and forecasts: The automated system provides a comprehensive view of operational and transaction information. The decision maker uses this data to populate planning and forecasting models. By using current operational data, a more accurate, forward-looking plan is maintained, and adjusted with day-to-day status reports.
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Performance Planning: A Framework For Continuous Planning, And Adaptive Control
A trend is appearing in the performance management arena that is directed at improving the planning and control function areas. Performance planning is the most common name for this trend. Aspects of the techniques employed are applicable to all areas of business planning and are especially useful when an organization attempts to improve forecasting accuracy.
Most planning and forecasting models identify four factors that influence aspects of the planning process: · Planning and Controls · Resources and Coordination · Organization and Culture · Targets and Rewards All four are closely related and serve to ensure that all salient considerations of effective planning and forecasting are addressed. For example, in traditional practice, rigid annual planning exercises are employed where tracking of variances is tightly controlled. In such plans, resources are allocated in a quasi-fixed manner and centrally coordinated. This centralized control is spread about the organization structure and the end result is a focus on managing numbers. As a result of the above, performance incentives have a tendency to become preset and supporting incentive targets tend to the incremental.
Performance planning suggests that a process of rolling planning and forecasting be utilized. When coupled with identification of key performance indicators (KPI) with adaptive controls, an organization can reach an iterative state of plan then adapt in real or near-real time based on performance, not numbers.
A similar process occurs when dealing with resource allocation. Assigning resources on demand opens the door to a better utilization of key talent that can be further spread throughout the company. Coordination can then become dynamic and applied wherever needed.
At this point, this dynamic entity empowers a significantly larger, distributed, action group to act freely when needed and swiftly. Instead of responding to arbitrary numbers, the focus shifts to enhancing customer value. And, as one would expect, performance targets grow to be relative to performance variables and increased value to the customer and the organization can be rewarded.
One word of caution; Resources on demand, dynamic coordination, and decentralized control can, unless wisely employed, lead to serious problems.
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Cognos Tip: The Role Of Performance Planning In Improved Scorecarding
Cognos.com Tip: Annual planning processes have long been beset with inherent inaccuracies in the numbers selected and used in the plans and forecasts. These inaccuracies fall into a number of categories: · Legitimate errors arising from mishap or difficulty acquiring data · Complexity errors resulting from difficult or poorly understood mathematical constructs · Calculated guesses · Overtly false or ‘gamed’ figures, etc.
Consider performance planning software because its approaches appear to provide solutions to some, if not all of these error sources due to one simple factor; deriving the organization’s key performance indicators, hence true business drivers from a dynamic and adaptive process drawing upon manipulation of real numbers from myriad sources. This has the effect of essentially ending inaccurate information. It therefore is an important side benefit of business intelligence and reflects the power analytical techniques, such as statistical error checking, provides when employed on a broad scale set of data.
Another valuable benefit is that a balanced scorecard solution is easily achieved because the underlying business drivers truly drive determination of the scorecard metrics. This avoids the pitfall of having bulky, traditional budgeting exercises choke the strategic value of the scorecarding initiative.
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Using BI Planning And Forecasting To Generate KPIs
Consider using BI planning and forecasting tools to generate your company’s key performance indicators (KPI).An interesting test run of how an investment in BI software can help your business is the tip.
Use your traditional forecasting process in an attempt to create the appropriate KPIs for your business.Research the topic to understand the salient characteristics of your performance indicators and get to know how vendors develop KPIs in a BI environment.After you do it traditionally, ask a vendor to take a subset of your data and run it with their software and compare the differences.You may be pleasantly surprised and make the move to the BI world.
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Cognos Tip: Chasing Numbers: Sound Financial Reporting And The Role Of Business Intelligence
Cognos.com Tip: Establish a higher priority for better planning tools and forecasting software. Such a planning process should focus on key economic and business drivers, the KPIs (key performance indicators) of performance planning. Try to make these improvements: ·Consistency across corporate planning and forecasting ·Plan from the top-down ·Streamline the process cycle time ·Forecast the future with both historical data and predicted key economic drivers Furthermore, the ultimate goal from pursuing this approach is suggested to be a transition to rolling forecasts and a subsequent organizational planning revolution.
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Cognos Tip: Rationale For Linking Business Function Areas With BI Planning Software
Cognos.com Tip: Establish key goals and metrics for business function areas (marketing, finance, human resources, etc.) because these are important pre-requisites for data mining and manipulation in business intelligence software. This foundation-laying process leads directly to analysis of the information to facilitate planning, forecasting, and decision-making.
The planning process links them with the relevant dimensions, ensuring that resources are allocated and expectations set against financial and operational goals. In this way, the planning process ties back from decision-making processes through the assorted business functions of the organization, and eventually into the reporting process and, eventually, the financials. This illustrates how BI can serve an entire business enterprise and can permit management to monitor performance, allocate resources, and set plans for future financial targets.
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Cognos Tip: Planning and Forecasting for a Clinical Trial
Cognos.com Tip: If you are a project manager, you must first go through a planning process, whether ad hoc or formal, that lays the groundwork for the launching of the development or functional process.
First, observe the situation, in the case of a clinical trial management software application, by determining the mission – trial objectives, testing options, and required measures of effectiveness; Establishes the effort – establish protocols, test techniques, instrumentation needs, map the process, schedules, etc; Decides on a course of action – determining the correct path from the choices identified in the previous steps, document it, brief it, and attain authority, etc.; Commences work - through setting the project team in motion and proceeding down the plan’s path. You should review and refine the plan as the learning curve is established, results are achieved, and outside influences, as they always do, drive needed change.
In simple and straightforward projects of relatively small magnitude, this planning exercise can be performed rather simply, using very traditional tools. For example, use the tried and true spreadsheets, database applications and project management programs. This is a great way to start, and as the magnitude of your company’s projects grows, so to can your use of technology options that abound in the marketplace. However, because of the diversity, breadth, and volume of data/information available (and evermore required) to operate in the 21st century, the sophisticated, automated business intelligence tools offered by vendors, such as Cognos, may be the right choice earlier, rather than later, in the cycle.
