Allowing for strategy and risk in your planning includes alignment by crafting initiatives that can then be illustrated by applying resources, budget, and program structure to create the necessary changes to an organization. You can use several techniques to enact strategic initiatives that result in value-based outcomes for increased enterprise performance and to consider program risk factors.

Initiative Mapping – A Useful Technique to Define EPM and GRC Programs

Logical diagrams provide a sound framework for management to understand the path required to move the organization or components of the organization from a current state to a target state. In the current state position, strategic goals and objectives recognize the existing circumstances of the organization and the internal and external factors it faces. They also establish a baseline for future initiatives. The target state position reflects the desired environment the organization would like to achieve, once a particular goal has been realized. During this process, various initiatives, conditions, and outcomes may be represented in logical diagrams (also known as results chains). Figure 1 shows the way an organization must change to realize successful goal achievement.

Figure 1

Mapping initiatives using logical diagrams to support strategic goals and objectives

You can define, map, and structure various initiatives using SAP BusinessObjects Strategy Management, supported by other SAP BusinessObjects enterprise performance management (EPM) and SAP BusinessObjects GRC solutions, as well as classic SAP environments such as SAP ERP and SAP Supply Chain Management. 

However, programs can fail for many reasons other than technology, including bad organization and project management practices, poor project planning, and insufficient resources. How management commits to achieving its strategic goals and objectives in the execution of its business in the end is more important than the proper or improper use of software. 

In working with clients, four key issues stand out for me as critical to the success or failure of transformation of the organization through the change process:

1. Resourcing and funding, so management may provide the finances to execute the initiatives and create the value realization conditions needed to achieve goals and objectives
2. Communications planning, so that the organization members receive the correct communication at the right time in a way that allows them to make accurate decisions
3. Risk management, so that the organization can preempt any changes in the external or internal factors that may prevent you from achieving goals, and to account for any risk events that may transpire along the way
4. Operating model alignment, so that the organization, as needed, can restructure how it executes its business to better enable its ability to accept the changes needed for goal achievement.

Since the operating model of the organization is structural and not generally related to programs or projects, I’ll focus on the remaining elements of the organization change that are in the control of program management teams.

Resourcing and Funding for EPM and GRC Programs

Structuring of EPM and GRC programs follows best practices of program management techniques (as defined by the Project Management Institute, www.pmi.org, and other associations). Initiatives are grouped by logical objectives, executive sponsorship, region, operating unit, and other factors that may vary from one organization to another. Key to the success of the program structure is the allocation of resources, particularly funding for the various assets that are required to facilitate different forms of organization change to achieve strategic objectives. Financial enablement of initiatives, particularly in light of the recent economic crisis, is one of the true signals of whether or not executive management supports the program.

Most organizations have detailed processes to create business cases to support initiatives. Once approved, you can then use these business cases to provide the mandate to initiate the program through the use of a charter or other program start document. In both the business case and the program charter, stakeholders (e.g., management from finance, HR, and IT) need to articulate and approve resources and financial inputs along with anticipated monetary and qualitative benefits.

Communications Planning for EPM and GRC Programs

Communications is essential for any organization change program, with EPM and GRC initiatives being no exception. These programs encompass multiple elements of the organization simultaneously, creating a hazard for inadvertent misunderstandings at all levels of management and throughout the workforce. For example, a corporate sustainability reporting (CSR) program using SAP BusinessObjects Sustainability Performance Management and SAP BusinessObjects Process Control must have the sponsorship of several functions of the organization outside of IT, such as finance, HR, corporate planning, and operations. Therefore, most well-managed programs invoke some form of communication planning based on a three-stage change process illustrated in Figure 2.

Figure 2

Organization change programs highlight the need for communication of each step of the transformation

In this framework, the first stage is completed at the management and program team levels, where executives demonstrate their sponsorship of the program and the organization changes anticipated to follow. As discussed at the outset of this article, the need to understand and convey how all the organization groups come together also helps define the particular impact to individuals or groups at department, functional, and regional levels. Executives establish a series of communication with the program team to create an ongoing information exchange, some by physical meetings and some by virtual means (such as email updates).

The second stage expands the change program to the middle and functional management of the organization, as the processes, personnel roles, and technology required to do business in new ways is defined. For example, as one of the initiatives the organization might elect to focus on supplier rationalization. The specific benefits to each stakeholder are identified and communicated in the best manner to each stakeholder group.

In the final step of this framework, the new organization structure is finalized and with it come perfunctory activities associated with management of key functions, such as new procedures and policies implemented by HR. Training on new processes and technologies occurs, and with it the last vestiges of “how things used to be” as new operations are implemented.

Risk Management of EPM and GRC Programs

Risk management of EPM and GRC programs stemming from strategic initiatives take on the same best practices and methods used in other enterprise-wide efforts. As shown in Figure 3, risk management efforts begin at the outset of the change process. Based on this information, you can craft several elements to provide governance around EPM programs:

• Risk analysis, including impacts and probabilities of events occuring or not occuring (often illustrated by heat maps and other frameworks)
• Contingency plans, in the event that certain risk events transpire
• Triggers, thresholds, and metrics such as key risk indicators (KRIs) used to define acceptable limits of risk categories according to the organization
• Environments (e.g., scorecards, dashboards, and program microsites) used to manage and communicate risk aversion and mitigation activities

Figure 3

Example program risk management plan elements

Once the program is in its execution phases, the risk management activities are likewise executed with a monitoring effort to gauge when and if key risk events increase in likelihood or impact to the program.

Executive Buy-In Across EPM and GRC Programs

Whether implementing a top-down, middle-out, or bottom-up approach, executive buy-in is imperative to successful EPM and GRC program deployment. All organizational units potentially affected by such an initiative should consider the challenges and opportunities before selecting a plan of action.

In a top-down approach, executive buy-in is less difficult to achieve as initiatives usually stem from a mandate imposed by executives that is conveyed to mid- and lower-level management. In such a scenario, all goals and objectives established at mid- and lower-levels innately tie in to corporate-level strategic initiatives; therefore, simplifying downward progression of the initiative and making this the ideal strategy for EPM or GRC program deployment. However, successful top-down approaches must strongly consider the unique needs and challenges of each operational unit within the organization or risk a lack of sublevel buy-in resulting from perceptions that the initiative is unrealistic.

In a middle-out approach, middle managers contend with both tying initiatives to corporate strategy and ensuring their operational applicability to floor-level concerns. While not ideal, a middle-out approach is arguably the most-practiced method of EPM initiative implementation as middle managers are accountable both to corporate-level management seeking to improve overall organizational performance and to floor-level management and staff that create the goods or provide the services offered by the organization. As a result, middle managers seek a method to provide accountability and strategy management for all stakeholders. This approach is unique in that initiative designers have insight into what C-level executives are seeking to achieve and into the day-to-day challenges of floor-level employees, thereby providing middle managers the opportunity to develop a comprehensive EPM program. Unfortunately, this position also presents the difficult challenge of trying to simultaneously appease a diverse array of stakeholders, which can muddle the direction of an EPM initiative.

The most perilous of program roll-out strategies is the bottom-up approach. In implementing a bottom-up program, lower-level managers face the challenge of selling a program with potential global impacts to middle- and top-level managers and risk focusing too much on tactical concerns and not enough on strategic operation management. In terms of selling a program to higher-level management, it can be difficult to communicate how the proposed program addresses current operational concerns while tying in to corporate strategy. Regarding the latter issue, the full potential of an EPM initiative may not be realized because the program might focus too much on day-to-day operational concerns and not enough on the strategic direction employed by C-level executives.

William Newman

William Newman, MBA, CMC is managing principal of Newport Consulting Group, LLC, an SAP partner focused on EPM and GRC solutions. He has over 25 years of experience in the development and management of strategy, process, and technology solutions spanning Fortune 1000, public-sector, midsized and not-for-profit organizations. He is a Certified Management Consultant (CMC) since 1995, qualified trainer by the American Society of Quality (ASQ) since 2000, and a trained Social Fingerprint consultant in social accountability since 2012. William is a recognized ASUG BusinessObjects influencer and a member of SAP’s Influencer Relations program. He holds a BS degree in aerospace engineering from the Henry Samueli School of Engineering and Applied Science at UCLA and an MBA in management and international business from the Conrad L. Hilton School of Management at Loyola Marymount University. He is a member of the adjunct faculty at both Northwood University and the University of Oregon with a focus on management studies and sustainability, respectively.

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You may contact the author at wnewman@newportconsgroup.com.

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