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The strategy gap lavaraging thechnology to execute winning strategies - Goveney M.

Goveney M. The strategy gap lavaraging thechnology to execute winning strategies - Wiley & sons , 2003. - 242 p.
ISBN 0-471-21450-7
Download (direct link): thestrategygapleveraging2003.pdf
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A surprising nonchallenge, says Graves, was that “we didn’t have an acceptance problem from our users. They wanted 24-7 online access to data. They wanted one version of the data. They wanted to get rid of the spreadsheets. The new system was an easy sell.”
Today, the web-based system has over 100 registered users. “Fifty to sixty of those actively use it as part of the budgeting and monitoring process. The others use it randomly to perform analyses. Managers and analysts can use it to look at the budget as it’s evolving. They can also look at actuals over time to perform trend analysis. Soon we’ll have eight years of actuals and nine years of budgets in the system,” says Graves.
During the initial sales cycle, Graves says the Port did not fully understand all the benefits that the CPM solution could deliver. “The product had a lot more capability than we thought. We had to really think about what we wanted to use. It was good news/bad news.” Today Graves reports that the Port has taken the system “way beyond our initial vision. For example, we really didn’t understand the product’s capability for online reporting, but now we’re using it extensively. The managers are really happy about being able to access information online and about being able to look at the information in different ways. In the fall of 2002 we will create a control panel for our executives—a single dashboard where they can view critical information as soon as it’s available, not just monthly.”
The Port also has benefited from the system’s ability to create alternative scenarios quickly, according to Graves. After the September 11,
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Corporate Performance Management at Work
2001, attacks, revenues dropped dramatically but expenses did not. In addition, some new legislation was proposed within a week of the terrorist attacks that would separate the airport from the rest of the district. Management wanted a revised revenue and expense budget for 2002 and new forecasts for 2003 that would reflect the bad economy with the airport remaining part of the district and a bad economy with the airport leaving the control of the district. “Plus they wanted a five-year cash flow forecast for all three scenarios. We had three days to do it—and we did it, with our new CPM system! We spent late nights to do it, but to this day, I’m amazed we could do it at all. We wouldn’t have even tried it before,” reports Graves.
Graves, who has several CPM projects scheduled through 2007, has a vision for how the Port will be able to use the system to enhance its ability to measure its strategic execution. “We have a conventional line-item budget right now. Next we plan to go to program-based budgeting,” he reports. The Port’s “programs” are actually strategies for the organization’s five core areas of operation. “After that, we’ll go to performance-based budgeting.” Graves also says that the group is moving closer to implementing a Balanced Scorecard methodology that will help the organization in its efforts to better execute strategy.
Matav: Hungary
Matav is Hungary’s largest telecommunications company with revenues of $1.6 billion. In 1998 the company was awarded the Financial Times Global Telecommunications Award as the most competitive national carrier. In 2002 it was awarded Euromoney’s Award for Good Corporate Governance.
“Our original systems for planning, budgeting, consolidation, and reporting were very difficult to operate and manage, making it virtually impossible to model the business,” says Zita Imrene Kartyik, head of business planning at Matav.4 “There was no common database in the company and its subsidiaries, making the financial data consolidation process difficult and leaving very little time for reporting and analysis. To meet our corporate goals, it was critical to find a solution that would help the planning team execute the strategic plan more effectively.”
The new CPM solution combines all these processes into a single enterprise system that provides powerful functionality for tasks such as business modeling and “what if” analysis. The system follows a rolling three-year planning methodology. “Top-down targets for the group and
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The Strategy Gap
its subsidiaries are set by the business planning division on the basis of market research and owners’ and analysts’ expectations. These are contrasted with bottom-up plans prepared by each business unit,” explains Kartyik. “Both need to be aligned, so we go through a process of reallocation of targets and resources by either modifying the top-down target, adjusting unit targets to maintain the overall group target, or adjusting the group target.”
The CPM solution has proven a major success with more than twice the number of users predicted in the original project plan. “Over 100 users including planners, financial controllers, analysts, and unit managers are using the solution,” confirms Kartyik. “We can now quickly pinpoint deviations from strategy because actual and budget data are stored in one database. Management can therefore manage corporate performance more effectively.”
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