But how does one begin building a CPM strategy? As with any enterprise-wide initiative, careful thought and planning early on will help the organization achieve the best possible results. By performing the following seven steps, an organization can create a roadmap to help jump-start its CPM initiative.

1. Define Key Performance Metrics
Strategic execution is the driving force behind CPM. Therefore, the first step is to review organizational goals and objectives at the highest level. Next, clearly define key performance indicators (KPI) and how they are to be achieved. The purpose is to determine which performance metrics will be required by which people and at what level of detail. Give careful thought to these metrics: plan to measure what is critical to the organization's success, not what is easy to measure or everything possible to measure.

Defining the key metrics will help identify the methodology for delivering them. If the organization's most critical KPI is the value each asset adds, Economic Value Added (EVA) likely will be the methodology. If nonfinancial measures and leading indicators are critical, then a scorecard methodology likely will be employed. Most organizations will combine and tailor multiple management tools to accommodate their specific needs.

2. Define CPM Processes
Seven key processes must be integrated to provide an effective CPM environment. They are strategy formulation, scenario analysis, planning and budgeting, communication, monitoring, forecasting, and reporting. In addition, feedback loops must be established between these processes so that they become event driven rather than activated by the calendar. In step 2, the organization must determine how these processes should work to support the organization's strategies and goals.

Many questions must be answered. For example, who will be involved in each process? What level of detail will be necessary? What event will trigger each process? How will strategies be assessed and chosen? How will the resulting top-down targets be established? How will tactical plans be created and funded? How will plans be communicated? How will plans be monitored? How far out will the organization forecast and how will it deal with forecasted exceptions to the plan? How will results be communicated to internal and external stakeholders?

The step should result in a document containing the workflow of data through the various processes. It serves to enhance management's understanding of the way in which CPM could work within the organization.

3. Overlay Existing Processes/ID Gaps
Next, compare what currently happens with what should happen as identified in step 2. Focus on the ways in which processes are triggered, the types of data created and shared, and the users involved. Surprisingly, many organizations do not really understand the processes they currently have in place and how they impact organizational performance.

Again, many questions must be answered. Are the tactical plans directly linked to the corporate strategy? What processes are missing or are inadequate? Are the market assumptions recorded and monitored throughout each process? Can the defined organizational metrics be monitored through each CPM process? Can the planned, actual, and forecasted progress of strategic initiatives be tracked individually? What information is not getting to the right people? What unnecessary, nonstrategic information is being distributed? What feedback loops or triggers are missing?

After comparing the ideal CPM processes to what actually happens, organizations will be able to identify a number of gaps in their current processes that prevent the effective implementation of strategy. These gaps should be documented. The organization should determine whether the gap is being caused by their existing technology system(s), their adopted measures or methodology, or simply a failure to consider the impact of an action or inaction.

4. Identify Pain Points
The next step in building a CPM road map is to identify the "pains" the organization is experiencing with current processes and the causes of those pains. For example, a "pain" may be that the budgeting process takes too long. The organization also must consider all the contributing factors. For example, does the process take too long because budget holders are submitting their budgets late? Are the budget submissions incomplete or outside of established guidelines? Do managers understand the process? Is the system too complex for novices? Is there a lack of commitment to the process because managers are not allowed to comment on whether budget goals are realistic and achievable? Identifying pains and all their root causes will help the organization identify priorities that should be addressed in the early phases of the CPM implementation.

5. Assess Planned Business Intelligence Initiatives
At any given time, an organization may be planning or implementing various business intelligence initiatives. It is important to review these because a particular initiative could work against the implementation of a CPM solution. For example, if a new customer relationship management (CRM) analysis system is being implemented, it is important to know whether this can form part of a detailed store beneath the reporting of a summary CRM measure. If the CRM analysis system is a stand-alone solution, then it may be difficult or impossible to integrate it into the final CPM system. This would result in having two systems that could cause integrity problems because each system could potentially give different results. It would also double the maintenance effort because there would be two models to maintain.

CPM solutions are built on top of a BI platform that could and should be used for as many BI initiatives as possible. In this way, administrators only have one set of technologies to learn and integration between the various data stores will be greatly simplified. Reviewing all the current and planned BI initiatives may help to leverage development efforts and will certainly help in the planning of any integration that may be required in the future.

6. Calculate Return on Investment
Enterprise-wide changes and systems can be expensive. Resources typically are limited. Therefore, organizations must continually assess whether any effort is worthwhile. Organizations should calculate the return on investment (ROI) expected of a CPM initiative relative to the value of resolving strategic gaps and pain points.  Without calculating ROI, organizations find it too easy to cancel or delay essential initiatives. In addition to helping convey the value of a CPM implementation, calculating ROI helps enterprises set priorities.

7. Set Implementation Priorities
Armed with an understanding of the organization's pain points, process gaps, and priorities, the order in which to implement CPM components and technology can be determined. As with any enterprise-wide system, the best approach is a phased approach.

Phasing the implementation provides a number of benefits. First, the organization can concentrate on solving its most painful problems early in the implementation. Second, managers and others can see the improvements quickly, generating interest and excitement. Third, phasing allows users to get comfortable with any necessary new technology a little at a time, which avoids overwhelming them and causing frustration. And fourth, once users are comfortable, the technology system can be updated with additional functionality without traumatizing the organization and greatly increasing IT support requirements.

Moving Towards Implementation

Completing these seven steps enables the creation of a CPM road map. This guide can be used to help the organization specify a technology solution capable of helping it turn its strategic vision into action. Because business needs, priorities, and circumstances change over time, however, organizations must revisit the CPM road map on a regular basis and ensure that it reflects the most current situation.

MICHAEL COVENEY, Senior Director of Strategy Management for Comshare, Incorporated, is co-author of The Strategy Gap: Leveraging Technology to Execute Winning Strategies (John Wiley & Sons, March 2003).