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Caterpillar Gets Tough With BPM |
When acquisitions cause a company to suddenly quadruple in size to $1 billion in revenue, budgeting can become an ordeal. If the process involves rolling up several hundred Excel spreadsheets from various cost centers, it can become "unwieldy," to say the least.
That's how Paul Hensley, the controller at San Antonio-based Holt Cat, the biggest dealer in Caterpillar machinery in the country, describes the process. "We did one round of budgeting, and we knew we had a problem on our hands," he says. The budgeting process had extended an unacceptable six weeks into the new financial year. So Hensley and Holt Cat's business systems manager, Gretchen Stepke, identified what they needed from a business performance management (BPM) system:
- It had to be flexible and scalable so that it could grow as the business grew.
- It had to be affordable and easy to use.
- It had to have the look and feel of Excel, because managers had experience with the spreadsheet tool.
Holt Cat came up with a short list of BPM vendors that in turn presented their software tools to executives. Another step Hensley and Stepke took early on was to get key buy-in from the company's leadership of seven operational VPs.
After reviewing the presentations, Holt Cat's next step was slightly unusual. It plugged information from the presentations into Decision Focus, a decision analysis tool from Minnetonka, Minn.-based Focus Performance Systems, which Holt Cat had been using for years. Indeed, the company has used the tool for more than just technology purchasing decisions. "It helps you take a subjective decision and make it objective," says Hensley.
The winner turned out to be Clarity Systems Ltd. A major plus of the software was that Holt Cat's IT people didn't constantly have to get involved -- an obvious benefit for a midmarket company with limited resources. "We are able to use templates and set up allocations and manage them within our department without having to depend on IT programmers to make changes for us," says Stepke.
With a bird's eye view of performance, Holt Cat was able to complete the budgets on time before the beginning of the next financial year. The Clarity project is so successful that Holt Cat plans to do much more. "The prize we are looking for here is way beyond just budgeting," says Hensley.
Holt Cat's growth-by-acquisition strategy will continue to result in many disparate systems, but the finance department is confident that Clarity's software has the wherewithal to pull the information together.
"Now Clarity allows us to marry different platforms of information and consolidate it into a place where we can develop a performance scorecard, linking key performance indicators to manage our business," says Hensley.
-- J.S.
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Redmond Weighs In
With its PerformancePoint Server (PPS) 2007 due out later this year, Microsoft will join the list of BPM vendors. The software has a wide-ranging target, from the Global 2000 to the lower end of the midmarket. "It's potentially a world-changing, earth-shaking event in the CPM industry," says Brown of Bloor Research. "It will move midmarket companies to the next level of enterprise functionality in performance measurement and analysis without the up-front costs" of investing in stand-alone BPM systems.
PPS will be tightly integrated with Microsoft SQL Server and Office, as opposed to sitting outside a business's daily processes, and will have the look and feel of Excel. In time it will be integrated with the Dynamics ERP suite. Down the road, Microsoft plans to take performance management into areas such as planning for operations, workforce management, and sales and marketing.
Gartner's Rayner is impressed with what he's seen of the product so far. "They are not pitching it as a kind of CPM-lite, which would be a much easier thing for them to do," he says. Still, Rayner thinks that it will take PPS two years to settle into the market. In the meantime, he advises companies not to delay deployment of a BPM suite.
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