Management Methodologies

Organizations incorporate management methodologies to link vision and strategy with performance. In many organizations multiple methodologies are incorporated to meet their objectives. Activity Based Planning is used to manage overhead costs and more accurately align overhead costs with the revenue it supports to properly execute profitable pricing strategies. Six Sigma advocates quality management as a component of improving performance through reduced overheads and increased competitiveness. Economic Value Added methodology links employee compensation with increasing the economic value of the organization with the objective of making employees act like owners. Then, there is the Balanced Scorecard and Strategy Maps which is an overriding umbrella methodology which asks the organization to create 4-categories of key performance measurements to tie everyday decision making to the overall execution of strategy.

CPM uses an open-methodology architecture that supports each of the above methodologies through a combination of database tools and customizable end-user template design to articulate your organization's vision across the enterprise.

Activity Based Management
ABC Management, the Grandfather of current performance management methodologies has come back into favor within many world-class organizations after originally being dismissed due to the complexity in keeping the model up-to-date. Now, through improved technology and real-time web-based applications, ABC Management is experiencing a re-birth.

CPM allows you to build in the activities that make up your costs and then define the appropriate cost driver for each activity to apply the activity to the internal customer based on usage by way of the CPM Allocation Manager. To the organization when linked to compensation, this encourages improvements to competitiveness and effectiveness, protects against over-utilization of resources, calculate profitable pricing strategies, discontinue unprofitable resource draining product lines, and work with your customers towards an amicable business relationship.

Balanced Scorecard
Organizations who embrace the Balanced Scorecard buy into a philosophy where 75% of their organization's value is locked in metrics that are not financial, namely, their customers, their internal business processes and their learning and growth initiatives. Balanced Scorecards involve communicating strategy to every level within the organization so that corporate strategy is integrated with everyday decision making. The best Balanced Scorecards are not a static set of measurements, but instead remain a work in progress and involve a multi-year progress of testing and tweaking performance measures to reflect better information and changes in business climate.

The CPM Balanced Scorecard solution is completely customizable to your organization's needs. CPM effectively integrates its database architecture and end user interface to provide a solution that satisfies the requirements of the Balanced Scorecard methodology. Start by defining your Scorecard perspectives, then below each of your perspectives insert your measures and finally link (calculate) your measures to the relevant determinants in your CPM financial database and supporting source systems. Complete your scorecard by designing your end-user data view and integrate your data views with CPM's collaboration and security tools to communicate your scorecard to all levels of performance management participation and link accountability to strategy.

Economic Value-Added (EVA)
An EVA management methodology changes an organization's outlook and associated management compensation plans from short-term to long-term growth after tax profits that outpace the cost of capital.

The EVA methodology involves removing the confusion of multiple measures of performance in favor of one overriding measure. This offers the organization one common language to communicate between all levels of the organization.

In order for EVA to be successful, EVA must be measured and reported for each location, business unit, product, customer and activity which in many cases is just not possible within an organization's existing technology infrastructure. EVA specialists Stern Stewart recommends that organizations employ Online Analytical Processing (OLAP) solutions, the same technology used by CPM to successfully support an EVA methodology.

CPM supports EVA through:
1.	The scrutiny of financial drivers across the organization through slice & dice technology to reduce costs and taxes.
2.	The examination of capital expenditures: both management of new capital and redeployment of existing capital.
3.	The comparison of the Net Present Value (NPV) of a proposed project to the opportunity cost of employing that same capital elsewhere.
4.	Drilling into the Cost of Capital and comparing the Cost of Capital to alternative available capital in order to ensure it is the lowest it can be.

Six Sigma
Six Sigma takes a statistical approach towards targeting the organization's defects across all company processes from defective products to errors in payables to mistakes in recruitment. When fully calculated, most organizations operate at a defect level between 20 to 30 percent of revenue, or in other terms 35,000 defects per million operations where six sigma organizations target these defects and strive towards 3.4 defects per million operations.

CPM modeling for Six Sigma involves dissecting your organization into measurable projects such as call center response by location, product delivery time to customer by region, and number of misassembled parts by plant. From here, CPM allows you to set Six Sigma performance targets and link compensation to these targets. The CPM solution allows you to continue to monitor projects that have reached Six Sigma and add new projects where improvement is necessary and to create a consolidated organizational view of defects per million operations.