Over the past few months, I have talked about what a CPM system is and how to implement and what to measure. This month I thought I might talk about little bit about why CPM projects fail. I know this is something of a negative topic, but it is always worth considering failures in order to help us make sure they only happen to other people.

There are many possible reasons for failure, and lack of appropriate talent or lack of funding are chief among them. But because I know you are smart people (or else you wouldn’t bother to read my posts) and because you won’t even start a project if you haven’t got it funded, I thought I would talk about some more common problems that I have seen in the past. The areas of failure that I would like to discuss revolve around the following four areas: 

1. Lack of senior management involvement
2. Keeping measurements systems just at the top of the organization
3. Development process takes too long or treated as a “systems” project
4. Using scorecard only for compensation.

The first and most important issue for you to consider is who should participate in CPM and the answer is pretty straight forward. The group should include the entire senior management team. The two key players are the CEO or President and the CFO, but without broad participation of the leadership team, even that is not enough.  CPM projects often start as a CFO-led project. There is nothing wrong with this, but it is much more than a finance project and the CEO and leadership team must be active participants if this is to succeed. This can be difficult to achieve if the leadership team does not have familiarity with the concepts and the potential results. If you have a team that is insular and has been together for a long time, you have a much bigger problem than if you have several team members who come from other companies or other parts of the company where they have seen successful CPM implementations. The first thing you need to do before embarking on the project is get them all comfortable with what can be achieved so that they will help you rather than hurt you as you go to implementation. It is possible to avoid “failure” if you have both CEO and CFO on board without the other senior managers but it will make it much harder and if the CEO is not on board, you should just quit now.

Another common problem I see is that companies keep much of this data just at the top of the organization. If you want everyone in the company to be rowing together, then you need to communicate what is important and how success is measured. This can be a tricky premise.  Some data should remain confidential at the top and if you are a public company, there are additional issues involved.  I still think it is better to over communicate than to under communicate.  If warranties are an important issue for the company (as they recently have been at Microsoft), then you need to find a measure of success and get everyone focused on it. As I mentioned in a previous post, an MBS partner was starting up a new CRM practice and it was a key component of their growth strategy. Yet, it didn’t have a place in their scorecard nor was it highlighted at their recent all-hands company meeting. Their chances of a successful practice do not seem very high to me. As I have suggested in previous posts, you start with a strategy, try to define what constitutes success and then communicate with everyone in the company how you are doing against that strategy.

The third issue I see is that CPM projects are often treated as an IT or Systems project. While it is true that you need to have the requisite systems to have a successful implementation and you have to oftentimes build measurement systems for “non-standard” items such as customer satisfaction or renewal rates. But this is really a “management” system that we are talking about and not an IT system. The management team has to believe in it and want it to succeed and the real time sink for a CFO or finance leader is in evangelizing the whole CPM process so that the management team really believes in what you are doing. If they are committed to it, then the rest of the things are more likely to fall into place.

Finally, using a scorecard only for compensation is ultimately going to fail.  CPM systems need to be comprehensive to succeed. They help determine whether or not strategies are successful, they help you know when to change strategy, they help you communicate what your objectives and results are AND they help you compensate people for achieving objectives. But when CPM is used only piecemeal, as for instance just for compensation, then it is doomed to fail. 

Craig Bruya
Chief Financial Officer of Microsoft Business Solutions