• Customer Value Management - Customer relationship management systems (CRM) have been narrowly viewed as a way to communicate one-to-one with customers. However, executives have learned that it is more expensive to acquire new customers than to retain existing ones, and that their products and service lines have become commodities from which there is little competitive advantage. As a result, organizations are reframing CRM more broadly as a way to analyze and identify characteristics of existing customers that are more profitable and valuable and then apply these traits to formulate differentiated and tiered treatments (such as marketing campaigns, deals, offers and service levels) to existing customers as well as to target attracting new customers who will possess relatively higher future potential value (which, incidentally, requires ABC data to calculate customer lifetime value scores to differentiate prospects). This reframing places much more emphasis on micro-segmenting customers and post-sale value-adding services with cross-selling and upselling. Mass selling that snares unprofitable customers is out, and it is being replaced by the new recognition that one must not just grow sales but rather grow sales profitably.
• Shareholder and Business Owner Wealth Creation and Destruction - The strong force of the financial capital markets to assign financial value to organizations has caused the executive teams and governing boards to realize that old, traditional methods of placing value on a company are obsolete. The balance sheet assets now only account for a small fraction of a company's market-share price capitalization. A company's future value is linked to its intangible assets such as its employee skills and innovation. As a result, executives are reframing its understanding as to how to increase its positive "free cash flow," the financial capital market's metric of choice to convert potential value (ideas and innovation) into realized value (financial ROIs). They have reframed the path to continuous shareholder wealth creation as governed by customer value management.

Synergy from the Links Among Performance Management Components

It is not a coincidence that each of the four tipping points just mentioned have interdependencies. Transaction-based information systems, such as enterprise resource planning (ERP) systems, although good for their designed purposes do not display the relevant information required for decision analysis and, ultimately, for decision making. Transactional systems may provide some of the raw data, but it is only through transforming that raw data into decision-based information that the potential ROI trapped in that raw data can be unleashed and realized financially. This in part explains the growing demand for performance management systems as value multipliers.