Corporate Performance Management Solution help finance with more efficient planning, budgeting and forecasting, and they enable them them to understand and monitor cost behaviour and create different scenarios. It also means finance can gather


AUTHOR:
Sébastien Boivin CPA, CMA
Director, DECIMAL


Today’s Finance departments need to be more efficient, more analytical and more in control than ever. The current trend in finance – to adopt specific software solutions and hire financial data analysts in addition to existing personnel – shows just how pressing that need is.

One of these solutions is CPM, or Corporate Performance Management. CPM solutions help finance with more efficient planning, budgeting and forecasting, and they enable them to understand and monitor cost behaviour and create different scenarios. It also means finance can gather data from multiple sources and use it to create relevant financial and operational dashboards, reports and KPIs for the entire organization.

How does a CPM solution relate to financial (or ERP), payroll, human resources and operations systems in your existing software infrastructure? And what specific benefits does a CPM solution offer that are not provided by other solutions?

CPM SEAMLESSLY INTEGRATES INTO YOUR EXISTING SOFTWARE INFRASTRUCTURE

Let’s start by saying that Corporate Performance Management software won’t replace your ERP, payroll, HR or mission-critical services, as these solutions all have their own specific uses and benefits. Instead, CPM seamlessly integrates into your existing software infrastructure, bilaterally exchanging data from many different sources and consolidating into a single location.

Generally speaking, CPM systems enable organizations to do the following:

  • Enable the Finance Department to spend less time collecting relevant data;
  • Use forecasting processes to generate data not available in transactional systems;
  • Make it easier to exploit financial and operational data by consolidating and organizing information;
  • Provide better control and greater visibility of data used by finance;
  • Create and analyze scenarios without impacting data in other systems;
  • Reduce the risks associated with using files and spreadsheets.

Whether for budget entry or monitoring, calculating the costs of different departments or easily producing clear, relevant and reliable information, CPM tools are obviously the right choice.

Now, let’s take a closer look at the many benefits provided by this type of solution.

BENEFITS OF THE CPM SOLUTION

Improved budgeting

First of all, we all know that budgeting is a strategic process. Therefore, managers of every department need to make sure they understand the organization’s strategic focus so they can provide financial and organizational data based on the current yearly scenario. The resulting financial scenario gives management a reliable tool to monitor the actual performance and compare it to the budgeted performance.

The CPM tool’s unique features help you optimize the budgeting process. Here’s how:

  • Gives managers access to consolidated data from multiple systems. The more easily managers can access data that will impact their budget, the more accurately they can produce that budget, and the more easily they can analyze variances throughout the year. CPM software databases are structured to integrate and centralize data from multiple systems, and its user-friendly tools enable managers to easily access this information during the crucial budgeting period.
  • Shortens budget preparation time. Many managers view budgeting as a necessary evil. This attitude creates a host of problems – from unreliable budgets to cost overruns and inaccurate management information – that could all be avoided if the task was made less time-consuming, and managers were given the right tools for the job. Also, the less time it takes to input budget data, the closer the budget will be to the upcoming fiscal year, so it will contain the most up-to-date and relevant financial data possible. Assisted by our experienced consultants, you can use CPM solutions to shorten your budget process and produce budget tracking and monitoring tools that will lead to maximum efficiency throughout the budget entry process.
  • Automates budget calculations with business rules. Managers should not have to figure out salary scales each time they create a budget. They should simply have to enter staff requirements and let the system do the rest. The same principle applies to revenues. Managers should only update volume and make sure component cost and recipes is up to date. Hence, avoid inaccuracies and making managers feel better-equipped to produce their budgets.

Understanding and controlling costs

An activity-based costing (ABC) model is a huge plus for an organization, but it can be difficult to implement because of the large amount of data that must be identified and consolidated

The ABC model must avoid getting side-tracked, focused on the business need to be filled, be well documented and well understood. Otherwise, the model will become too cumbersome to maintain and will no longer be useful. If the model’s main objectives are to validate existing pricing and make scenarios based on sales forecasts and new product launches, it should aim to be less complex and focus solely on these objectives.

Be sure to choose an experienced, knowledgeable team to help you manage the scope of the model, achieve the desired targets and meet production deadlines. Furthermore, costing systems generate models that retain comparable data, thereby enabling the model to keep pace with the organization’s business needs and evolution.

  • Maximize the tool’s potential by actually using the costing information. This is where organizations often fall short. All too often, technological and political considerations cause information that should be shared more widely to stay inside the finance silo. Sharing this kind of information requires three things: a communications strategy, a clear commitment from senior management, and a proven, specialized BI tool that makes it easier to roll out important information and restricts document access to the intended recipient(s). Having this kind of tool leaves the organization free to focus on its goals, not on information roll-outs.
  • Knowledge loss is a significant risk. Organizations often invest a lot of time producing a costing model in Excel and become dependent on the only staff member who understands it. When that expert leaves, the person who takes over the file may only partially understand the model, leaving the organization at risk of generating bad data, losing the entire model, or becoming less agile due to the new person’s lack of knowledge. Choosing a CPM solution reduces this risk because, by the time the expert leaves, the costing model is already well integrated into the organization’s system. Also, experienced consultants can come onsite to analyze the software, train the new expert and arrange a complete knowledge transfer.

Easily share your organization’s critical data

CPM tools focus on analysis rather than on controls and transactions, so their modules and functionalities concentrate on producing easily accessible information at the database level. The qualitative information is organized around the quantitative data in a star schema database that is designed to produce and exploit information on a specific business need and that maximizes the output of reports and dashboards. The CPM tool must be develop to meet these specific needs, and this makes it a lot easier for managers to design reports and obtain and manage the desired consultation behaviour. The data path is always direct, so optimizing data queries is a snap!

The ease-of-use, makes the CPM tool information easily accessible and managers can rapidly generate reports for them and senior management through its drill down and drill through capability and interactive graphics.

The automated security feature enables the IT expert to prepare a single report with different access rights, rather than preparing a different report for each permission level.

Simplify data integration

Because CPM systems are relatively new, people mistakenly believe that uploading their data or building an API enabling their various systems to communicate requires a significant investment of time or money. In fact, integrating CPM-type tools is rarely a difficult or expensive undertaking. Setting up a simple, automated import/export that will exchange data between different systems is often all that’s required. For less frequently updated data, CPM-type solutions typically include an ETL tool that performs ad-hoc imports: no need to handle data or have advanced programming knowledge or IT skills.

CONSIDERING A CPM SOLUTION?

Here are a few factors to consider:

A dedicated implementation team

Companies that develop CPM software focus exclusively on the business need that the solution has been designed to address. During onsite implementation, the organization benefits from the dedicated team’s extensive knowledge of the tool itself, the associated issues and best practices. This is not always the case with an external team that implements several solutions, usually for different sectors. With the CPM implementation team, organizations benefit from a highly-skilled, experienced group that oversees the implementation and provides onsite assistance with integration issues.

A dedicated solution

The software is developed with the same exclusive focus: it has features that specifically address the business need, without any of the constraints found in ERP-type transaction processing systems. Suppose that an organization decides it wants to add valuable management information to its chart of accounts during the budgeting process by using a different naming system for new accounts. It can do so easily, using the aforementioned features, without having to go through all the controls and imperatives of an ERP system, and without potentially affecting the organization’s transactional and normal operations.

Vertical organization

A CPM solution will typically cost significantly less than purchasing an ERP-type system or building a custom system internally. You can reduce the project’s overall cost by dealing directly with a company that offers all project-related services: software development, implementation by the company’s own dedicated team of professionals, and support provided onsite by a local team. In addition to lower costs, the organization can enjoy peace of mind, knowing that one company is solely responsible for the project, thereby avoiding any potential conflicts between various companies delivering different parts of the project.

A leader in organizational performance management, DECIMAL improves the budgeting and costing and financial dashboards for public and private organizations through comprehensive software solutions and consulting services.


Articles de / from Sébastien Boivin

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