The goal of every Finance team is to get rid of jobs that bring little or no added value as this enables them to streamline their operations.
Specialized solutions can go a long way towards helping you achieve this goal, but how do they actually benefit individual users?
Existing tools and their limitations
Take Excel spreadsheets. This tool is very popular with accountants and has several benefits: it’s easy to use, has a familiar interface and can analyze small amounts of data fairly quickly. This is why it's so widely used, often when there's no dedicated solution for the problem at hand. However, Excel does have certain shortcomings, which you would be wise not to overlook. If your organization wants to develop reliable financial processes, it must be aware of the constraints and risks of using Excel spreadsheets, such as data entry and formula errors, standardization issues, restricted reporting, and limited data storage space. Taken together, these factors represent a certain level of risk for the organization.
Some organizations use the transactional features of ERP software to perform CPM-related functions. Unlike Excel spreadsheets, this type of tool also has many built-in checks and balances and, fortunately, restricts what users can do with the data. However, the downside of ERP tools is their lack of flexibility (due to their focus on data integrity) and their limited performance management capabilities. Often, users cannot perform analyses, scenarios and forecasts, because this is not the tool's primary objective.
Corporate Performance Management (CPM) solutions, on the other hand, are designed with industry best practices in mind, have none of the constraints of more transactional systems such as ERP, nor do they have any of the risks associated with using Excel.
What is a CPM solution?
A Corporate Performance Management (CPM) solution is a centralized, corporate software solution that provides multi-year planning, budget preparation and tracking capabilities as well as full product and service costing, scenario planning, financial analysis and dashboarding.
As stated in our other article on the same topic, CPM solutions seamlessly integrate with your existing internal tools, all of which have their own purpose. However, in line with industry leading practices, the best-of-breed CPM solution creates simple, integrated and standardized management information and delivers in-depth analytics and customizable security settings to meet the needs of all users.
Benefits of using a CPM solution
- Senior management often faces a number of challenges when it comes to acquiring information. Being able to gather information quickly is crucial, but repeated requests to your Finance teams can put them under additional stress, on top of their existing day-to-day tasks. What's the best solution to this problem? A self-service approach!
The self-service approach allows senior management to access regularly updated dynamic dashboards and reports, which present the current financial situation and its changes, including trends, unusual values and other important indicators. This approach solves the problem of information availability and immediate access. Corporate Performance Management solutions also include features that ensure information reliability, such as limiting system access privileges, change history, configurable data access parameters, and more. These features ensure that senior management will always have access to accurate information.
CPM solutions also mine the data in the dynamic reports it generates. This gives senior management a more intuitive grasp of the results, by enabling executives to review the them whenever they want, and in much greater detail.
Finally, senior management can run multiple high-level scenarios and test multiple assumptions. This crucial feature enables them to assess different options, and to visualize the impact of future decisions.
- The Finance team will also find the solution useful. Preparing and monitoring budgets and analyzing program costs involves many time-consuming tasks. Manipulating data is often cumbersome, and can lead to data entry errors, but automating imports between CPM and other internal systems simplifies these processes and eliminates potential errors. Automation also gets rid of a large number of non-value-added tasks such as data entry, data consolidation, and more.
This means the Finance team has more time to analyze the data and make any necessary recommendations or adjustments. Because the process is faster and more closely monitored, they can be more proactive.
Another key benefit is that all relevant information – budget, actual, forecast, payroll and cost data – is stored in a single, totally secure database that can easily be accessed by all team members.
Another major benefit is the ability to analyze data as it's entered by different users. Gone are the days when the Finance team had to wait until it received the Excel files to find out that a given department’s budget scenarios failed to comply with the norms.
- Managers and directors can save a lot of time and effort with the right CPM solution. Because these people have to manage a variety of tasks and issues on a daily basis, they must be able to use the CPM solution to quickly and intuitively understand information. If the dashboards and reports produced for managers contain accurate and relevant data, they can quickly address whatever issue is at hand.
As we saw previously, this data is available in self-service mode, enabling managers to view the information at their convenience, comment on it and make any necessary changes, without outside assistance. It's vital that managers benefit from these operations, otherwise they will view them as simply another task to be performed, with little or no value for them.
As you can see, CPM solutions have something for everyone, as they benefit users throughout the entire organization.
Want to know more about CPM solutions? Listen to our web session (In French only). It will help you understand the tangible benefits of CPM for senior management, Finance and managers!