Think back over the last 5 years, it was and to some degree continues to be a challenging time for many organizations. It was during the height of the Financial Crisis business leaders were forced to look inward and ask some tough questions. Questions that would impact the difficult decisions required for the time. One of the end results coming from this period was the re-emergence of Corporate Performance Management (CPM) as a leading technology to bring together both financial and operational data. To give some perspective on the level of interest, according to analyst firm Gartner the CPM market grew by 16.4% in 2011. An impressive growth rate and confirmation to support the premise of CPM being one of the go to tools in helping business leaders harness the necessary information needed to make accurate and timely decisions. It’s not clear whether the sustained interest into 2014 is specific to expense and revenue management, executive dashboards or scenario planning to name a few or simply a residual effect from the crisis itself. In this post we will explore the triggers on why business leaders see the value in leveraging CPM technology to integrate finance and operations, enhance the overall planning and decision making process by adopting a now critical application to help bounce back from disruption.
To start, let’s get some background on how a typical company plans and budgets. On an annual basis most executives devise plans unique to their business. These strategies in turn become priorities and a benchmark in guiding the company forward. Once the strategies are identified funding is distributed to the various departments to help make the identified goals attainable – usually top down based on prior year actuals. To help with this process many rely on Finance to compile driver based plans to identify potential scenarios – building models that forecast where the company is headed based on information from all business units working in tandem. Spreadsheets continue to be the tool of record to help with this process. Despite the familiarity and adoption of spreadsheets, they often present a challenge in effectively managing a business. Below is screen shot from Aberdeen Group outlining the role of Spreadsheets in business today and how best in class companies rely on applications to mitigate the risks associated with spreadsheets.
It’s my take that the crisis cast light on the amount of time being spent on manual spreadsheet processes and reality that teams often spend more time searching and compiling data than actually analyzing results and planning scenarios. This in turn not only highlighted the short comings in the length of time to make a decision, but also the agility of the business to recognize early warnings or be better equipped for any future changes in the market. Fast forward to today and we are witnessing more companies adopting the view of spreadsheets as a tool to leverage, not the tool of record for managing the business. The increased adoption of CPM technology has helped automate and reduce the time spent on repetitive tasks, such as searching for data, consolidating results and compiling reports and allowing for more time to be spent on making decisions. CPM software helps business leaders to make better, smarter decision, faster than the competition and with confidence in the numbers. In other words consider CPM technology as a means to extend information into knowledge by enabling all departments to work off the same song sheet towards business priorities.
So how does technology impact Finance? Finance continues to take on a growing number of core business processes that can be automated through technology. In order to help drive sustainable and profitable growth, business leaders need to make informed decisions and are relaying on Finance to provide the right information in real-time. Turning insight into action doesn’t only come from deploying resources at the right time to market opportunities, but to profitability analysis and scenario planning when it comes down to products, services and other growth related initiatives. It’s with an integrated planning approach driven by Finance that CPM technology is helping build a foundation for growth, while ensuring structure and processes are in place so companies can react with timely and accurate information, thereby competing more effectively.
By connecting CPM technology to business processes Finance can help resources become more productive across all departments by helping:
- Improve accuracy, transparency and accountability across the company
- Provide insight and forward facing analysis based on one version of the truth
- Manage uncertainty and mitigate risk through more effective scenario planning
- Enable self service agility and analysis to adapt to change
- Drive collaboration across business units and integrated functions
- Improve the integrity of planning, budgeting, forecasting and reporting processes
Organizations of all sizes rely on technology as an enabler for change, but only best in class companies are more likely to use CPM technology to converge business planning and execution. To get you started on your journey let BDO help you us assess your organization’s health and evaluate its future technology direction.
We’ve made these additional resources available to aid you in understanding the value of CPM technology for today’s business:
- Making Execution of Strategy an Ongoing Process, Not a One Time Event
- 5 Things About Technology Finance Needs To Know
- Forward Facing Planning, Requires a Historical Review
- CPM, more than simply budgeting and forecasting software
- Five Tips to help prepare for your BI Software selection
- Business Intelligence – A Catalyst for Change
- Planning and Budgeting Season Has Started. Are You Ready?
- Why the Focus on Business Intelligence and Enterprise Performance Management Technologies?