Corporate Performance Management And New Challenges That Lie Ahead

by Tomaž Lukančič | Mar 24, 2020 | Blog

Are you systematically managing your business performance? If not, what are you waiting for?! You are and it is not working out? Well, fix it! Here’s how.

Companies of all sizes are accelerating the introduction of digitalization at various levels and content areas. Solutions that incorporate elements of Industry 4.0, artificial intelligence and machine learning are being introduced in manufacturing processes. Digitization also takes place in the area of overall corporate governance, including the planning of the necessary resources to operate, and corporate performance management (CPM). The ultimate goal is for the business to operate digitally at all levels and not just through individual processes. The transition from process digitalization to business digitalization is defined as an organization's ability to integrate digital technologies, organizational culture and structure, processes, and employee competencies to deliver more efficient and productive business. Digitalization also means delivering new digital products to the customers, creating a modern work environment and taking care of employee development. Going digital has everything to do with data – as getting verified and comprehensive data for the right leaders' decisions is key to success.

Taking care of business

CPM is one of the key areas of business as it incorporates best practices for the planning, forecasting, management, and reporting of financial and other resources and processes. A CPM solution monitors and manages an organization's performance using key performance indicators (KPIs) that are set by management for specific periods of time. These can be revenue, return on investment, or other strategic goals for the company, such as enhancing operational efficiency or improving the company's strategy.

Tools of the CPM trade

CPM tools have evolved, as they are being developed and adapted to user requirements throughout history. Traditionally, companies have used different information systems and analytical tools to manage individual segments within CPM, which have been based on different data sources. This resulted in data fragmentation (also described here: www.linkedin.com/pulse/how-decrease-spaghetti-integration-result-processes-data-kastelic/), where the final result meant that there may have been several different reports within the company as well as truths for the same content – depending on the department that produced the report. According to a global customer survey conducted by CCH Tagetik in 2017 (https://edit.tagetik.com/resources/case-studies/sap-hana-integration/at_download/file), fragmented CPM systems are in use in around 70% of companies as these are still heavily dependent on spreadsheets in their finance departments, thus making it difficult for company executives to take a holistic view of KPIs.

Painful out-rooting of legacy solutions

Another challenge for companies is the emergence of new information architecture approaches, notably the establishment of some functionality in the information cloud. Many CPM solutions are of older date and were built to work locally or on-premise as we call it today. Many of them are still based on technologies that make it impossible to switch to cloud operations. Even some major providers prefer to buy or outsource a solution to a manufacturer that has a running cloud system. Or buy the whole company altogether. In these cases, clients must make the necessary migrations and data integrations when moving to a new environment. All too often, we come across companies that stick to an outdated CPM solution as they reconsider that replacing the old solution with a more modern one will be very expensive and time-consuming. CPM experts and analysts agree on one thing: outdated technologies cause such companies a lot of additional costs (measured in time and money) so the action is needed in the near term.

When should one change the CPM solution? The basic indicators that indicate the need for CPM replacement are the following:

  • Increased costs of maintenance, management, and upgrades without increased efficiency.
  • More difficult to cope with the growing volume of data and fragmented systems.
  • Lack of new functionality and lagging behind technological requirements such as cloud and hybrid environments. Gartner estimates that 80% of large organizations will replace their CPM solution by 2020!
  • Unnecessary complexity of solutions and difficult integration with existing systems.
  • Slow and poor responsiveness of the system – sometimes it can even take days to prepare reports.
  • The occurrence of reports with incorrect results.
  • The existing solution does not support new business processes and new trends.
  • Great dependence on IT professionals. Modern CPM solutions have transferred most of the development, customization, and management to business users making these processes shorter and cheaper.

Ask business users!

CPM tools are commonly used by the finance department, but the introduction of controlling throughout the organization, they are also often used in other business functions. Joint business management helps the financial leaders and other executives to keep a clear picture of the organization's performance concerning the key success factors.

Some of the trends and key features of modern CPM systems are based on collaboration and automation. A good CPM solution must be a team player, so it has to integrate with other solutions in the IT environment. Today, CPM solutions extend to areas and business processes once managed by ERP system and other software tools, therefore strong integration options are very welcome, predominantly with providing connectivity to systems such as CRM, HR, production systems and others. Modern CPM systems support new processes and technologies such as predictive analytics, artificial intelligence, machine learning, software robots, etc. With modern solutions, the focus is on functionality and pre-configured processes, which enables greater involvement of business users and reduces the role of ICT departments in the deployment and support phase. The level of automation of certain processes can be very high.

CPM is most often functionally divided into FCPM (Financial CPM) and SCPM (Strategic CPM); there are other divisions, but there are trends following the establishment of a single and comprehensive platform with integrated processes and functionality for uniform CPM, especially from the point of view of data source and service connectivity.

Great CPM ensures the availability of some operational and financial data in real-time and can integrate different data sets. But such a solution mainly provides a single platform for consolidation, planning, regulatory reporting, and disclosure. Modern and personalized user experience is expected, so a good CPM solution supports proprietary infrastructure, cloud or a hybrid environment and, if possible, has a mobile application with the same functionality and built-in support for stakeholder collaboration.

Advanced modeling technologies enable greater analytics and reporting accuracy, while different analytical approaches and performance indicators enable performance management at the business unit or customer level.

Meet CCH Tagetik platform

CCH Tagetik (www.tagetik.com) is a CPM solution provider that responds positively to the above dilemmas and sets new standards. A complete, unified solution covers all applications and processes in CPM and therefore provides a structured and easy transition to digital enterprise transformation. Centralized metadata and management enable automation of CPM process management. The great added value and advantage of the CCH Tagetik solution lie in over 50 pre-set standard processes for CPM and regulatory reporting which greatly shortens the implementation time. Tagetik puts business users at the forefront of process deployment while the IT department assumes the classic systematic support role.

The CCH Tagetik solution supports the following basic business management processes:

  • Budgeting, Planning, and Forecasting
  • Financial Reporting and Analytics
  • Financial Close and Consolidation (for several parent companies)
  • Disclosure Management
  • Compliance Regulatory Reporting
  • Advance Analytics and Dashboarding
  • Integrated Business Planning
  • Profitability Analysis and Modeling Analytics
  • Data Modeling and Transformation

Everything under one umbrella

The uniqueness of the Tagetik platform ensures the connectivity of data and different processes and easy involvement in complex financial processes. Performance management is available for planning and consolidation processes as well as for more advanced activities such as profitability analysis, production cost planning that is considering complex production models, cash flow forecasting, regulatory reporting, and preparation of all types of reports (annual, quarterly, monthly… automated reporting included).

With Tagetik, all of these solutions are integrated into one product, a single database, and a single user interface. Data connectivity makes it easy to execute different scenarios (such as an employment plan) and measure their impact on the final P&L or cash flow plan. This architecture also enables and ensures that data is accurate, up-to-date, verifiable, and provides only one version of the truth across the company.

The advantages of such an approach are many:

  • better transparency and traceability
  • stronger governance and control
  • lower cost of ownership and easy scalability
  • the processes are already interconnected
  • one place of truth and a single source of metadata
  • manage workflows across multiple processes and provide audit trails for entries and activities
  • built-in financial logic (example: double-entry bookkeeping)
  • scalability

Runs wonderful with SAP HANA

SAP has certified CCH Tagetik solution to operate on the SAP HANA platform. Now SAP users can take full advantage of its benefits and more efficiently handle growing data volumes, explore data, and perform in-depth data and real-time analysis. This gives finance managers new approaches and opportunities in the field of CPM.

A unified approach to applications and data makes it possible to change financial systems and processes. The changes are also reflected in corporate governance, which is one of the goals of digitalization. When it comes to CPM, the CxO level has the final say, usually, it is the chief financial officer and also the content managers of individual areas in the financial departments that pick the solution they want to use. Please, be smart, and don’t allow the IT department to pick your business solutions, as this is certainly the wrong approach.

Need help? Happy to help you.

Are you blown away by new approaches in the field of corporate performance management? We can help you get everything sorted. With new possibilities of processing different data sources and establishing a single data environment, we ensure better and more efficient implementation of CPM functions across the board. Our decades of experience count for something – but don’t take our word for it and try us out.