Over the past few years, the focus on adaptability and agility has led to increasing digital transformation efforts for companies of all sizes. The hyper-competitive nature of modern business has placed a lot of emphasis on solutions designed to deliver performance improvements, but far too often, the desired benefits are never fully realised.
As the finance function continues to evolve from a static reporting function to a high-performing team that helps organisations maximise business impact, many companies are finding a fundamental disconnect between financial plans and performance measurement. Cost and profit centres don’t reflect how key decisions are really made across the business, and far too many businesses are still struggling to effectively employ insight, foresight, control and agility to set targets and drive performance and profitability.
This has led to increasing uptake of corporate performance management (CPM) solutions. Designed to bridge the gap between strategy and execution, CPM – also known as enterprise performance management (EPM) – has become one of the most important tools used by finance teams to ensure their organisations are on the right trajectory to meet their future goals.
Data rich, information poor
With the benefits offered by EPM platforms, organisations are unifying finance and operational planning at scale to make accurate and rapid business decisions. Today’s market dynamics require CFOs to make data-driven decisions, and EPM enables this by helping the organisation create a single source of truth where all departments get access to real-time data from the platform. The platform connects common data and processes across departments and offers accurate, updated and comprehensive data, allowing business leaders to gain the insights they need to make the right decisions.
Unfortunately, many organisations are still contending with disparate data sources and processes that are often siloed. In addition, most companies still use spreadsheets with their EPM software for additional analysis, as an input mechanism, or to pull in data. According to the 2021 BPM pulse survey, 81% of respondents said yes to the question: “Are spreadsheets still used with the new business performance management system?” The most common uses were additional analysis (57%), as an alternative input mechanism (51%) and to pull in additional data (51%).
As a result, companies are finding themselves “data rich and information poor”. This is why organisations are looking for a unified CPM platform that empowers finance teams to maintain control and visibility of data across the entire business.
Unifying data through CPM
In addition to functions like forecasting, planning and analysing “what-if” scenarios, finance teams have had to start integrating data from other areas of the business in recent years. Not only are organisations seeking to align operations and finance, new reporting requirements are highlighting the need for CFOs to have access to data that previously didn’t fall under the purview of finance teams.
For example, environmental, social and governance (ESG) reporting is becoming the responsibility of finance teams in specific industries. Using data such as environmental and socio-economic impact assessment studies, as well as in-depth analysis of environmental and social practices, ESG reporting requires access to data from multiple departments and across many different job descriptions.
A single unified CPM platform provides an effective bridge across all of an organisation’s data, enabling finance leaders to start delivering on their expanded mandate as a company’s custodian of performance – steering activities and resource allocation at the enterprise level to achieve strategic objectives. However, as CFOs continue to grow their impact on the business, it may be time to move past CPM and into a future where all elements of the business come together within the finance function.
Moving into the future
Finance is already creating more value within organisations through the benefits offered by EPM. Most companies have redesigned their processes to incorporate many different areas of the business in order to promote greater impact, and CFOs are routinely using data from operations, production and even marketing. As organisations become more comfortable with the increasing impact finance teams are having on the business, there is an opportunity to integrate more processes beyond the finance function to improve efficiency and effectiveness.
In the future, finance leaders are going to have to integrate their teams even further into the rest of the business in order to ensure the bold thinking that will enable organisations to keep ahead of market dynamics. Similarly, transparency and continuous communication across all departments will have to become the norm to ensure the business achieves its strategic goals.
CPM platforms have created the foundation for a future in which CFOs are able to help direct the business through informed decisions. However, to evolve in today’s dynamic business environment, finance teams need to be bold; they need to have the insights necessary to motivate the company to reach for greater heights of performance. To achieve this, CFOs need to move past CPM. They need to integrate it into every area of the business rather than continuing to view it merely as a tool to help bring disparate data sources together. CFOs need to build the businesses of the future on a CPM foundation, but build on that foundation in the years to come.
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