Dispelling the Myths About CPM Implementations

This is the next of two columns on corporate performance management resources. The to start with report, The ABCs of CPM Software package, was published on November 10.

Myths and misinformation about corporate performance management systems and their use in finance departments abound. A lot of revolve around these tools’ complexity, creating it difficult for a CFO to see their price at the conclusion of the implementation road. The myths, having said that, are quickly debunked. We address 5 of them underneath.

Myth one: Implementing CPM Will Take Too A great deal Time to Comprehend Price

To expedite a CPM task (speedier, less work, small price tag), CFOs should:

• Use a “configuration” vs . “customization” primarily based option structure method.
• Scope the task from a small feasible solution (MVP) viewpoint so that the group can get started knowing the solution’s price more speedily.
• Soon after MVP deployment, method the task from a period-primarily based implementation viewpoint, layering in additional performance.
• Layout for financial consolidation and organizing/forecasting for the duration of a “common structure phase” upfront, but deploy each in a prioritized manner.
• Have the resource-to-target mappings complete before partaking experienced products and services. (Also with other demanded mappings: group/entity, solution, channel, etcetera.)
• Recall, CPM  is a intent-constructed system to support financial consolidation, budgeting/forecasting, and the reporting demanded to support these procedures. So resist the temptation to change the CPM procedure into an all-encompassing system for every single reporting require.

Myth two: CPM Focuses on Financial Data, Not Operational Data

There is a grain of truth of the matter to this assertion having said that, it vastly understates the importance of operational data.

• There are going to be data/reporting demands that are better supported by substitute platforms to CPM. That explained, the supplemental operational data that supports the financials and is leveraged as part of a driver-primarily based organizing/forecasting method should be introduced into the CPM option.
• Even more so than CFOs at massive, multi-billion-greenback organizations, CFOs at midsize and personal fairness-backed businesses require to be just as fluent in the operational metrics as they are in the financial types.
• The demanded ability to product many financial eventualities (finest, worst, expected cases) can only materialize when operational metrics are introduced and correlated with the financial lines they travel.
• By layering operational metrics facet-by-facet with the financials, finance is informed and empowered to have significant dialogue with several practical departments.

Myth three: “We Really don’t Have to have a CPM Technique Due to the fact We Are Migrating to a Single ERP”

• Consolidating many common ledgers into a single organization resource organizing procedure is time-consuming, costly, operationally disruptive, and creates many adjust management worries and challenges.
• Personal fairness-backed CFOs in certain usually inherit a complicated architecture of financial systems. Untangling these systems, and the procedures they support, to migrate into a single ERP can be impractical, at finest, and counter to price creation, at worst.
• CPM options enable business enterprise device autonomy (many G/L environments) when at the same time empowering finance with the essential controls to standardize the near/consolidation system, organizing/forecasting, and financial reporting.

Myth 4: The Integration of Acquisitions Will Be a Problem

When they can support some rudimentary capabilities, G/Ls usually fall brief in support of the adhering to:

• The financial near/consolidation system (inter-organization transfers, account reconciliation, transaction matching, activity management).
• The organizing/forecasting system (driver-primarily based organizing, situation modeling, rolling forecasts).
• Reporting demands (dashboarding, ad-hoc, drill-down and drill-by means of, analysis)
• On top of that, while spreadsheets provide more versatility than a G/L in support of the capabilities mentioned higher than, they simply cannot inherently enforce specifications and controls. What’s more, multi-spreadsheet workbook logic can be tough to construct, deconstruct, and append/modify when a business enterprise require, like an acquisition, necessitates it.
• Acquisitive businesses aggressively scaling and integrating new increase-ons as part of their price-creation approach profit drastically from the deployment of CPM options.

Myth five: CPM Alternatives Demand Significant Complex Assist

Modern CPMs are cloud-primarily based options and, consequently, less unwieldy than individuals of past generations.

• Their complex infrastructure is maintained by the software vendor as part of the software-as-a-service product.
• CPM option administration is, consequently, finest supported by methods in finance and accounting that have good business enterprise familiarity and mild technologies techniques.
• Continuous-condition support normally includes a part-time position. Nevertheless, it can maximize to entire-time for the duration of near cycles and budgeting and forecasting procedures.
• IT should get concerned when new data resources require to be integrated (for instance, when demo harmony data demands to be sourced from a new G/L as part of an acquisition).
• Outsourcing solutions exist whereby 3rd-celebration companies will administer the CPM option in a managed-products and services capability.

The ROI of CPM

There are fees linked with deploying CPM options. First, there is the software membership. Specified the cloud-primarily based nature of the modern CPM procedure, having said that, the SaaS product has meaningfully pushed down the fees (and burdens) of implementation. 2nd, there is the software configuration. Providers can configure internally or leverage outside the house skills. There will be support configuration and labor fees (while less so with an skilled companion). Then, of program, there are the fees of procedure support (the administrative methods to keep the procedure).

CFOs have to comprehend that the positive aspects of CPM to speedily recoup the investment decision and direct to price creation in the two difficult and soft dollars. Åmong the former, the technologies drives down fees by permitting business enterprise-device comparisons to identify and leverage finest tactics. But there is a soft-greenback return that CFOs should not overlook. CPM systems enable CFOs to realign their finance division function to larger price-increase capabilities (lower in data collection, reconciliation, and consolidation maximize in business enterprise analyses and support). And, the insights realized as a consequence of a CPM procedure investment decision support finance chiefs make more informed business enterprise choices and more quickly program-correct when situations adjust.

Mike Cochran, running director, head of CFO tech products and services, at Accordion, the personal fairness-centered financial consulting and technologies organization.

contributor, corporate performance management, CPM software, ERP, G/L