Dispelling the Myths About CPM Implementations
This is the next of two columns on corporate performance management applications. The initially article, The ABCs of CPM Software program, was printed on November ten.
Myths and misinformation about corporate performance management systems and their use in finance departments abound. Quite a few revolve all-around these tools’ complexity, building it tricky for a CFO to see their price at the end of the implementation highway. The myths, even so, are very easily debunked. We address 5 of them under.
Myth one: Utilizing CPM Will Take Much too Considerably Time to Recognize Value
To expedite a CPM project (more quickly, significantly less exertion, negligible price), CFOs need to:
- Utilize a “configuration” as opposed to “customization” primarily based alternative layout strategy.
- Scope the project from a negligible practical solution (MVP) perspective so that the group can begin recognizing the solution’s price much more swiftly.
- Following MVP deployment, strategy the project from a section-primarily based implementation perspective, layering in supplemental features.
- Design and style for monetary consolidation and preparing/forecasting through a “common layout phase” upfront, but deploy each and every in a prioritized vogue.
- Have the supply-to-target mappings finish prior to engaging professional products and services. (Likewise with other necessary mappings: group/entity, solution, channel, and so on.)
- Try to remember, CPM is a reason-developed system to support monetary consolidation, budgeting/forecasting, and the reporting necessary to support these procedures. So resist the temptation to change the CPM system into an all-encompassing system for just about every reporting want.
Myth two: CPM Focuses on Economic Data, Not Operational Data
There is a grain of truth of the matter to this assertion even so, it vastly understates the value of operational details.
- There are going to be details/reporting needs that are better supported by different platforms to CPM. That explained, the supplemental operational details that supports the financials and is leveraged as aspect of a driver-primarily based preparing/forecasting strategy need to be introduced into the CPM alternative.
- Even much more so than CFOs at large, multi-billion-greenback companies, CFOs at midsize and private fairness-backed businesses want to be just as fluent in the operational metrics as they are in the monetary kinds.
- The necessary capability to model multiple monetary situations (best, worst, expected cases) can only happen when operational metrics are introduced and correlated with the monetary lines they travel.
- By layering operational metrics facet-by-facet with the financials, finance is informed and empowered to have meaningful dialogue with various practical departments.
Myth three: “We Do not Will need a CPM System Considering the fact that We Are Migrating to a Solitary ERP”
- Consolidating multiple common ledgers into a solitary organization useful resource preparing system is time-consuming, high priced, operationally disruptive, and makes various adjust management issues and pitfalls.
- Personal fairness-backed CFOs in certain usually inherit a complicated architecture of monetary units. Untangling these units, and the procedures they support, to migrate into a solitary ERP can be impractical, at best, and counter to price generation, at worst.
- CPM solutions make it possible for company unit autonomy (multiple G/L environments) whilst simultaneously empowering finance with the necessary controls to standardize the near/consolidation process, preparing/forecasting, and monetary reporting.
Myth four: The Integration of Acquisitions Will Be a Obstacle
Even though they can support some rudimentary capabilities, G/Ls usually tumble shorter in support of the adhering to:
- The monetary near/consolidation process (inter-organization transfers, account reconciliation, transaction matching, job management).
- The preparing/forecasting process (driver-primarily based preparing, scenario modeling, rolling forecasts).
- Reporting needs (dashboarding, advert-hoc, drill-down and drill-by, examination)
- In addition, even though spreadsheets offer much more adaptability than a G/L in support of the capabilities shown higher than, they can not inherently implement standards and controls. In addition, multi-spreadsheet workbook logic can be tough to construct, deconstruct, and append/modify when a company want, like an acquisition, necessitates it.
- Acquisitive businesses aggressively scaling and integrating new insert-ons as aspect of their price-generation system profit appreciably from the deployment of CPM solutions.
Myth 5: CPM Methods Call for Significant Complex Help
Modern-day CPMs are cloud-primarily based solutions and, consequently, significantly less unwieldy than individuals of preceding generations.
- Their complex infrastructure is maintained by the software seller as aspect of the software-as-a-provider model.
- CPM alternative administration is, consequently, best supported by assets in finance and accounting that have good company familiarity and light-weight technologies competencies.
- Regular-state support usually entails a aspect-time role. Nevertheless, it can boost to full-time through near cycles and budgeting and forecasting procedures.
- IT need to get concerned when new details sources want to be built-in (for case in point, when trial harmony details needs to be sourced from a new G/L as aspect of an acquisition).
- Outsourcing selections exist whereby third-occasion companies will administer the CPM alternative in a managed-products and services capacity.
The ROI of CPM
There are charges associated with deploying CPM solutions. 1st, there is the software membership. Supplied the cloud-primarily based mother nature of the present day CPM system, even so, the SaaS model has meaningfully driven down the charges (and burdens) of implementation. 2nd, there is the software configuration. Firms can configure internally or leverage exterior expertise. There will be support configuration and labor charges (even though significantly less so with an skilled partner). Then, of study course, there are the charges of system support (the administrative assets to retain the system).
CFOs must understand that the added benefits of CPM to swiftly recoup the expenditure and direct to price generation in equally tricky and tender pounds. Åmong the previous, the technologies drives down charges by letting company-unit comparisons to identify and leverage best methods. But there is a tender-greenback return that CFOs need to not overlook. CPM technologies allow CFOs to realign their finance division perform to bigger price-insert capabilities (minimize in details collection, reconciliation, and consolidation boost in company analyses and support). And, the insights realized as a result of a CPM system expenditure assistance finance chiefs make much more informed company conclusions and much more very easily study course-appropriate when instances adjust.
Mike Cochran, taking care of director, head of CFO tech products and services, at Accordion, the private fairness-centered monetary consulting and technologies organization.