Assessing the success of any business requires monitoring areas like financial performance or overall market share with a high-level overview to gain big-picture visibility.
Key performance indicators (KPIs) provide data-driven insights into different parts of the operation, pinpointing areas that are succeeding or failing. When combined with strong strategic planning, including corrective measures, this sort of information can improve efficiency, profitability, and value.
Corporate performance management (CPM) software provides an operational framework and a strategic methodology for business planning. Complex business plans and decision-making require strong budgeting, financial forecasting, and detailed performance measurements in areas like sales, marketing, finance, HR, and operations.
Successful CPM software needs to support several core areas to maximize its value to the business:
What was once a laborious undertaking - budgeting, planning, and forecasting - has become a streamlined and strategic process due to CPM. Cloud-based applications and dedicated software programs allow large and complex data sets to be extracted and analyzed at speed, revealing insights and trends that finance and operational teams can act on immediately.
Leaders concerned with cost management, budgeting, and forecasting have the ability to access information to analyze trends, influences, and business drivers. This helps finance teams pinpoint areas of the organizations that are outperforming others and isolate profit-draining activities.
For businesses that need to react swiftly to remain competitive in the marketplace, the ability to extract insights quickly provides an advantage over the competition. Corrective actions can be designed and implemented to push back failing processes, products, or departments and return them to profit.
CPM gives business leaders detailed visibility into company performance. It permits better management and control of operations, revenue, capital investment, and expenses.
When you can carefully measure the results of business decisions, you can make better decisions. CPM allows management to assess the outcomes of their management decisions and understand potential outcomes of future decisions using scenario planning tools. With performance analysis and fresh data, it is possible for finance teams to both plan and assess the impacts of a number of scenarios, measuring the effectiveness of each one before deciding on the best course of action.
In addition to being a valuable tool for providing insights into company growth and financial health, CPM is beneficial in other areas such as:
Leaders who rely on teams or employees to fulfil tasks can use CPM to help align their teams with company strategies. While operations and finance are key drivers of business performance, engaged and motivated employees will implement and drive initiatives forward.
Metrics can be used to reward high-performing employees and identify those that are struggling. Data-driven information and evaluations will help organizations reduce staff turnover while highlighting areas needed for training or support.
In terms of the customer experience, performance management software can be used to improve sales and refine the purchasing process. CPM helps to reduce the need for customer involvement, streamlining different steps of the supply chain to create a smooth and seamless customer journey from beginning to end.
Optimizing the sales cycle in this way, with an enhanced purchasing process, leads to better customer retention and enhanced relationships between client and supplier, often yielding further opportunities for profit-boosting business.
With the intricacies involved in corporate performance management, it makes sense for most companies, large or small, to implement dedicated CPM software. Cost savings gained from automating repetitive tasks like data retrieval and streamlining complex and routine processes like collecting sales forecasts, expense forecasts, and actuals make converting to a software environment financially prudent.
For a CPM system to be fully effective it will need to have the following components:
Performance management software can examine individual tasks, uncover efficiencies, and improve processes for each one without the need for human supervision or input. Data may be extracted and examined at speed, and algorithmic patterns used to detect and correct underperforming processes.
CPM systems need to integrate across the entire organization. Software should be adaptable and able to be incorporated easily within new areas as the business environment changes.
Companies need to identify any problem areas that could result in adverse financial outcomes and the ability to run multiple ‘what if’ scenarios is an essential component of CPM software. Actions and impacts can be examined and risks reduced by analyzing the effects of decisions made over long and short timeframes.
Finance teams and leaders will need to connect and view data or dashboards from desktop computers, tablets, and mobile devices. In an interconnected world, teams may be managed remotely or operate across several different locations, so being able to log on to software systems from anywhere is vital.
As companies grow, a CPM system will need to scale with the business. Software systems with limited storage capabilities or user restrictions soon become incapable of keeping up. A good CPM system will be able to grow alongside the business and manage an expanding list of functions while handling increased data storage needs.
Data extracted using CPM software will need to be converted into a format that is easily understood across different levels of the organizations. A good CPM system will include tools to create dashboards, graphs, and other graphical functions to make information easy to interpret, even by non-technical users.
For good performance management, CPM software will include other essential financial tools like consolidation and close, or profitability modeling. Compliance tools and features help businesses maintain regulatory responsibilities and financial reporting can often be linked to third-party programs to help with compliance and generating financial statements. As a strategic and financial tool, companies frequently report positive ROI from incorporating a CPM system.
Citrin Cooperman’s Corporate Performance Management (CPM) Practice team has performed over 300 CPM implementations. With over 70+ years of combined FP&A experience, our professionals provide management and implementation consultation services to successfully navigate your digital transformation journey. Contact a member of our team today to discover how we can assist you with your CPM implementation.