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Design Thinking in Corporate Performance Management applications

Design has long been the domain of physical products. Well-known examples such as Apple’s iMac computer and the Tesla model S illustrate how great design can propel a product to iconic heights. Today, the design process is no longer the exclusive property of physical products1. Last month’s Harvard Business Review even dedicated a whole edition to this phenomenon under the header The Evolution Of Design Thinking. Design Thinking is in large part a response to the increasing complexity of modern technology and modern business, and the challenge of having user interaction be simple, intuitive, and pleasurable. The idea behind it is that value is not so much created through technology itself, but through the way the users experience that technology. As a consequence, value creation becomes a joint effort between the technology and the user; the design process thus becomes essential in making the technology successful.


Our business is to implement Corporate Performance Management (“CPM”) applications for financial consolidation & reporting, for budgeting & planning, and for regulatory support. Design Thinking is at the core of what we do. Delivering a simple, intuitive, and pleasurable user interaction forms an integrated part of the design process we execute. From that perspective it seems rather strange that one of our peers once questioned the challenge that is design – after all, was his opinion, everyone is capable of designing a chart of accounts. That statement ignores the complexity and added value behind a solid design process and surely does not foster innovation. Designing a great CPM application is not an easy task, as there are a variety of users involved each with their own specific requirements and expectations when it comes to Corporate Performance Management.

The corporate center in general, and the CFO in particular, can be classified as the key user of the CPM application. Their requirement is being able to understand and manage the competitive and financial position the corporation is in. This does not just relate to operating profit and return on invested capital, but also to the extent at which accounting profits are converted into physical cash flows: every corporation’s life blood. Next to being a business partner, the CFO also has to ensure compliance through the annual consolidated financial statements and its sign off by the auditor. Another important CFO task involves reporting to shareholders. And where a corporation is funded through bank loans there is also the necessary covenant reporting. The auditor, the shareholders and the banks therefore should be considered indirect users as well.

At the contributor side of a CPM application there are important users that should not be neglected during the design process. The data contribution by the local operating companies has to be of high quality and speed; without these preconditions there can be no effective performance management. The CPM application therefore has to be devised in a way that is also intuitive to those working at the local operating companies but at the same time leaves no room for errors. And not just when it comes to actual reporting, but equally important also for the budgeting and planning activities.

So how do you design an integrated CPM application that covers this variety of user requirements? The answer lies in a commonality that is as simple as a journal entry. The entries in the accounting ledger and the processing of intercompany elimination and equity consolidation entries, but also the logic that binds the income statement, balance sheet and cash flow statement together, can be deduced to individual journal entries. Transactional thinking therefore lies at the basis of a rock solid CPM application. Being able to mentally drill down from the group management report and the consolidated financial statements to the original recording per individual journal entry is a skill that requires a lot of practice and experience. Especially when complex topics such as business combinations and hedge accounting come into play. This skill and its appropriate utilization provides for a CPM application with a seamless fit to the users. It makes management information more relevant and reliable, being of great value to the corporation. The corporations we worked with can testify the effect this has had on their organizations.

Casper van Leeuwen is partner at Satriun Group, a European consultancy specialized in Corporate Performance Management and the practical application thereof at corporations.

1”Design for Action”, T. Brown & R. Martin, Harvard Business Review, September 2015


Performance management processes

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