Fixing Finance with CPM

A recent article in CFO magazine (Fixing Finance: Work in Progress, March 27, 2014) discusses the great improvement in productivity and cost savings that finance departments have made over the past 15 years. Despite this great improvement 81% of the finance executives surveyed said they were "seriously committed" to more efficiency and effectiveness.


Based on an American Productivity & Quality Center’s (APQC) survey, the top areas where Finance Executives are motivated to 'fix finance' are:

1.    A need to improve the quality or usefulness of information provided by finance;
2.    A belief that finance can do more to help business managers boost revenues and profitability; and
3.    A desire to boost labor productivity in finance.

The article goes on to talk about some potential ways to address these needs, all of which are worthy of reading. What it missed is how well advanced Corporate Performance Management (CPM) initiatives can add value to these 3 identified motivations.


Advanced CPM, at a minimum, improves and speeds up financial processes, boosting productivity in finance. Organizations using CPM see closing and planning cycles improve 30-60%, and a reduction in manual tasks by 40-60%.


The real value of today's CPM solutions is how they go beyond improving process efficiencies to adding corporate value with advanced analytics. This is especially true in a solution such as Tagetik (shameless plug, sorry) where all the data needed is housed in one application, with the dimensionally needed for analysis and financial business intelligence built into the processes.  This gives our customers the means to do product profitability, cash flow planning, and multiple what-if scenarios in a timely fashion. The result is accurate, prompt information given to the business managers and executives who then make better informed decisions. The key to Analytics is having relevant, accurate and validated information at its core.  Enabling faster decision making based on bad data is worse than not doing analysis at all.  That is why Analytics of CPM information is so valuable, it is based on a specific, vetted, set of data that has been developed from a controlled and auditable process.


The one day turn around - a real life example of value added CPM

A client who had been using our solution for a few years in the US, had just divested in a line of business mid-year and were planning future acquisitions. The executive team wanted to see how the business was performing year over year, but needed the divested line of business' impact removed from last year to get an accurate picture of the current business. They initially asked for just the top-line P&L, thinking the restatement process would take days of work and strain their already resource strapped team.


To the astonishment of the execs, in less than 2 hours the team delivered the reports requested - plus a full P&L, Balance Sheet and Cash Flow. Thrilled, they then asked for additional scenarios with potential acquisitions included to do a full analysis, which were provided in an equally timely manner.


In a day, this team went from being a 'need-to-have' reporting group to a value-add part of the strategic team.  Without the financial intelligence built-in and the ability to easily show this analysis was based on vetted information this analysis would have taken much longer to do and likely would have been received with some skepticism.


When looking to 'fix finance', think about how you can turn the results of your finance processes into a Analytics that deliver insight that your CFO and other executives can use to make business decisions.


What are your thoughts? Are you able to do this with your CPM solution?


Tagetik CPM Software

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