Business numbers on the current state of the company at the push of a button.

An overview of the bigger picture – and if questions occur, all the details available for a drilldown.

That's what a good corporate performance management tool is all about.

Definition: What is corporate performance management?

Corporate performance management (CPM) – also known as business performance management (BPM) or enterprise performance management (EPM) – serves strategic corporate planning and corporate management with a focus on the area of finance. Key components are the analysis of company-relevant key figures and the optimization of processes based on reporting from business intelligence (BI).

"Corporate" refers to large companies and enterprises that are subdivided into legal entities. Annual financial statements of subsidiaries must be incorporated into consolidated financial statements. Here, the German Commercial Code (HGB) as well as international accounting standards such as IFRS and US GAAP impose special legal requirements and recommendations which are generally not the focus of enterprise or business performance management. Above all, however, such a corporate network makes the reporting of business figures a lot more complex than in the case of small companies.

Corporate performance management software gives controllers the tools they need to provide business unit managers, CFOs and business leaders with the right metrics when they need them. Ideally, decision makers can retrieve the information themselves.

After all, the goal is to manage the business, not waste time waiting for controlling to compile numbers from a variety of sources.

Doing a contribution margin calculation for the different product lines of the two largest business units? How many controller weekends have fallen victim to requests like this? Countless ones!

Corporate Performance Management: FP&A, xP&A, Planning & Forecasting, Reporting & Dashboarding, Analysis, Scenarios & Simulation, Business Intelligence, AI/ML Predictive Analysis & Planning, Data Management/Data Consolidation.

 

Limits of corporate performance management – and beyond

The optimization of human performance is – in contrast to performance management in competitive sports or the HR department – not a central concern of classic CPM. In CPM, the focus is on the performance and results of the entire company. However, the extended xP&A (extended planning & analysis) approach integrates HR, marketing, sales, production, or operational planning into a unified corporate planning beyond conventional FP&A (financial planning & analysis).

You want to learn more about extended planning & analysis? We have prepared decisive insights for you in this white paper

Cycle: The 4 phases of corporate performance management

Corporate performance management combines four phases into one continuous process:

  1. Planning and forecasting
  2. Reporting and dashboarding
  3. Analysis
  4. Scenario building and simulation (modeling)
Corporate Performance Management: Planning & Forecasting, Reporting & Dashboarding, Analysis, Scenarios & Simulations.

This phase includes the classic financial planning of companies – financial management including modern budgeting. It involves plans and objectives of different functional areas and departments of the company for the coming period – usually the fiscal year.

The individual sub-plans (sales plan, cost plan, personnel plan, production plan, liquidity plan, etc.) are combined to form an integrated corporate plan that determines how the company intends to shape its future.

The plan provides orientation. The company and the separate divisions are measured against this plan.


Reporting and dashboarding together are one of the two main disciplines of business intelligence (BI). It focuses on the continuous monitoring of the actual development compared to the targeted plan, the target state, and a comparison with history.

To identify deviations, it is important that data in planning is created in the same business-oriented structure as in reporting.

Only then can it be determined at any point in time:

Where are we compared to the plan and the past?


The second part of business intelligence concerns business analytics. If relevant deviations in the target-actual comparison appear in the reporting, the question arises why this is the case.

Was the plan unrealistic? Is the implementation lacking? Which processes need to be optimized to improve performance?

If all internal developments are going according to plan and the results are still not right, perhaps external factors have occurred that are changing the situation?

A new competitor, a marketing offensive by a known competitor, changing consumer behavior or problems in the supply chain?

The analysis provides answers to these questions. This then results in recommendations for action to the management for course correction.


4. Scenario-based simulation and modeling of alternatives to form the basis for plan adjustments or replanning

At the end of the planning cycle, the beginning for replanning is prepared.

Based on the available data – What was the plan? What was the actual development? What developments do we see in the market? – assumptions can be sketched out as to what future we might be heading towards.

There are considerable interdependencies and interactions between the assumptions from the various business units.

An interactive CPM tool with simulation and modeling functions can show these and make them tangible.

How does changing my planning figures in one aspect affect the other business units? What consequences do adjustments in capital expenditure planning have on production?

And does this fit into both the legal framework and the sales target plan?

A corporate performance management system makes the interdependencies transparent.

You would like to see a powerful scenario planning tool in action? We are happy to present Serviceware Performance to you in a non-binding demo session!

Goals and challenges in corporate performance management

A CPM system depends on the quality of the data. To get the right figures at the decisive moment, there are high requirements for the systematic filing, structuring and management of the data.
 

Challenges of corporate performance management:

  • Amount and complexity of information with poor signal-to-noise ratio
     
  • Variety of data sources and silos without structure or uniform format
     
  • Formatting and processing decisions lead to path dependencies that make a change of perspectives difficult
     
  • Elaborate preparation delays the availability of information
     

Goals of CPM:

  • Clear perspective on the relevant facts as the basis for strategic corporate decisions
     
  • Data quality: uniform, business-oriented structure of data leads to consistent and correct figures
     
  • Adaptability of data: Flexibility without jeopardizing the quality, structure, and availability of the data
     
  • Availability of data at the push of a button
     

The availability of correct and consistent data in the appropriate level of detail at the time when business leaders need it – that is the greatest challenge in corporate performance management. That's what we’re aiming for!


Data silos will remain, the number of source systems will increase even further

The data for a comprehensive corporate overview usually sits in a variety of sources and systems in a wide range of file formats.

Why?

Even if an ERP like SAP is in use, it needs many different modules and customer databases to map reality.

Even within the same system, different master data and data formats are often used – mostly unintentionally.

Millions of employees constantly carry data from one place to another.

The consequence? Without a uniform structure, the numbers are not consistent, not reliable, not comparable.

Excel: Powerful, flexible – and highly error-prone

The information from the jumble of source systems must be prepared and integrated into a uniform format in one place. This place is usually Microsoft Excel.

Many use Excel to aggregate data and pull out the appropriate information because it's what they know best. They appreciate the flexibility of how data can be filtered, dissected, and aggregated.

This works right up until the moment the CFO suddenly wants to add a third business unit to the view or wants a breakdown by market or production facility instead of product lines. And then there is the small issue of what exactly the number in the fourth row of column F is made up of...

A business performance management solution provides a remedy for all these complexity problems if two conditions are met:

  1. It can be integrated into the existing system landscape and infrastructure, and
  2. it still gives the controlling department all the freedom and skills it needs to prepare the data.

With Serviceware Performance, this has been achieved in every setup so far. We are happy to work with you in a non-binding demo session to see how this can also be successful for your company!

More efficiency with AI and ML

Yan Qu, Product Owner AI, describes how Serviceware Performance works as an AI-based efficiency booster in the planning process.


Are you looking for a corporate performance management software that frees your budgeting and forecasting processes from complexity and reliably delivers consistent business figures? Then try Serviceware Performance and benefit from a successful CPM tool with state-of-the-art planning and analytics.

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