What is corporate performance management (CPM)?
Corporate performance management (CPM), also known as business performance management or enterprise performance management, refers to a range of business processes executed by the office of finance.
CPM is best described by leading analyst firm Gartner Research:
“CPM is an umbrella term that describes the methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise. Applications that enable CPM translate strategically focused information to operational plans and send aggregated results. These applications are also integrated into many elements of the planning and control cycle, or they address BAM or customer relationship optimization needs. CPM must be supported by a suite of analytical applications that provide the functionality to support these processes, methodologies, and metrics.”
Corporate Performance Management can be further divided into solutions that deliver Strategic Corporate Performance Management and Financial Corporate Performance Management.
Strategic Corporate Performance Management (SCPM)
SCPM refers to a CPM solution’s ability to support the Office of Finance in managing organizational performance and strategy.
Financial Corporate Performance Management (FCPM)
FCPM refers to a CPM solution’s ability to support the Office of Finance in completing the financial close and controlling the accounting cycle.
Processes that fall under the CPM umbrella include financial close, consolidation, management and regulatory reporting, compliance, disclosure, analytics, and planning (including budgeting, forecasting, FP&A, xP&A, department planning, supply chain planning, and operational planning.).
When is a corporate performance management system needed?
Any company that meets the following criteria should consider investing in a corporate performance management system:
- Your enterprise has complex consolidation needs that involve multiple entities, legal hierarchies, and accounting requirements
- You’re looking to foster agility in enterprise planning to prepare for disruption and times when quick pivots are needed
- Data is isolated in departmental, subsidiary, or process-specific point systems and requires manual data collection to retrieve
- Data-intensive processes, like group disclosure calculations and consolidation, take days to process and render
- You have plans for extensive growth, M&A, or global expansion
What financial processes should a corporate performance management system cover?
CPM systems should be a one-stop-shop for all financial management processes, including:
Financial close and consolidation: Best-in-class CPM software automates and unifies every close process including intercompany transaction management, account reconciliation, local close, and group consolidation. CPM software ensures multi-entity consolidation represents a single version of the truth while allowing users to calculate adjustments quickly, manage multiple entity consolidations, convert regional currencies into a common currency, and comply with various regulations and accounting standards.
Financial and management reporting: CPM software should act as a central data source, automatically cascading real-time and historical performance data into financial and management reports. For ease of use, look for solutions that couple CPM automation with reporting tools your teams already know, like Microsoft Office.
Disclosure management: CPM software should automatically calculate and format disclosures for all regulatory requirements and enable you to meet both statutory and financial disclosure needs. These systems should normalize data upon entry. By eliminating points of manual entry and manipulation, CPM systems help to ensure data accuracy and integrity.
Planning, budgeting, and forecasting: Reporting corporate performance is only half the battle. CPM solutions should aim to optimize performance too. Integrated planning, budgeting, and forecasting capabilities, complete with scenario modeling, predictive analytics, and cost allocations, are a CPM software must-have. Planning functionality should connect financial and operational departments, like supply chain, sales, and HR, so that every plan is linked to financial outcomes.
Analysis: Profitability analysis, advanced analytics, and KPI dashboards — CPM software should show you performance results and help you understand why they matter and what they mean. To further your understanding of performance, CPM software should enable its users to produce instant data visualizations, monitor dynamic KPI graphs, and drill into performance to analyze low-level drivers. In other words, CPM software should enable you to explore the big picture and the little picture.
Standardization, collaboration, and workflow: CPM isn’t a one-person job. It involves multiple contributors, departments, data sources, and systems across multiple LoBs, subsidiaries, and regions. CPM software streamlines data integration across organizations while giving administrators and managers the power to define workflows to optimize efficiency. Audit trails also ensure data is tracked so users can find quick answers during audits and be confident performance data are correct.
Why is corporate performance management important?
When CPM is completed in a unified environment using a single version of data, all contributors, reports, plans, disclosure documents, departments, and LoBs are on the same page, with finance at the core of strategic decisions.
Corporate performance management software keeps financial performance at the heart of all decisions and strategies.
Corporate performance management puts finance in the driver’s seat. Operational decisions are then made with an understanding of true profitability, costs, and impacts to financial statements. When executive management can see how financial information relates to and impacts different departments, LoBs, branches, etc., every decision is made with a 360-degree view of impacts.
Corporate performance management solutions improve efficiency.
Corporate performance management solutions are built to help you see performance, execute financial processes, and report on performance data faster. Data collection, close, consolidation, reporting, and analysis are time-consuming when completed manually. They’re also erroneous, especially when exposed to potential for human error. CPM gives users the automated tools to expedite tasks while eliminating human-inputs and, thus, the chance for human error.
Corporate performance management aligns all LoBs, departments, branches, and divisions.
With performance data at every level of granularity, CPM software solutions allow users to identify underlying trends in data and see the impacts of business decisions across the organization.
Corporate performance management systems help control risk.
When you see real-time performance trends, you can identify shortcomings and financial risks as they emerge. Tools like dashboards and automated reports enable executive management identify changes in performance as they occur.
How to improve corporate performance management:
The best way to improve corporate performance management in your organization is to reduce as much data movement and data interference as possible. This means two things: First, integrating source systems to reduce the number of times data changes hands (e.g. data imports and exports between systems.) Second, using automation to eliminate points of human intervention (e.g. spreadsheets, manual data collection). Of course, these two factors can only be achieved by implementing an enterprise-wide CPM software solution.
In deploying a CPM software across your organization:
- You create a single data hub for finance. Data sources, like ERPs, GLs, marketing systems, and CRMs can all be integrated into the software.
- You ensure consistency across all outputs. Because financial processes are completed using CPM software, all reports contain results generated from a single version of the truth.
- You improve efficiency. Users can collaborate using workflows and communication tools built within the system. These reduce duplicate work and bottlenecks. What’s more, because all financial processes are automated, users complete those processes faster and can dedicate their time and skills to value-added activities.
What should you look for in a corporate performance management solution?
When you’re looking to purchase a corporate performance management solution, look for:
- A unified solution — not an isolated point system.
- A single version of the truth across all financial processes, from close to disclosure — not a system that requires data exports every time you consolidate data.
- The ability to run multiple consolidations simultaneously — not one consolidation at a time.
- Data and reporting controls owned by the Office of Finance — not IT-owned processes.
- Easy implementation — not an implementation that disrupts existing processes.
- Configuration — not customization or custom scripting.
- Inter-system collaboration where multiple people can work in the same document simultaneously, without risk of overlap — not numerous contributors working in different versions of a single document.
- Ease of use with native Microsoft integration — not Excel-like features.