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FINANCIAL PERFORMANCE MANAGEMENT

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Financial Performance Management – new mid-market solutions offer an alternative to spreadsheet terror.

Careful management of the financial performance of any organisation is critical to its success and long-term sustainability. In a dynamic marketplace, however, static reporting based on spreadsheets seldom delivers the agility necessary to remain competitive. Small and medium sized organisations are thus turning to newly available financial performance management (FPM) solutions tailored for the mid-market.

Powerful and flexible enough to scale across the business and drive decision-making from the storeroom to the boardroom, these mid-market FPM solutions provide the answer for organisations that are struggling to make spreadsheet-based solutions meet their needs but do not have the means to afford enterprise-class performance management solution suites.

Spreadsheet gaps

Measuring, monitoring and optimising a company’s financial performance requires more than the mere collation of annual or biannual reports to adjust retroactively budgets or guide strategic decision making-managers and executives have to have their fingers on the pulse of the business at all times to drive business performance intelligently. What is needed is a solution that will support all the financial processes, from planning to budgeting, forecasting, consolidation, reporting, analytics and data management.

Key challenges smaller businesses currently face include not having the staff, experience, time or budget to select, implement and manage complex, dedicated toolsets for data storage, planning, budgeting, reporting, forecasting, etc. Most thus rely on the familiar spreadsheet for just about all their FPM needs. This leaves a lot of gaps.

Data is scattered and inaccessible, stored in two-dimensional spreadsheet files using unreliable links and complicated macros; critical reports are inflexible, designed by a handful of ‘power users’ scattered across functional units; collaboration is difficult, relying on an endless stream of spreadsheets attached to crossing, conflicting, often irrelevant and frequently unread emails; analysis is ad hoc and ineffective; updates and revisions are complex and therefore infrequent; version control is a nightmare; and, to crown it all, reports are frequently out of date by the time they are printed and distributed.

The simple reality: while spreadsheets are pervasive, user-friendly and readily integrate with other productivity tools, to attempt to use them as a primary data storage and performance management solution is to court disaster.

Enhanced FPM

Business and financial agility depend on getting the right information to and from the right people at the right time. A FPM solution that supports the various financial processes (e.g. planning, budgeting, reporting, etc.), streamlines information gathering, aggregation and analysis, and provides immediate feedback to enhance decision support at all levels of the business.

However, to meet the needs of SMEs, such a solution also needs to be easily deployable, reach right across the business and empower the organisation to react rapidly.

Ease of deployment means the organisation can implement the solution quickly, beginning wherever the need is greatest – be it planning, budgeting, forecasting, consolidation, reporting, or analytics – and then extending the implementation rapidly. In selecting a FPM solution, check that self-help components like wizards, workflow, pre-built databases, sample cubes and plans are included, as this will ensure users can configure their own applications, maintain data and generate reports quickly and easily, even across the Web. Also ensure that all the components of the solution are integrated. Business rules, data and metadata need to be shared across applications to ensure teams work with only one set of rules and hierarchies.

Ideally, the selected FPM solution will automate and manage FPM processes by engaging, empowering and monitoring executives, line-of-business managers and staff across functional areas and business units. For example, it should enable the organisation to create high-level plans, assign responsibility for providing information and track progress until plans are complete.

A powerful, high-performance engine will empower users to perform analysis on large, frequently changing data across myriad transactions like daily or hourly sales; reviews by store, brand or representative; or perhaps day by day activity across hundreds of service facilities. The advantage this delivers is that finance executives, planners, controllers and managers can change input values – even business models – and recalculate them on-the-fly, attacking business problems immediately. Further advantage can be gained by ensuring the solution will integrate with various applications, allowing users to access and import multi-source data (e.g. SAP, Turbo).

Clearly, a spreadsheet-based approach to data and performance management is inadequate to meet the challenges facing a growing business. Organisations that want to focus on their core competencies, such as running and growing their businesses, would do well to consider the advantages that an integrated, functionally rich FPM solution would give them. Implementing a FPM solution of this nature will not only deliver the standard cost savings that come with automation and standardisation, but will also assist to enhance business performance.

David McWilliam BCom, is the Managing Director of Cognos South Africa, an IBM Company.