CPM: A new beginning

This is the last Industry Insight in the series on corporate performance management (CPM). Having discussed the full management cycle from planning to reporting, we`re now back at the beginning, or perhaps, back at a new beginning.

Readers who have followed the full range of Industry Insights will have come to realise that CPM is not a product that can be installed, configured and then left to run. It is a process, or to use a clich'e, a way of life.

The initial changes and customisations to the business are not merely a technical exercise, but affect every business and reporting process - the technology is merely the tool. Once the management cycle is complete, it evolves into a continual process of measurement and renewal.

The first aspect in this cycle most executives notice - because it is constantly driving them to improve - is the change to the organisation`s budgeting and financial planning. CPM supplements or even replaces the annual budget with a real-time rolling forecast adaptable to change and able to warn management of any potential dangers in future.

Planning therefore becomes a core competency and is practised on almost a daily basis by every manager, from the executive down to departmental management. The organisation`s corporate governance and reporting efforts will improve dramatically because of the increased accuracy of reports and forecasts, which provide early visibility to changes in operating performance.

Technology is an important part of CPM, so important that it may not be possible without good enabling systems.

David McWilliam, MD, Cognos South Africa

When issues arise, or even when an opportunity is noticed, management can explore the scope of actions necessary to resolve or take advantage of each situation, while maintaining alignment with and focus on corporate objectives.

Of course, CPM does not only focus on the financial side of business, but as observed in the modelling phase, also on operations. When problems are uncovered, drilling down to the root causes becomes simpler for managers who have the entire organisation modelled in front of them (on their PCs or notebooks).

Changes to the business process or structure can be designed and tested before they are implemented, providing another safety net to ensure business continues with minimal interruption. These changes, once refined in the CPM model, are simpler and less disruptive if done correctly and with the appropriate care.

The technology used for CPM is an enabler for this constant yet controlled change, but it is important to ensure CPM applications deliver certain standard functionality. First, all data from results or new planning must be instantly aggregated into the business model.

In this mobile age, the ability to take it with you is also critical to executives, many of whom may only have a few hours to think about planning when at an airport or in a hotel. Offline planning and configuring is therefore a must-have, along with the ability to link to the server via the Internet and synchronise applications.

Additionally, as a constant manager and monitor of corporate health, the CPM system must be configurable (after the initial installation and customisation) to allow IT staff to change data structures, model parameters, user access rights and more without taking the system offline. Especially in the new globalised world, 24x7 availability is required as the norm for companies operating internationally.

Technology is an important part of CPM, so important that it may not be possible without good enabling systems. Nonetheless, it is in the planning and modelling phase that CPM is made or broken. Every CPM process needs to have its foundation in the business processes and model - technology simply takes the drudge work away and allows business to focus on the business of business - and is that not the point of it all?