Spread the word - CFOs need performance management today

John Robson, Performance Management Consultant, Infor, says a vital CFO objective today is obtaining a single version of the truth. However, the only truth, for most companies at the moment is that they have a disconnected set of ERP software applications spread all over the business - which amount to nothing less than a mess.

Speaking at a recent Softworx (an EOH company) customer event, Robson explained that today's CFO is expected to manage far more than just financial performance in order to provide the consistent, reliable and integrated metrics needed to run the business and support innovation. This expectation is being fuelled by the increased emphasis on compliance with laws and regulations, as well as the implementation of International Financial Reporting Standards (IFRS).

The original intent of ERP systems was to streamline and simplify business processes. Instead, Robson believes they have created rigidity, uncertainty, risk, and enormous complexity - all of which are fatal to a business.

Some of the common ERP problems, he says, are: too many data sources, too many issues with untrustworthy data, too many silos and no integration, too many questions about access rights - adding up to too many reasons why any one person would want to take ownership over the data. But, unless someone does take ownership - a responsibility which is rapidly falling in the CFO's lap - the business will never achieve that ever-elusive “one version of the truth” goal with its enterprise-wide data.

“Companies with no formal performance management (PM) strategy often depend on their existing accounting and ERP applications to address planning and budgeting requirements. These applications, admittedly, serve an important function by recording a business' transactions. But, they lack the functions and ease of use necessary for a company to link its strategy and operations to achieve true performance management. At many companies, an over-reliance on spreadsheets to support planning and budgeting processes compounds the problem.”

Spreadsheets, Robson believes, inhibit a company's ability to make real-time, strategic decisions based on accurate data. Prone to failed business logic, information delivery delays, and a lack of visibility across the business, spreadsheets hold back a company's ability to grow.

PM applications provide companies with immediate access to on-time and accurate data, centralised reporting to drive business processes based on analysis and the ability to develop reliable budgets in a timely manner. This is why more and more companies are adopting PM solutions to provide them with actionable insight into the performance of their organisation.

“With PM, information and reports are available immediately and role-specific PM solutions provide each user with the information important to their individual function within the company. No longer do they have to rely on the finance department to run the report and then sift through the data to extract what they need for an upcoming meeting. And, due to the fully automated nature of PM, it practically eliminates errors formerly caused by manually entering and moving data from one file or system to another. Because of error-reducing features inherent in the systems, users no longer worry as much about the accuracy of their data. When you go into a meeting, you can know that what you carry and show is accurate,” says Robson.

PM solutions also make budgets easier to analyse than before by helping CFOs drill down to see how lower-level data impacts top-line numbers. They can now actually see all the assumptions that justify the budget and they can break the budget down into greater detail - as granular as is required.

“Companies that dig out from under their spreadsheets and move to PM are able to move beyond performance measurement to actual performance management. They align resources with corporate objectives through financial and operational planning, flexible budgeting, and realistic forecasting. They monitor and control performance with meaningful reporting and analysis that leads to improved decision-making,” Robson concludes.