Best Practices in Selecting Performance Management Solution

A new generation of sophisticated, web-based database applications is changing the way companies look at planning and financial reporting. These Corporate Performance Management (CPM) applications combine a wide variety of financial functions into a single solution, resulting in one real-time data pool that can be extended across the organization to allow users to input data and extract reports from a single data source.

In addition to improving the planning and reporting processes at organizations, CPM solutions are helping organizations meet the demands of the new regulatory environment. As new laws are passed, such as Sarbanes-Oxley, placing strict compliance rules on companies, the need for streamlining reporting practices has become a global necessity. In the wake of Enron, WorldCom and Nortel, companies are getting more pressure from stakeholders and investors to apply best governance practices, increase employee accountability and ensure due diligence when managing financials such as budgeting, reporting, consolidations, assets and allocations, and planning such as strategic, human resources and capital.

Many companies still use and depend upon Excel spreadsheets for all their planning and reporting and are finding this delivers highly unreliable and inaccurate data. Furthermore, this does not allow for stringent accountability practices. CPM systems allow for improved information flow and data integrity – “one version of the truth” – and assign accountability to users, making it easier to trace any questionable input to the source. These solutions allow financial analysts to focus less on gathering information and more on analysing the data.

When selecting a CPM solution, there are specific factors that every purchaser should consider. These considerations, ultimately, separate dedicated CPM applications from Excel spreadsheet budgeting and reporting, by saving time and resources, reducing strenuous efforts made by collaborators, and ensuring data accuracy, control and flexibility during the planning and reporting process. But not all solutions and solution providers are alike, and more importantly, not all solutions provide companies with the results they need to ensure they are meeting requirements and extending their solution beyond its original responsibility.

Clarity Systems has long been on the leading edge of the evolution of performance management. For global and local companies wanting to improve visibility and control of their planning, reporting, scorecarding and consolidation processes, Clarity Systems delivers web-based corporate performance management solutions, enabling corporate accountability of performance across the enterprise. Based on a close partnership with its clients, Clarity Systems’ product and professional services teams offer the following best practices for implementing and extending a CPM solution to meet a company’s performance management requirements. A solid CPM solution should offer key features that will not only improve your company’s reporting and planning processes, but help measure your ROI by allowing users to extract information easily in order to report back to investors at every stage. These best practices include:

1. Using web-based technology
2. Adopting a single-integrated platform
3. Embracing an Excel interface
4. Using a hybrid of relational and OLAP databases
5. Ensuring the product is backed by expertise in design and deployment from the vendors’ Professional Services team

1. Using web-based technology
Web-based technology is an essential feature for any solution as it provides more flexibility, from installation to data entry. Web-based technology:
• Means no desktop installations or upgrades that can be time consuming and expensive.
• Allows for real-time access to information from a single data set.
• Provides remote access for users working off-site.
• Increases scalability so that thousands of users can access the information at the same time.

2. Adopting a single-integrated platform
Most vendors in the CPM space do not offer a single-integrated solution for corporate performance management. They instead offer disparate products with different licensing fees, different user interfaces, and a requirement to map these different products together. Instead, with purchasing a single-integrated solution you not only save money on the product and services, but you can be confident that you are reporting and working with a single data set. A single-integrated platform:
• Allows information to flow more freely, breaking-down silos.
• Allows for easy data entry and users are accessing information from one data source.
• Means not having to map modules together. You don’t have to continue to purchase new products for each area; there is a single solution for budgeting, forecasting, consolidation, HR planning, strategic planning, business modeling, etc.
• Reduces time spent on training users and avoids having to gain user acceptance on each new system.
• Creates better ROI since all departments can incorporate their own models with integration into the other departments, and IT support is reduced with only a single software application to maintain.

3. Embrace an Excel interface
Excel is the unifying language used for budgeting and performance management. Excel’s flexibility however has caused the ailment known as “spreadsheet hell,” by delivering inconsistencies and inaccuracies in data. It’s familiarity amongst users for budgeting, reporting and analysis however cannot be ignored. An Excel-like interface:
• Reduces the stringent efforts on becoming more familiar with a new interface.
• Provides finance with the ability to generate templates and reports quickly.

4. Use a hybrid of relational and OLAP databases
The ideal CPM solution should be able to disseminate information / data from both a relational and OLAP database in order to best meet the needs of the given business case. Typically, a relational database is two-dimensional and optimized for data input, including user creation of new members for HR planning, asset planning and project planning. An OLAP database is multi-dimensional and optimized for data retrieval and analysis. A multi-dimensional database allows for easy access, updates and rolls information forward very quickly. This means that you can drill down to every department, division, district and location, and be provided with real-time information. The ideal hybrid CPM solution embraces both technologies and provides:
• A single interface to all repositories containing any information regarding your performance management solution.
• More flexible tool to expand and utilize information from many sources, i.e. ERP, CRM, Data Warehouse, HRMS, etc.
• Allows more flexible storing of information and combines the right tool for the data types being stored, e.g. numeric data to OLAP and textual qualifiers to relational.
• Allows for multiple sub-ledger type data entry to support the various models for individual departments and/or accounts.
• Harnesses the calculation engines from both to provide the “best of breed” speed and performance to the end users.

5. Exceptional Professional Services support
A CPM solution should come with an exceptional Professional Services team that is available during and after implementation. More importantly, the support service should offer you with the thought-leadership needed to assist you in leveraging the solution across your organization and taking it to the next level of performance. Professional Services should not be an after-thought. A vendor support services team:
• Should have the expertise in the design and deployment of CPM solutions.
• Ability to configure the solutions to become the most functional and flexible software application to meet your requirements.
• Ensure your implementation runs seamlessly, by being available to you every step of the way.
• Provide you with the advice you need, at every level, to leverage the solution and move it beyond its typical capabilities.
• Holds the vendor accountable to what they sold you – the implementation partner cannot argue you were sold something the software cannot do.

Selecting a performance management solution can be a daunting task for any company. Doing your research on best practices, listening to experts and evaluating a range of vendors is key to choosing the solution that best fits your requirements. Most importantly, the solution you choose should have the ability to not only deliver the applications you need now, but be able to support your future business objectives. A solution that has the ability to meet these objectives will put you well ahead in meeting the expectations of your stakeholders and investors, and help your company reap long-term benefits.

To find out more about this topic, we invite you to download a recent white paper research report published by CFO – Best Practices in Selecting Performance Management Software.