Proactive Performance Management Yields Greater Competitive Advantage

For many businesses, current economic factors heighten the focus on the bottom line. The ability to advance, persevere, or succumb to challenging times is tied to an organization’s ability to establish the proper KPI’s and then track, measure, analyze, and adjust accordingly. Companies that proactively manage their performance, experience significant advantages over companies that do not including:

• Predictive business foresight
• Better business decisions
• Rapid response times
• More time for analysis and trend assessment
• Faster more accurate close of monthly, quarterly, and annual books

According to the Aberdeen Research Benchmark Report entitled The Closed Loop Corporate Performance Management, Managing Corporate Business and Financial Risk, more than 75% of all enterprises that engage in a program to improve their closed loop performance management systems achieve impressive improvements in % gross margin – on average a 6.8 percentage points gain (17.7% to 24.5%).

Organizations that show improvements in a market place of constant volatility are ahead of the curve. They are able to move forward in a nimble and confident manner. While they encounter the same challenges that every other company confronts, they are armed to make swift adjustments for continued success.

Why performance management yields greater advantage
There are three main reasons that proactive performance management yields greater advantage.

Relevant Knowledge, speed and accuracy
The more you know about the state of your business faster, you are better able to make the decisions that drive profitable results. Aberdeen Group further states in their report the Intelligent Performance Management: Aligning Day-to-Day Decisions to Meet Corporate Goals that the ability to respond quickly to exceptions can be significantly enhanced with the ability to drill down to specific transactions.

Proactive performance management facilitates the collection, analysis, and regular review of KPI’s and the supporting details of those metrics. Timely and deliberate scrutiny of the variances between actual and forecast data provides real time foresight down to the line item detail to adjust operations and focus for getting back on target.

Structure
Any process that is not clearly defined is unable to be managed. Proactive performance management links people, process, and data in the most productive and meaningful manner. What is expected and when is clearly established and becomes the catalyst to an organizations ability to improve efficiency.

Collaboration
Companies that have experienced growth, often times do not realize that their prior informal approach to coordination of the budgeting and planning process is causing crucial break downs. To much time spent on gathering, manual keying, consolidations, and report creation leave little to no time for cross functional dialogue. Proactive performance management utilizes tools that do the “heavy lifting” and provide transparency. This enables on going communication at every facet of the enterprise.

The Challenge – it’s not just what you’re doing; it’s how you’re doing it
The Ventana Research White Paper The Fast, Clean Close; Processes and systems for best execution asserts that while desktop spreadsheets remain useful tools for finance professionals, they are not suited to any collaborative, repetitive process such as consolidating and closing a company’s financial statements. Yet, according to CFO.com, 73% of mid-size companies still use spreadsheets for budgeting, planning and forecasting.

Aberdeen Group states in the June 2007 Intelligent Performance Management; Aligning Day –to-Day Decisions to Meet Corporate Goals that an ERP can be an appropriate tool to provide visibility to customer, purchase and production orders. However, that same report further reveals that there are a significant number of business processes in an enterprise not managed by an ERP. Nonetheless, spreadsheets and ERP’s remain the principal sources of data for the decisions that drive an organizations performance.

Spreadsheet paradox – What’s not to love?
You’ve heard it touted as beyond spreadsheets and Excel-Hell, but the use of spreadsheets for budgeting, planning, and forecasting negatively impacts the performance management process. Their use also makes your results questionable. More specifically spreadsheets are:

• Prone to errors. Manual keying of data leaves exposure to incorrect entries and more importantly, mis-calculations.
• Not able to produce accurate cash flow information. The use of accrual based accounting in conjunction with the dependency of proforma transactions is nigh impossible to create with a flat spreadsheet without complex formulas and links.
• Unable to scale well. Large volumes of data make spreadsheets unwieldy.
• Not connected to the source data. Your analysis and reports are only as good as the data used. With real-time data, the information in a spreadsheet is outdated before it’s published.
• Great for finance, but not for business users. Line of business managers that need to input their budget information and notations for the planning process want a simple template not a spreadsheet.
• Unable to drill down to the detail. There is not direct integration to data sources across systems and no connectivity to do what-if analysis across all of your data. This limitation is a blindness no company can afford to have.

Why isn’t my ERP enough?
Enterprise Resource Planning systems provide wonderful insight into operational transactions. However, they are not designed to support the linkage of people, processes, and data which is the core purpose of proactive performance management. An ERP does not provide:

• Cross system analysis and reporting
• Assignment and status of responsibilities and tasks
• Strategic alignment benchmarking
• Calendar and event management
• Result monitoring and analysis
• Collaborative workflow

But if Excel spreadsheets are so bad why is it so pervasively used?
Spreadsheets continue to prevail for three reasons.

Familiarity
For over 25 years, finance departments from all over the world have relied on the ubiquitous spreadsheet. Their simple and intuitive capabilities have endeared them to accountants and analysts alike.

Flexibility and functionality
Spreadsheets bring unparalleled ease to business modeling. Inherent functionality to customize complex formulas is another benefit that finance is not willing to part with. Robert Kugel, a director at Ventana Research stated in the article Spreadsheet Heaven written by Justin Wood, that the functionality of Microsoft Excel was the most important feature that users were looking for in a dedicated budgeting and planning application.

Empowerment
The electronic spreadsheet freed finance and business users from IT dependency. The constraints and barriers were lifted and the users were able to close the books faster without IT intervention.

This is the way it is
Your company has an ERP, and in many cases, multiple ERPs. There is also a CRM, an HR application, stand alone financial applications, and other databases and still spreadsheets remain the defacto standard for budgeting, planning, and forecasting. Every article, study and report you’ve read confirms what you already know; better management of performance will give your company the gains you need in the bottom line results.

Vendor after vendor has promised a silver bullet for proactive performance management, but what you need is a jumpstart beyond the technology to gain the buy-in for success.

A jumpstart to proactive performance management
The performance management vendor and technology you choose are critical to the success of achieving quantifiable results. But, there are other drivers to consider in moving forward with implementing a performance management solution that will increase your company’s:

• Technology ROI
• User adoption
• Skill, asset and resource leverage
• Time to benefit

Seamless integration with what’s already in place
Multiple terabytes of data in various systems and databases already exist within your company. Your organization gains the jumpstart from a performance management solution that already accepts data feeds easily and seamlessly from all of your current sources. If it is unable to accept feeds of certain types, then your insight is limited. If extensive coding or programming to map connections from all of your sources is required that process can be lengthy, costly and much like a linked spreadsheet, halt all activity until a non-working connection is found and repaired.

IT expertise and infrastructure requirements
Proactive performance management is a collaborative process that all executives, mangers, finance staff, and key personnel contribute and participate in. If IT intervention is required to use the solution, you lose self sufficiency and time. Should the solution require specific hardware and/or operating systems, it becomes owned by IT and could significantly increase the cost of infrastructure. The most cost effective solution is the one that does not come with rigid hardware and platform requirement or the need for technical expertise to get the most from its use.

New tool requirements
Many performance management solutions have great capabilities, as soon as everyone learns how to use it. The need to be trained on and learn a new tool can be detrimental to user adoption of a new solution. The learning curve diminishes time to benefit while current product knowledge and skill sets are not leveraged. Advantage is increased when little to no training is required to be up and running from the beginning.

Implementation
Functionally sound rapid deployment of a performance management solution is pivotal for receiving maximum ROI. Lengthy implementation cycles or long consulting engagements erode the bottom line.

Selecting the right performance management vendor and solution
Many performance management vendors extol their virtues and the capabilities of their solutions. At the end of the day the only that counts is results. Both vendor and solution are accountable to deliver.

Ability to meet company specific needs and requirements
Your company wants to do bottom up budgeting using Prior Year’s Actuals as your budgeting methodology. You have identified Net Income/Loss, Gross Profit %, EBIT, and Operating Expenses as a % of Sales as your KPI’s. Monthly reforecasting is a requirement with the need to reduce the overall time of the budgeting process to allow more time for what-if analysis.

A true performance management vendor and solution will meet the specific needs of your company. They will also be able to provide additional benefits, features and savings in terms of cost and time.

Adaptability
Rigid parameters do not allow your business to create models and calculations that are meaningful to your business. This rigidity is sometimes positioned as “best practices” by vendors. Best practices are important. They save you time in getting started with a new solution and minimize customization. But, if your company is outside of the box, your solution has to be able to adjust accordingly and easily.

Your satisfaction is the focus
The performance management vendor that is focused on sales only will never put your needs first. Even if the solution meets every functional requirement, if the vendor is not a vested partner that is committed to your company:
• reaching every established performance management initiative goal
• reducing time and expense associated with budgeting, planning and forecasting
• achieving greater collaboration and bottom line results

The functionality will not out weigh the absence of on going communication, service and support.

Proven proactive performance management: Satori Group, Inc. i-Performance Planning
Satori Group, Inc. is a premier provider of Business Performance Management and Business Intelligence solutions empowering small, mid-market, and divisions of large enterprise clients with reduced budget cycles, improved decisions, and greater business and financial insight.

i-Performance Planning the company’s flagship solution, is a breakthrough single-source business performance management solution powered by the proCube business intelligence platform which delivers budgeting, forecasting, planning, analytics, dashboarding, and other functions vital to business success. This all in one solution, enables your company to become proactive, fully optimized to prevail over market challenges and competitive pressures.

Increasing demands for a better way to solve critical budgeting and forecasting challenges without throwing away the skills or investment in Excel caused Satori Group to develop i-Performance Planning which is available and yielding bottom line results across industries.

A customer-centered approach with commitment to advancing the edge in business performance management and business intelligence, serves as the core focus of all Satori Group efforts.

We offer our clients the deployment methodology of their choice.
• Virtual Appliance – i-Performance Planning is pre-installed and pre-configured, includes operating system and packaged in a run-to-ready format on a virtual machine and delivered on client premise. Simply plug in and go.
• On Demand – Secure Internet access to i-Performance Planning at our hosted virtual solution center.

With low total cost of ownership, flexible payment options, rapid deployment, enhanced collaboration, and true knowledge and skill leverage of Excel, concrete and exhaustive proactive performance management can be acquired today for your company. Take the next step now and learn more about Satori Group i-Performance Planning and how it can accelerate the performance of your business: call 1-866-6Satori, email sales@satorigroupinc.com or visit: www.satorigroupinc.com.

Satori Group, Inc.
555 North Lane, Suite 6100
Conshohocken, PA 19428

©2007 Satori Group, Inc. Satori Group, Inc. i-Performance, and proCube are registered trademarks of Satori Group, Inc. All other product or company names appearing in this publication are used for identification purposes only and may be trademarks of their respective owners.