Enhanced performance

With an overwhelming number of corporate performance management solutions, how do you find the one that’s right for you?

Quite simply, Corporate Performance Management is hot. Many corporate CFO’s struggle with the answer as to which CPM tool fits best within their organisation and processes. Partake Consulting has a 10 year track record in the implementation of exactly such applications at 200 corporate centers. This history has resulted in the below best practices.

The right fit

The size of the corporation and the nature of the underlying organizational model are often ignored when choosing the decision criteria for application selection. The fundamental question being the level of centralized versus localized decision making. As an example, it is of no use for the individual McDonalds restaurant to concern itself with the product range that it provides, is determined at a higher level within the organization.

Within the organisation that is governed according to the strategic development model, decision-making power is found at the top of the corporate structure. In general, the central organisation is large with many of the support functions centralized at and coordinated from the corporate level; HRM, marketing, procurement and the financial administration. Here the implementation and design of CPM is a corporate matter. In an organisation such as this and as a result of the uniform and centralised working practices the added value of a financial consolidation tool is limited. Such functionality sooner belongs in the financial source systems. The only appropriate role for a consolidation tool is to solve the complex issues centred around statutory consolidation. Of far greater value is the application of analytical tools.

Naturally data is collected in volume, uniformly and centrally. The same applies to budgeting systems. Through good access to operational data and standardised financial processes the key conditions for an efficient and powerful use of the budgeting solution are met. Dependant on the dynamism of the market (few or many mergers) in which it operates, a Strategic Finance application can be meaningful to such an organisation.

In an organisation which governs itself according to the extreme opposing style, the Financial Control model, decision making is performed at a level much lower down in the organisation. Often these are organisations that have a diverse product and market portfolio and are not usually interested in cross synergies. Corporate control has a strong financial focus with much emphasis placed upon target achievement. CPM design is dispersed and differs per division. Here analytical applications at a group level are of limited value. Detailed data is not readily accessible and if available usually not uniform. Financial consolidation tools present the infrastructure through which the numbers are communicated. Detailed budgets are consolidated at the divisional level and the headlines find their way to group by means of a consolidation package. As these organisations are in effect investment vehicles, strategic finance applications offer an excellent platform on which to model financial strategies.

The third organisational model is one of Strategic Control. Here decision making is placed between the highest and lowest levels within the organization: the division. In this example the group will issue generic guidelines for the design of CPM processes. The generic design for budgeting and consolidation packages is set and chosen at the corporate level, the details subsequently decided upon by the division. Analytical applications may have a role to play group level, but the key success criteria regarding the data (complete, uniform and central) are not satisfied.

Decision time

Partake’s best practice shows that before deciding upon a specific CPM solution, a thorough analysis of the control style should be made to come to a sound and appropriate choice. Naturally it is rare for an organisation to dovetail precisely into one of the above examples. Reality teaches us that it is often one of a combination of such styles. What is important is a selection partner who talks the CFO’s language and is experienced in the everyday realities of software solutions and implementations.

Partake Consulting has provided advice to 200 leading European multinationals during its 10 year history with succinct analyses and unrivalled product knowledge. Partake Consulting aspires to forge long-term relationships and be the service partner of choice for the entire implementation lifecycle. We offer the expertise to make an informed choice regarding application design, have the experience to successfully implement and provide the size and reliability to maintain, manage and host your applications.