When business conditions change due to company-specific developments or wider economic issues, an organization’s corporate performance management strategy and CPM system may quickly become outdated. CPM software is no good to anyone if it's measuring and driving performance based on obsolete metrics – so how do agile companies keep their CPM systems equally nimble?
The answer may have more to do with how companies set up their internal performance management processes than it does with the particular CPM tool they’re using or how the technology is configured.
"It has to get back to the business processes," said John Van Decker, a CPM and financial management systems analyst at Gartner Inc. "You can't assume that nimbleness is just a function of technology." Most of the leading CPM vendor applications were designed to be flexible, he added – putting the adaptability onus more on process management than on technology management.
Tony Wright, vice president of product management at Longview Solutions, a Toronto-based CPM vendor, agreed with Van Decker. Wright said that in Longview’s experience, CPM systems only grow outdated if they aren’t used properly or “if they are not intrinsically tied into how companies manage their corporate performance."
The scope of a CPM system often is still limited to specific parts of an enterprise – typically the finance department. If a company is simply looking to stop emailing spreadsheets between finance users to make budgeting faster and more accurate, CPM nimbleness may not be such a critical factor.
But if an organization is thinking more strategically about CPM and wants to begin integrating financial forecasting or cost and profitability management into its CPM system – while also perhaps looking to make some acquisitions or other business changes – “adaptability” and “flexibility” should be part of the enterprise CPM vocabulary.
Best practices for CPM system development
Wright cited several key management-level best practices that he said can help set up organizations for ongoing CPM success, even in the face of changing business conditions and needs:
• Strike a good balance between corporate and business unit requirements when standardizing CPM models and processes.
• Model how the organization reacts and adapts to business changes and build that into the processes handled by the CPM system – and make the administrative flow as efficient as possible.
• Have a well-defined understanding of how data moves throughout the organization, via metadata and master data management. Automating as much of the data flow as possible is helpful, according to Wright.
• Invest in end-user training to ensure that your workforce is well versed in how the CPM system works. "If they know how to use and manipulate the system, reaction time to change is quicker and easier," he said.
Don’t ignore the technology side, though. Mucahit Erdal, a CPM consultant at Planist Ltd. in London, said that the three core components of a CPM system – the software platform, the CPM models and the underlying data – do have a role to play in enabling CPM agility.
One important thing to remember about CPM software is that it typically isn’t a pre-packaged application. "Rather, it is an application development platform that enables you to build your CPM models effectively, based on your company’s custom requirements and data," Erdal said. He noted that the CPM software chosen by an organization should be flexible enough to allow existing CPM models to be changed with minimal effort and little assistance from IT.
In addition, Erdal recommended that companies buy CPM software from vendors that are committed to enhancing their applications with new releases every year. Users should then plan to upgrade their CPM implementations to the latest technology at a reasonable interval after it becomes available in order to stay current with CPM technology trends, he said.
Keeping a CPM system up to date
That’s part of the CPM process at eSilicon Corp., a semiconductor design and manufacturing company in Sunnyvale, Calif. For eSilicon, keeping systems up to date and ready for action is a priority – especially when the time comes to add new functionality because of business changes.
Larry Peyton, eSilicon’s director of finance, said business growth or acquisitions typically drives hardware and software updates and system enhancements aimed at keeping the company’s CPM system and other applications running smoothly.
"Anytime we engage in a new business venture, it puts more demand on our information systems, and that ultimately drives modernization," Peyton noted. eSilicon implemented Oracle’s Hyperion CPM suite last year and also uses the Oracle E-Business Suite 11i ERP software, among other applications.
If organizations don't spend enough time and effort defining their CPM models before an implementation, they can run into walls in the future, Erdal cautioned. Properly defining business requirements and then “intelligently” building CPM models can help minimize the need for ongoing model changes and extend the life of CPM applications, he said. Still, he added, some CPM models may reach their expiration dates after a few years, and having to remodel them based on the latest business requirements should be expected.
The core data being used in a CPM system also shouldn’t be overlooked. "Proper use of CPM applications will certainly be dependent on the underlying CPM data that is being sourced from other systems,” such as ERP and CRM systems, Erdal noted. If the underlying data models in a company’s source systems become stale and outdated, that will affect the sustainability of its CPM system, he said, adding that organizations should have plans in place for continuous data quality improvements to ensure that source systems always provide relevant and up-to-date information.
Chris Maxcer is a freelance writer.