Advancements in technology and business analytics have brought about vast changes in business intelligence. One of the major components of business intelligence is corporate performance management, or CPM. CPM is a primary practice of senior leadership and it shapes the way organizations operate and conduct business.
In this FAQ we will help provide a general idea of what CPM is, why it is important, and the process of performance management.
What Is Corporate Performance Management (CPM)?
CPM is a generalized term that provides context to a variety of methods, metrics, processes, and systems that are used to monitor and manage corporate performance. The term itself is used singularly to describe these activities as a complete environment that helps leadership monitor the performance of the organization.
CPM is sometimes confused with human performance management, which is a common activity used in Human Resources. This is because both terms are used to describe activities involved with managing and monitoring performance.
The idea behind CPM is that it integrates planning, sales, marketing, and FP&A which helps align the various departments that carry out these activities to the goals and strategic plans created by senior leadership.
Typically, a firm will deploy a system, or series of systems, to help monitor the pertinent key performance indicators. Advancements in technology have created significant improvements in the type and volume of data that can now be accessed. These systems take this raw data and aggregate and automate certain aspects of the performance management process.
Why Is Corporate Performance Management (CPM) Important?
Among the many benefits of CPM, perhaps the most valuable is that it results in the alignment of strategy with operations. This serves to enhance the ability of the business to link the budget with operating outcomes. Since the budget acts as a road map to execute the financial plans of the organization, this helps to ensure that the entire enterprise is aligned around achieving the targets in the plan.
Aside from helping to keep the business on track, CPM provides a means for management to be proactive rather than reactive when changes in the business environment present themselves. CPM analytics can reveal operating weaknesses that need to be addressed to help avoid future problems. These analytics can also provide measures that alert management to the need for adjustments when external factors impact the business.
The Importance Of CPM Software Solutions
Software applications developed for use in CPM have a multitude of benefits and provide management with a necessary tool to manage data effectively. The systems produce timely and accurate information which often results in clear, concise, and relevant metrics.
Automation in the CPM process can lead to more standardized data sets, making it easier to build in additional efficiencies. The aggregation and management of data can often lead to reduced dependence on spreadsheets. In some cases, CPM software solutions can entirely replace spreadsheets.
CPM software solutions also help in building robust internal control environments. The systems identify parts of the business process that generate relevant information. This in turn helps corporate finance departments and controllers to identify where controls are needed to enhance security and strengthen governance.
Some common features of CPM software solutions include the ability to create budgets, the ability to generate forecasts, automated accounting processes, reporting, modeling, and scorecarding. Good software solutions will typically provide some analytical tools that allow users to design custom dashboards.
The CPM Process
The process of corporate performance management moves through planning, implementation, and monitoring of goals and strategies. The planning stages of the process revolve around analyzing the financial performance of the businesses. The outcome of the planning stage is a set of goals and objectives that will then be used as a roadmap to navigate the future period.
CPM revolves around the goals and objectives of the enterprise. Therefore, the most important phase of the CPM process could very well be the planning process. This is because it provides context and direction to the other phases of the CPM process.
Once goals and objectives are created, plans of action are designed to achieve them. These plans then need to be implemented, which is the second phase of the CPM process. Each department will create a budget and plan to which it will be held accountable.
This process of holding parties responsible for achieving the goals and objectives they have been given forms the basis of the third phase, which is monitoring. The monitoring phase serves to ensure that the organization is collectively, and individually, making progress towards their respective goals and objectives.
The byproduct of the CPM process is an endless feedback loop in which data is continuously collected, organized, analyzed, and used to make adjustments to future operations which are then monitored.
Using DataRails as a CPM Software Solution
DataRails can help your company implement automation that can help your FP&A team operate more efficiently and effectively. DataRails is helping FP&A teams all over the globe reduce the time they spend on traditional reporting and planning.
By replacing spreadsheets with real-time data and integrating fragmented workbooks and data sources into one centralized location, you can work in the comfort of excel with the support of a much more sophisticated data management system behind you.
Build beautiful budgets, track and monitor business performance, and give users stunning and easy-to-use dashboards with DataRails.