Corporate Performance Management Systems are critical to monitoring and managing business performance. Interested? Here's a detailed overview from CCH Tagetik.
Gartner defines Corporate Performance Management (CPM) as “an umbrella term that describes the methodologies, metrics, processes, and systems used to monitor and manage the business performance of an enterprise. Applications that enable CPM translate strategically focused information into operational plans and send aggregated results. These applications are also integrated into many elements of the planning and control cycle, or they address BAM or customer relationship optimization needs. CPM must be supported by a suite of analytical applications that provide the functionality to support these processes, methodologies, and metrics.”
As you can infer from the above statement, CPM not only improves corporate performance, but it also reduces risks through unified data insights across departments. At present, and rightly so, CPM relies heavily on financial information or your company’s financial performance - making the Chief Financial Officer responsible for business performance, in a way - despite the fact that he or she cannot possibly direct performance management for the entire organization, especially due to the informational siloes that are inherent in most organizations due to various reasons.
For example, while relying on the financial performance of your company in the past quarter can help you evaluate your corporate performance - you also need to gauge how this information impacts and relates to different departments in your organization to get a 360-degree view of things. Integrating such a process calls for two things. First, CFOs and CEOs need to work in collaboration with each other, as well as the heads of other departments to break down any informational barriers. Second, a new office of a Chief Corporate Performance Officer may be created to design, implement, and monitor performance management by liaising with the key stakeholders, such as HR, strategy, and budget, to link strategic business objectives with day-to-day operations and co-ordinate organization-wide efforts to improve performance management using a data-driven approach for goal-setting and action plans.
Informational Siloes and Corporate Performance Management
One of the key drivers, and also the problem, in setting up a business performance management framework is the concept of business information. It is to be understood that business information is a little different from financial information, in the sense that what is referred to as financial information in any company is, for the most part, information that is a result and consequence of a series of decisions and actions in the past. More often than not, such information is at least 1 month or older - and generally referred to as business information or KPIs, that is, the true business events/factors that drive any business. At CCH Tagetik, however, what we refer to when we speak about business information is more actionable data, often real-time, which enables us to respond to events immediately and change the course of action at all levels of the organization.
It is also a fact that most finance departments are overloaded with basic financial information and compliance, which have no real value for the corporation. The end result is that the most relevant information, i.e., performance management, is not dealt with properly and given the attention it really deserves. Besides, in uncertain times like these, business information becomes even more important - yet most Corporate Performance Management (CPM) information continues to exist in pockets and islands across the organization, leading to loss of revenue and productivity in the long run. In fact, it is my strong belief that companies that do not pronounce and plan to have a CPM framework in place are potentially wasting the resources and efficiencies of their company to a value of at about 20-30% of the total costs along with up to 20% of revenues.
In other words, in the absence of a CPM framework that promotes unification of data, the real owners of business information - the CEO and Business Unit Managers in Sales, Marketing Manufacturing, Logistics, and HR - often don’t get the information that they need to be able to make more informed decisions.
Besides, if you look across most companies, you will see very little effort in consolidating the so-called business information, which intensifies the problem.
What I have also noticed in my experience is that in reality if there is no real or suitable owner of the CPM framework or blueprint in a company, the finance role is just a supporting role as there is no direct compensation linked to the performance of a company, given their so-called independence. The CIO's mandate is very similar in the sense that he or she is only concerned with the systems running at the lowest possible cost but is often not incentivized or suited to run and give advice on how to run the business more efficiently from a systems point of view.
The only thing that remains is to start thinking of a new type of group focused on Corporate Performance Management, led by a Chief Performance Officer, which would be an extension of the CFOs role but more focused on value creation at the executive level.
The role of the Chief Performance office would then be to, in addition to finance, take into account key business drivers and real-time business insights to predict business performance and make necessary changes to ensure the long-term objectives of the company are met. The office of the CPO can also ensure internal productivity by following a driver-based approach coupled with sophisticated mathematical models for accurate forecasting. In addition, the CPO should take the lead in terms of adapting and introducing new technologies such as Machine Learning and Artificial Intelligence.
During these days we met with many Finance executives and CFOs that are currently already taking a step towards being a Chief Performance Office in their mission to navigate and keep the business informed about what lies ahead. Many of them are already taking advantage of our CCH Tagetik Finance Transformation Platform, powered by the Analytic Information Hub, that is supporting their decision making process quicker and more consciously during these turbulent times.
But for those of you who may have missed to know more about how we can help your life as Chief Performance Office of your business, check it out here and get introduced to the power of a single unified smart solution to move forward.
