June 21, 2024


Imagination at work

Dispelling the Myths About CPM Implementations

This is the second of two columns on corporate efficiency administration tools. The initial short article, The ABCs of CPM Application, was published on November 10.

Myths and misinformation about corporate efficiency management systems and their use in finance departments abound. Lots of revolve about these tools’ complexity, earning it challenging for a CFO to see their price at the stop of the implementation street. The myths, on the other hand, are effortlessly debunked. We tackle 5 of them underneath.

Myth 1: Applying CPM Will Consider Much too A lot Time to Know Worth

To expedite a CPM challenge (more quickly, a lot less effort and hard work, nominal expense), CFOs must:

  • Use a “configuration” as opposed to “customization” dependent resolution layout technique.
  • Scope the challenge from a nominal practical product (MVP) point of view so that the firm can start out knowing the solution’s price additional rapidly.
  • Soon after MVP deployment, technique the challenge from a period-dependent implementation point of view, layering in extra operation.
  • Layout for monetary consolidation and scheduling/forecasting throughout a “common layout phase” upfront, but deploy each in a prioritized fashion.
  • Have the supply-to-concentrate on mappings full in advance of engaging professional expert services. (Likewise with other expected mappings: firm/entity, product, channel, etcetera.)
  • Try to remember, CPM  is a intent-built system to assistance monetary consolidation, budgeting/forecasting, and the reporting expected to assistance these processes. So resist the temptation to switch the CPM method into an all-encompassing system for every reporting need to have.
Myth two: CPM Focuses on Financial Data, Not Operational Data

There is a grain of truth of the matter to this statement on the other hand, it vastly understates the significance of operational info.

  • There are heading to be info/reporting wants that are greater supported by alternate platforms to CPM. That explained, the supplemental operational info that supports the financials and is leveraged as aspect of a driver-dependent scheduling/forecasting technique must be introduced into the CPM resolution.
  • Even additional so than CFOs at huge, multi-billion-dollar corporations, CFOs at midsize and non-public equity-backed firms need to have to be just as fluent in the operational metrics as they are in the monetary kinds.
  • The expected capability to model a number of monetary scenarios (most effective, worst, expected instances) can only occur when operational metrics are released and correlated with the monetary lines they push.
  • By layering operational metrics facet-by-facet with the financials, finance is educated and empowered to have meaningful dialogue with several practical departments.
Myth 3: “We Don’t Will need a CPM System Since We Are Migrating to a Single ERP”
  • Consolidating a number of common ledgers into a one enterprise useful resource scheduling method is time-consuming, high priced, operationally disruptive, and produces many change administration issues and challenges.
  • Non-public equity-backed CFOs in unique typically inherit a elaborate architecture of monetary systems. Untangling these systems, and the processes they assistance, to migrate into a one ERP can be impractical, at most effective, and counter to price generation, at worst.
  • CPM answers allow for company unit autonomy (a number of G/L environments) although at the same time empowering finance with the necessary controls to standardize the shut/consolidation method, scheduling/forecasting, and monetary reporting.
Myth four: The Integration of Acquisitions Will Be a Challenge

Though they can assistance some rudimentary functions, G/Ls typically slide quick in assistance of the adhering to:

  • The monetary shut/consolidation method (inter-organization transfers, account reconciliation, transaction matching, undertaking administration).
  • The scheduling/forecasting method (driver-dependent scheduling, state of affairs modeling, rolling forecasts).
  • Reporting wants (dashboarding, advert-hoc, drill-down and drill-through, examination)
  • Also, although spreadsheets provide additional versatility than a G/L in assistance of the functions shown previously mentioned, they simply cannot inherently implement expectations and controls. Moreover, multi-spreadsheet workbook logic can be hard to construct, deconstruct, and append/modify when a company need to have, like an acquisition, necessitates it.
  • Acquisitive firms aggressively scaling and integrating new add-ons as aspect of their price-generation tactic benefit noticeably from the deployment of CPM answers.
Myth 5: CPM Answers Involve Major Technical Help

Fashionable CPMs are cloud-dependent answers and, thus, a lot less unwieldy than those people of preceding generations.

  • Their technical infrastructure is taken care of by the computer software seller as aspect of the computer software-as-a-support model.
  • CPM resolution administration is, thus, most effective supported by means in finance and accounting that have very good company familiarity and mild engineering capabilities.
  • Continuous-state assistance usually involves a aspect-time purpose. Having said that, it can enhance to comprehensive-time throughout shut cycles and budgeting and forecasting processes.
  • IT must get included when new info resources need to have to be built-in (for case in point, when demo stability info wants to be sourced from a new G/L as aspect of an acquisition).
  • Outsourcing choices exist whereby 3rd-celebration corporations will administer the CPM resolution in a managed-expert services ability.
The ROI of CPM

There are fees affiliated with deploying CPM answers. Initial, there is the computer software subscription. Specified the cloud-dependent nature of the contemporary CPM method, on the other hand, the SaaS model has meaningfully pushed down the fees (and burdens) of implementation. Second, there is the computer software configuration. Businesses can configure internally or leverage outdoors expertise. There will be assistance configuration and labor fees (although a lot less so with an knowledgeable partner). Then, of course, there are the fees of method assistance (the administrative means to keep the method).

CFOs should realize that the gains of CPM to rapidly recoup the investment decision and direct to price generation in both of those challenging and gentle bucks. Åmong the former, the engineering drives down fees by making it possible for company-unit comparisons to recognize and leverage most effective practices. But there is a gentle-dollar return that CFOs must not forget. CPM systems allow CFOs to realign their finance office do the job to better price-add functions (lower in info collection, reconciliation, and consolidation enhance in company analyses and assistance). And, the insights recognized as a result of a CPM method investment decision enable finance chiefs make additional educated company decisions and additional effortlessly course-accurate when circumstances change.

Mike Cochran, running director, head of CFO tech expert services, at Accordion, the non-public equity-focused monetary consulting and engineering company.

contributor, corporate efficiency administration, CPM computer software, ERP, G/L