Supporting the global profession
Businesses can face a fundamental disconnect between financial plans and performance measurement. Cost and profit centres don’t reflect how key decisions are really made across the business. Enterprise Performance Management (EPM)* addresses this disconnect.
This break between cost and profit centres and how the business works means many key issues are not addressed. To rectify this situation business needs to employ insight, foresight, control and agility to set targets and drive performance and profitability.
Enterprise Performance Management (EPM) consists of three core propositions:
- Planning, budgeting and forecasting (PBF), which should serve to support the business in understanding how its ongoing activities contribute to delivering its future longer term strategy. It allocates scare resources in line with the strategic intent of the business. It provides planning actions to help meet strategic goals in response to changing circumstances.
- Performance reporting supports organisations in converting their data into insightful, relevant and timely management information. This information is at the centre of supporting fact-based decision making.
- Profitability and cost analysis should be developed to enable efficient and effective analysis of costs, income and profitability at multiple levels across the enterprise. This approach is in contrast to the traditional profit and cost centre. For the business this modern analysis is aligned to where the strategic decisions are made.
Businesses should combine these three core elements to dynamically drive performance- improvement and strategy delivery.
EPM consists of 3 core propositions; Planning, Budgeting and Forecasting; Performance Reporting; and Profitability and Cost Analysis, all combined to dynamically drive performance improvement of a business and delivery of its strategy.
Addressing the flaws
PBF processes are flawed with many enterprises continuing to invest in sub-optimal performance management processes.
Current Performance Reporting processes are flawed, with many enterprises continue to proceed with ‘information’ that is ineffective in the support of rapid and informed decision making.
Businesses can improve the range, maturity, dynamicity and depth of the profitability and cost analysis performed.
How to improve
Planning budgeting and forecasting:
- create the right culture and ways of working
- stop PBF activities from being disjointed and discrete
- deploy effective and scalable technology solutions.
Performance reporting:
- build the right data and governance foundation
- structure the delivery model for success
- empower Finance Professionals to collaborate with the business.
Profitability and cost analysis:
- strengthen the quality and depth of insights
- design and build a model for efficiency
- optimise the organisation model.
* EPM is the intellectual property of KPMG.
[xhead] Addressing the flaws
PBF processes are flawed with many enterprises continuing to invest in sub-optimal performance management processes.
Current Performance Reporting processes are flawed, with many enterprises continue to proceed with ‘information’ that is ineffective in the support of rapid and informed decision making.
Businesses can improve the range, maturity, dynamicity and depth of the profitability and cost analysis performed.
[xhead] How to improve
Planning budgeting and forecasting
o Create the right culture and ways of working
o Stop PBF activities from being disjointed and discrete;
o Deploy effective and scalable technology solutions.
Performance reporting
o Build the right data and governance foundation
o Structure the delivery model for success
o Empower Finance Professionals to collaborate with the business.
Profitability and cost analysis
o Strengthen the quality and depth of insights
o Design and build a model for efficiency
o Optimise the organisation model.
[xhead] Addressing the flaws
PBF processes are flawed with many enterprises continuing to invest in sub-optimal performance management processes.
Current Performance Reporting processes are flawed, with many enterprises continue to proceed with ‘information’ that is ineffective in the support of rapid and informed decision making.
Businesses can improve the range, maturity, dynamicity and depth of the profitability and cost analysis performed.
[xhead] How to improve
Planning budgeting and forecasting
o Create the right culture and ways of working
o Stop PBF activities from being disjointed and discrete;
o Deploy effective and scalable technology solutions.
Performance reporting
o Build the right data and governance foundation
o Structure the delivery model for success
o Empower Finance Professionals to collaborate with the business.
Profitability and cost analysis
o Strengthen the quality and depth of insights
o Design and build a model for efficiency
o Optimise the organisation model.
[xhead] Addressing the flaws
PBF processes are flawed with many enterprises continuing to invest in sub-optimal performance management processes.
Current Performance Reporting processes are flawed, with many enterprises continue to proceed with ‘information’ that is ineffective in the support of rapid and informed decision making.
Businesses can improve the range, maturity, dynamicity and depth of the profitability and cost analysis performed.
[xhead] How to improve
Planning budgeting and forecasting
o Create the right culture and ways of working
o Stop PBF activities from being disjointed and discrete;
o Deploy effective and scalable technology solutions.
Performance reporting
o Build the right data and governance foundation
o Structure the delivery model for success
o Empower Finance Professionals to collaborate with the business.
Profitability and cost analysis
o Strengthen the quality and depth of insights
o Design and build a model for efficiency
o Optimise the organisation model.
"Performance Reporting at its best should enable a business to link its operational activity and decision making with the attainment of its strategy. It gives organisations the essential information to make more confident and effective decisions."
Delivering value
Organisations are facing challenges across many areas.
Organisation structure: does the business have clear accountability for Performance Management?
Operating model: how can cultural challenges be successfully navigated to bring finance to the heart of decision making? How can Business Partnering be effectively embedded to engage Finance Professionals in strategic and operational insight?
Data quality: how can organisations meet Big Data opportunities while many are struggling with local data structures and quality issues?
Technology use: why have organisations failed to realise the return on investment for projects? Why is the spreadsheet the tool of choice for so many businesses?
A Performance Management Framework must be put in place enabling clearly defined, integrated processes to be linked to delivering value.