What is Corporate Performance Management?
The term "corporate performance management” (CPM) was coined by analyst group Gartner to describe the methodologies, metrics, processes, and systems used to monitor and manage the business performance of an enterprise. Although performance management is important in all areas of the business, CPM tended to focus on financial software, supporting a cyclical process that typically went--Strategize > Plan > Execute > Monitor > Report--with solutions for the balanced scorecard, planning and budgeting, cost and profitability analysis
, and financial consolidation
. These four solution areas still form the core of Gartner's annual Magic Quadrant for Corporate Performance Management Suites and the acronym is still useful shorthand for describing the domain area of performance management. However ten years on, it is surely time to revisit some of the thinking behind the concept.
Corporate performance management today is not cyclical
Today that strategize > plan > execute > monitor > report cycle is the epitome of old school thinking. Other than period-end consolidation and reporting, planning and the other elements that comprise the CPM cycle are both continuous and iterative. Monitoring happens 24/7. And whenever opportunities or issues arise, we run through some ad-hoc scenarios, rework plans, and perhaps even revise some aspects of our strategy regardless of where we happen to be in the financial calendar.
This type of rapid sense-and-respond was never possible when finance teams were hampered with corporate performance management solutions that needed weeks of work just to set up the next forecast or run a cost and profitability report. Today things have changed. Organizations that use newer technology to reinvent their performance management processes are more agile, and hence have more of a competitive advantage, than ever before. The speed and ease with which they can now do things means their performance management need no longer be a calendar-based process, and looks set to evolve into an event-based process. When they reach that point, the idea of having an annual plan and budget becomes an anomaly as it is simply a snapshot extracted from their rolling reforecasts.
What you want from corporate performance management today
While CPM involves a suite of methodologies--strategy maps, planning, activity-based costing, financial reporting, etc.--it is perhaps time for the analyst team at Gartner to remove the word "suite" from the title of their CPM Magic Quadrant report next time out. Now that vendors, such as Anaplan, provide all of the methodologies in a single solution, the word is no longer needed.
You might think I am quibbling, but having a single platform, such as Anaplan, for all of the methodologies brings important benefits that have changed corporate performance management for the better:
- Users have all the CPM methodologies they need in a single workspace.
- Users can quickly customize and deploy applications for finance, sales, operations, and human resources. This is important as it means that for once the traditionally finance-centric CPM can extend out into all areas of the business and makes it easier for finance teams to provide support for decision-makers right across the enterprise.
- With a central repository to reconcile and synchronize various sources of data, users are leveraging a single source of truth for all their CPM needs – something that was far from easy in the past .
- With a software-as-a-service platform, deployment is quick and precludes having to install and maintain four or five different lots of software on premise.
All of this means corporate performance management methodologies can now be deployed quicker and at far lower cost. This allows companies to address those aspects of performance management that might currently be below par without the levels of investment that were needed previously. As such, I expect a resurgence of interest in all aspects of CPM giving those working in finance roles new and interesting challenges over the next few years. Watch a demo of the Anaplan App Hub
to see how easy it is to get started.