All too often, finance departments face the same challenges at the end of every reporting period—whether it’s monthend, quarter-end, or year-end. The department must prepare financial reports and statements such as balance sheets, cash flow statements, income statements, and increasingly, management reports, as well as provide information about key performance indicators. On top of that,…
Many organizations are confused as to the difference between BI and Performance Management and how the two fit together. This is made worse as Performance Management has become synonymous with planning, budgeting and forecasting systems, while BI is seen as systems that provide detailed analyses. Gartner introduced the term Corporate Performance Management (CPM), which they defined as “… the processes, methodologies, metrics and systems used to monitor and manage an enterprise’s business performance”. The promise of CPM was to improve decision-making and provide more effective control over organizational activity.
What improvement programs are Finance organizations embarking on today? What level of commitment are they making, and in what areas? These are some of the questions APQC and IEG researched in a compelling new whitepaper.
145 organizations participated in the survey and some of the findings are quite surprising.
The fact that eight out of ten organizations are now pursuing major process improvements is significant for three reasons. First, prior to the global financial crisis, CFOs by and large were mainly interested in incremental process improvements to save money. The slogan “do more with less” summed up the general attitude. But now we have strong evidence that CFOs want to deliver effectiveness as well as efficiency. The overwhelming majority of survey respondents indicated they are now pursuing these goals simultaneously.
In the “Preface” to The Gathering Storm, volume I of Winston Churchill’s World War II memoirs, Churchill writes that when President Roosevelt asked for suggestions about what the war should be called, he replied that it should be called “the Unnecessary War.” If someone asked me what to call budgeting I’d say it’s “the Unnecessary Practice.”
“The first phase of the 2012 Republican presidential campaign, ending with the 10 states that vote this week on Super Tuesday, has been about money and message. The next several months will be about maps and math.”
It was those four M’s that caught my attention: money, message, maps and math.
Any candidate for any major office inevitably needs to concentrate on that last M – the math.
CFOs see greater need for accurate, timely data, but may do it on the cheap. They want to boost finance’s analytic, modeling, and forecasting capabilities while maximizing tech’s ROI, says Hackett, even though cost pressures will limit them.
CFOs entered 2012 with lower expectations about the economy, their company’s earnings, internal and external risks, hiring and other factors, based on results from Deloitte’s fourth-quarter survey of large-company CFOs. The reason, not surprisingly, is the ongoing European sovereign debt crisis, unemployment concerns, increasing social unrest and governments’ difficulties in finding effective solutions.
“Finance transformation” is a trend gaining favor with strategic consultants. The term is associated with the objective of shifting the focus of CFOs and finance departments from transaction processing toward more strategic and higher-value functions.
Finance chiefs are bolstering their strategic roles by hiring more FP&A help.It’s not news that today’s CFOs are more strategically oriented than many of their predecessors. But they are now trying to bring more of that analytical mind-set to their staffs, by adding more financial analysts than other types of finance positions.
Forecasting performance objectives are usually set in one of three ways:
1) Relative to “best-in-class” industry benchmarks.
2) Improvement over prior year performance.
3) Arbitrarily – based on what management wants or needs to happen.
All three are wrong.