Oracle, the global market leader in business analytics and also the market share leader in enterprise performance management recently released a white paper entitled Enterprise Performance Management: Unlocking Business Potential.
I advise reading the publication as this is a good piece of work that merits consideration and discussion by every board, management team, IT, enterprise risk and finance practitioners.
The focus of the paper is on how Finance and IT executives can collaborate and implement an integrated enterprise performance management platform that supports the needs they face and helps unlock business potential and deliver profitable results.
Enterprise Performance Management (EPM) has always been and is still at the core of successful businesses. Although the business environment has evolved over the past decade or so, the fundamentals of EPM still remain. These include; linking strategies to plans and execution, monitoring financial and operational results against goals (Achieving Profitable Growth, Delivering Consistent Performance and Standardized Processes) and applying business intelligence and analytics tools to understand key trends , make better decisions and drive enterprise-wide performance. What has changed is economic uncertainty and volatility, stakeholder expectations, technology and workforce.
Because of increased volatility and economic uncertainty, business cycles are now faster than before meaning planning and forecasting needs to be more frequent. Today, businesses can leverage the use of big data. The volume, variety and velocity of data is higher than before. Stakeholders now have higher expectations. External stakeholders now require more qualitative and quantitative disclosures about the organizations they invest in. At the same time, internal management stakeholders are demanding more frequent insights into financial and operating results.
With the shift to Cloud, Mobile and Social Computing, organizations are becoming more empowered with information anytime, anywhere and through In-Memory technologies, they can leverage and analyze the exploding amount of structured and unstructured data to help in decision-making. Furthermore, they can utilize today’s predictive analytics capabilities to help users develop more accurate forward-looking models and support risk-based decisions.
However, achieving organizational goals is not that straightforward. There are a number of barriers that exist and must be dealt with in order to achieve organizational goals. For example, economic uncertainty and volatility is making it difficult for Finance executives to plan and forecast accurately. Increased stakeholder expectations are stretching the limits of many organizations and IT complexity is driving up costs and limiting the ability to invest business innovation.
These barriers need to be removed so that management can focus on driving business performance and profitable growth. For example, they should eliminate or invest heavily in under-performing products, channels, customers, markets or business units; better utilize existing workforce and capacity; make profitable use of excess cash on the balance sheet, say, investing in new markets, products and services. Creating more efficient and effective business processes and reducing IT complexity to reduce costs can also help remove barriers to goal-achievement.
In today’s dynamic and competitive business environment, management must come up with strategies capable of unlocking business potential. One way is creating an integrated EPM platform which unifies performance management processes and helps bridge the gap between goals and results. This platform should meet the needs of, and provide key capabilities, to both Finance and IT.
For Finance, the EPM platform must support agile planning and reporting processes. At the same time, it must provide sufficient centralized controls to ensure the accuracy and integrity of the information being delivered both externally and internally.
For IT, the EPM platform must provide scalability and high performance as the business grows and expands. It must also ensure there is concrete security of the critical business information to avoid confidential information getting leaked externally.
The integrated EPM Platform should provide the following key outcomes to the organization:
- Aligned Objectives: Linking long-term business strategy with the annual financial budgets is critical to ensuring alignment across the organization and optimal use of resources. In order to unlock business potential, organizations must also align individual and departmental goals to corporate objectives.
- Accurate Forecasts: When it comes to Budgeting, Planning and Forecasting, relying on spreadsheets has its own shortfalls. Spreadsheets lengthen planning cycles, introduce errors and limit the ability to adopt best practices in planning and forecasting. In order to drive more accurate forecasts, organizations must align strategic plans to financial budgeting and planning; shorten the budget cycle; use rolling forecasts for refreshing budget assumptions on a regular basis as well as driver-based plans and forecasts to help save time and effort.
- Confident Close: Having confidence in both the efficiency and accuracy of the close process is important. Organizations must not focus only on fast close, but also on the integrity of financial results.
- Accountable Enterprise: To unlock business potential, managers need to know what’s expected of them, and they should have the information they need to adapt quickly and make the right decisions for the organization. Recent studies have shown that many companies lack visibility into profitability across their business. Though most have visibility into profits at a corporate or divisional level, they don’t fully understand profitability by products, services, channels, customers, brands or projects. This lack of understanding by managers makes it difficult to make them accountable for their results.
In summary, an integrated EPM platform helps organizations break down the barriers to success, linking business goals to results and unlocking business potential. With a world class EPM platform, organizations can deliver the desired outcomes needed to succeed in today’s market.