Linking Finance and Operations with Corporate Performance Management

As part of Solutions Review’s Contributed Content Series—a collection of articles written by industry thought leaders in maturing software categories—Craig Colby, President and co-founder of OneStream Software, explains the value of using corporate performance management (CPM) software to link your finance and operations departments.

The Age of AI has shown us how quickly technology can advance and become mainstream in both personal and professional capacities. Modern enterprises require a new level of visibility, flexibility, and agility to anticipate and plan for the unknowns, and technology is advancing to meet these needs. Traditionally, organizations have operated on insights pulled from closing the books every thirty days, but that is no longer sufficient. Ongoing macroeconomic uncertainty, digital transformation, and geopolitical turmoil have revealed how quickly crucial business drivers can change. As such, leaders need access to updated data and projections in near real-time to steer business accordingly.

To keep up with business needs, traditional corporate performance management (CPM) solutions are evolving to become more advanced and dynamic, offering a more informed view of the enterprise. These next-gen solutions are called CPM+, and they are empowering managers with new insights while unifying disparate segments of the organization into one holistic view. Given that CPM+ is the new kid on the enterprise technology block, let’s dive into what it is, how to know if it’s the right solution for your organization and best practices for implementation.  

Reaching Beyond CPM 

Traditional CPM offers leaders a monthly or quarterly view of corporate and departmental financial results—including actual results, budgets, forecasts, and analyses. A key differentiator for CPM+ is that it goes a step forward by providing operational and financial information more frequently, including daily and weekly insights. With built-in AI technology, CPM+ solutions can help business professionals gather more informed insights, conduct predictive scenario planning, and automate tasks to perform at their best.  

In addition, CPM+ solutions require businesses to establish a link between operational and financial data, thus breaking down two historically siloed data pools. In practice, this can look like examining individual line items in a profit and loss (P&L) statement with specific information easily accessible on revenue drivers, costs of goods, and critical operating expenses. This data already exists across most enterprises, but CPM+ aggregates it into one holistic, singular view. 

Equipping leaders with more granular and accurate data aligning operations and finance allows for more informed decision-making and steering of overall business performance. These solutions can also support managers with predictions and forecasts to anticipate various scenarios and potential business outcomes. 

Identifying the Right Solution 

CPM+ is a new category of solutions, so the first step of an organization’s journey is to determine if it is the right solution for them. Given the capabilities to analyze more detailed and high-frequency data, CPM+ is particularly helpful for fast-changing industries or those with fluctuating demand, like retail and manufacturing, two sectors with shifting demand and staffing needs throughout the year.  

Beyond industry focus, CPM+ is also most attractive to organizations with large volumes of historical financial and operational data to leverage for analysis. 

Best Practices for Implementation 

You’re an established organization in a dynamic industry with lots of historical data that has decided CPM+ is, in fact, the solution for you. Now what?  

There are a few best practices for organizations wanting to continue exploring CPM+. First, identify business requirements, select an implementation partner with the right skills, and evaluate existing infrastructure. 

The first step in implementation is to define the business requirements and project objectives. Project teams need to align on the project’s scope and those who need to be involved to deliver a successful rollout. Factor in key stakeholders who should be involved across the different stages of the project, including finance, IT, and groups of end-users. It is also crucial at this point to identify organization-specific reporting and analysis needs as well as important KPIs. CPM+ cannot be successful without a clear vision of what that looks like right from the start. 

Another major determinant of success lies within the CPM+ implementation partner. When deciding which partner to go with, opt for one that has their own best practices framework and materials for your organization to leverage. Be wary of anyone unable to share resources with you. A good partner will do what they can to ensure your organization can make the most out of the CPM+ journey.   

Also, consider if their experience aligns with your industry. They should understand specific financial requirements for your line of work, especially for some more regulated industries. A deep industry or functional expertise can help you build advanced scenarios and processes specific to your industry.  

Common Challenges 

Once the project scope, team, and implementation partners are identified, it is time to look at rolling out CPM+ with a phased approach. Some organizations make the mistake of taking on too much or not selecting a sizable piece of the business to measure real impact. Phasing in the CPM+ rollout can mitigate those challenges and help organizations get comfortable with the solution before advancing to more complex analyses. 

The first phase may include foundational business processes, like financial close, consolidation, and reporting. The second phase could go a step further and incorporate planning and budgeting. The third phase could link financial planning and forecasting to operational planning and analytics, such as workforce or capital planning. Later phases could expand into advanced reporting, predictive forecasting, and demand planning, building on the prior stages. 

Pro tip from experience: Ensure organizational decision-makers know what budget they need in addition to software licensing, training, and implementation services beyond the initial rollout phase. Sometimes, there can be a lack of understanding around the financial investment that comes with CPM+, and I’d recommend ironing this out before starting any implementation.  

Embarking on the CPM+ journey is not a necessity for every organization, but it can help modern enterprises navigate with better insight. For example, consider how a notable power sports manufacturer leveraged CPM+ when the global pandemic introduced a new relationship between supply and demand. The company needed better visibility into critical business areas, so it used historical data and machine learning to generate predictive forecasts for more than 250 products at weekly snapshots. They got more accurate and timely projections to guide business decisions during a volatile period. Now, CPM+ has become an ongoing link between finance and operations to drive efficiencies across the enterprise.