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Financial performance management a spreadsheet alternative

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Careful management of the financial performance of any organisation is
critical to its success and long term sustainability writes David McWilliam,
MD of Cognos South Africa.

In a dynamic marketplace, however, static reporting based on spreadsheets
seldom delivers the agility necessary to remain competitive. Small and
medium sized organisations are thus turning to newly available financial
performance management (FPM) solutions tailored for the mid-market.
Powerful and flexible enough to scale across the business and drive
decision-making from the storeroom to the boardroom, these mid-market FPM
solutions provide the answer for organisations that are struggling to make
spreadsheet-based solutions meet their needs but do not have the means to
afford enterprise-class performance management solution suites.

Spreadsheet gaps
Measuring, monitoring and optimising a company's financial performance
requires more than the mere collation of annual or biannual reports to
retroactively adjust budgets or guide strategic decision making – managers
and executives have to have their fingers on the pulse of the business at
all times to drive business performance intelligently. What is needed is a
solution that will support all the financial processes, from planning to
budgeting, forecasting, consolidation, reporting, analytics and data
management.
Key challenges smaller businesses currently face include not having the
staff, experience, time or budget to select, implement and manage complex,
dedicated toolsets for data storage, planning, budgeting, reporting,
forecasting, etc. Most thus rely on the familiar spreadsheet for just about
all their FPM needs. This leaves a lot of gaps.
Data is scattered and inaccessible, stored in two-dimensional spreadsheet
files using unreliable links and complicated macros; critical reports are
inflexible, designed by a handful of 'power users' scattered across
functional units; collaboration is difficult, relying on an endless stream
of spreadsheets attached to crossing, conflicting, often irrelevant and
frequently unread emails; analysis is ad hoc and ineffective; updates and
revisions are complex and therefore infrequent; version control is a
nightmare; and, to crown it all, reports are frequently out of date by the
time they are printed and distributed.
The simple reality: while spreadsheets are pervasive, user-friendly and
readily integrate with other productivity tools, to attempt to use them as a
primary data storage and performance management solution is to court
disaster.

Enhanced FPM
Business and financial agility depend on getting the right information to
and from the right people at the right time. A FPM solution that supports
the various financial processes (eg, planning, budgeting, reporting, etc),
streamlines information gathering, aggregation and analysis, and provides
immediate feedback enhances decision support at all levels of the business.
However, to meet the needs of SMEs, such a solution also needs to be easily
deployable, reach right across the business and empower the organisation to
react rapidly.
Ease of deployment means the organisation can implement the solution
quickly, beginning wherever the need is greatest – be it planning,
budgeting, forecasting, consolidation, reporting, or analytics – and then
extending the implementation rapidly.
In selecting a FPM solution, check that self-help components like wizards,
workflow, pre-built databases, sample cubes and plans are included as this
will ensure users can configure their own applications, maintain data and
generate reports quickly and easily, even across the Web. Also ensure that
all the components of the solution are integrated.
Business rules, data and metadata need to be shared across applications to
ensure teams work with only one set of rules and hierarchies.
Ideally, the selected FPM solution will automate and manage FPM processes by
engaging, empowering and monitoring executives, line-of-business managers
and staff across functional areas and business units. For example, it should
enable the organisation to create high-level plans, assign responsibility
for providing information and track progress until plans are complete.
A powerful, high-performance engine will empower users to perform analysis
on large, frequently changing data across myriad transactions like daily or
hourly sales; reviews by store, brand or representative; or perhaps day by
day activity across hundreds of service facilities. The advantage this
delivers is that finance executives, planners, controllers and managers can
change input values – even business models – and recalculate them
on-the-fly, attacking business problems immediately.
Further advantage can be gained by ensuring the solution will integrate with
various applications, allowing users to access and import multi-source data
(eg, SAP, Turbo).
Clearly, a spreadsheet-based approach to data and performance management is
inadequate to meet the challenges facing a growing business. Organisations
that want to focus on their core competencies – such as running and growing
their businesses – would do well to consider the advantages an integrated,
functionally rich FPM solution would afford them. Implementing a FPM
solution of this nature will not only deliver the standard cost savings that
come with automation and standardisation, but will assist to enhance
business performance.