You would be hard-pressed to find someone in business today that isn’t familiar with the Peter Drucker statement “You can’t improve what you don’t measure.” When you make that statement in a room full of leaders and analysts, you’ll see a lot of nodding heads.
Drucker’s statement, though, is only part of the equation. It’s true, you can’t get better at something if you don’t know how good you are today. But “better” isn’t an arbitrary term. Better means you are moving toward something meaningful.
In business, it starts with laying out your goals and must include a plan to get where you want to go. Creating and implementing organizational strategies to reach those goals, and then collecting and analyzing metrics to understand if you’re moving in the right direction, is made easier using the right tool for the job. But is a Corporate Performance Management (CPM) that tool?
What is a CPM?
The general use of the term CPM is to describe the processes, methodologies, metrics and systems used to monitor business performance so that it can be managed to meet the organization’s goals. Tools that provide the functionality to support this measurement and performance management are also referred to as CPMs, which is primarily what we’re focused on here.
CPM software pulls together data from across the business, along with the use of various management methodologies such as Balanced Scorecards, Six Sigma, and Key Performance Indicators (KPIs), to measure how well an organization is doing against its strategic plans. Much of the information that a CPM uses comes from the office of finance, including strategic financial planning, budgeting, scenario analysis, reporting, and driver-based planning.
Is there a Difference between a CPM and an EPM?
In a word, not really. Even some of the experts use CPM and EPM, or Enterprise Performance Management, interchangeably. For instance, Forrester uses the terms EPM, CPM, and even FPM (financial performance management), while Gartner refers to EPM as a corporate performance management solution. Still others refer to it as Business Performance Management (BPM).
One reason for the separation of terms is to remove ambiguity around the use of CPM tools by non-corporations, such as government and not-for-profit organizations. While there are a few differences between these, the terms can be, and frequently are, used to refer to the same thing.
The Goals of a CPM
Performance management can span the entire organization, both with input and a need to see reporting and analytics. The purpose of integrations between a CPM and other systems is to allow data to flow directly into the tool and be used to update reports and dashboards. For instance, monthly financials may be automatically imported while important tasks, like review adjustments and distribution of reports, could happen without intervention.
Stepping beyond financial and business planning in Excel, CPM allows for the development of business models to support strategic plans and operational goals. Within the CPM, historical data can be brought in while calculations against the model can be performed efficiently and quickly.
Different stakeholders need to see reporting and analysis at different levels. Some need a broad and high-level overview. Others need a deep-dive into their area of management. With a CPM, organizations have a set of tools for analyzing and presenting data to the company. Data can be presented as a dashboard, assisting in the understanding of performance against KPIs. Deep dives into the data, on the other hand, can pull together information from across the organization and even from outside the enterprise to provide a foundation for business intelligence and inform decision making.
Is a CPM Better than Financial Planning Software?
The short answer? Not really. In reality, much of the information that a CPM relies on to reach its goals is information that comes from financials. More importantly, modern FP&A applications are sophisticated and can handle the automation of data management, modeling, and insight that CPMs provide. Tools like Centage’s suite provides the same level of business intelligence and analysis of a CPM and can steer data-driven decisions.
The difference is dependence. A CPM is dependent on the information produced by the office of finance and their financial tools. FP&A software, however, does not rely on input from a CPM. At the end of the day, FP&A applications can provide the same analysis, reporting, and insights that a CPM can, but without adding more chair turning by using yet another tool.
Centage Corporation’s Planning Maestro is a cloud-native planning & analytics platform that delivers year-round financial intelligence. With Planning Maestro, Centage offers the sophisticated features needed by small and mid-market organizations to integrate budgeting, forecasting, and deep data analysis within one easy-to-use, scalable SaaS solution. For more information on how to modernize your office of finance with intelligent planning, view our product demonstration video, or call 800-366-5111.