Corporate Performance Management (CPM) – The implementation big picture

By - July 30, 2015

Is your CPM implementation team only automating your planning process or are they automating the process and creating enterprise value? There are two types of CPM implementation consultants in the market – model builders and model users.

Model builders are defined as those implementation consultants who replicate your existing planning process into the CPM technology creating automation in your planning process and some slight (if any) design improvements. These consultants aren’t strong at designing your CPM model(s), just implementing them. Model builders often have an accounting, finance or technology background but may have never prepared a budget themselves (a key question to ask), only built the models in software. At the end of the day, anyone with a little background in accounting and/or finance can build a model. It’s those who truly understand your business/industry and its strategy, key performance indicators/drivers, working capital, capital allocation, and planning best practices who we define as model users. We find that model builders are great at taking the design of your existing process and model and replicating it in software. It seems as though model builders miss the implementation big picture which is creating enterprise value, in addition to automating process. Examples of enterprise value include:

  1. Achieving growth, profitability and/or working capital improvements
  2. Linking the budget to the strategic plan in order to foster integrated execution
  3. Creating actionable analytics to support financial and operational optimization

Model users are defined as those consultants who can design and build models but also are experienced experts in financial planning and analysis. These consultants not only have designed and built models, but also regularly use them to drive performance. Similar to model builders, model users have backgrounds in finance and accounting. Unlike model builders, model users have significant experience throughout the planning and analysis cycle. When designing and implementing CPM these consultants understand the impact of their design decisions both up-stream and downstream. Up-stream they understand how to link the design to your strategic plan to encourage behaviors/actions that will help you execute on your strategic plan. Downstream these consultants are considering the end-user experience from a process and analysis stand-point. These consultants think about how you will need to use the data to drive corporate performance and they design your model(s) accordingly.

When selecting a CPM implementation team, make sure they are model users and can add value to your organization through the implementation process. When evaluating the team, be sure they are experts in the following:

  1. Your business/industry and its strategy
  2. Big picture understanding is required to provide value for the other key areas:
    1. Key performance indicators/drivers (financial, operational and statistical)
    2. Working capital
    3. Capital allocation
    4. Planning best practices (i.e. rolling forecasts, zero-based budgeting)

At McGladrey, we are model users. Our clients experience an ROI on their CPM implementations. Just like in construction, the best builders (model builders) need to use an architect (model user) for design. To find out more about this or other ways that McGladrey can assist you with your business needs, contact McGladrey’s management consulting professionals at 800.274.3978 or email us.

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