In business, surprises are often troublesome. No one wants to find out just before closing the quarter that revenues will miss projections. Obviously. But even “good” surprises can be dangerously disruptive to a well-tuned business. Compared to missing your numbers, it may be relatively pleasant to find that your sales team has blown away their plan and found far more new customers than anyone expected. But even that kind of surprise can bring real trouble. What if you don’t have the resources to support that new business? In the end, surprises – even an unexpected surge in new business – can threaten the well-being of your enterprise.
To avoid such unpleasantness business has always done its best to build plans based on the most accurate forecasts possible. Even before the information age, the principles were the same. A business gathered the best data it could manage to find, established strategic and tactical plans based on the data, and periodically made adjustments to its plans based on analysis of reports of differences between results and forecasts.
The sophistication of this process has grown with advances in computing. For instance, when mainframes emerged on the business landscape, companies that could afford it began investing in Decision Support Systems (DSS). And as business computing has evolved, so has the range and sophistication of the tools available for this fundamental function.
Now in the age of pervasive personal computers and the advent of the Cloud, more businesses than ever can take advantage of the most powerful and responsive planning tools yet. Corporate Performance Management (CPM) tools (also known as Business Performance Management, BPM), such as Adaptive Planning, now supply an affordable and extremely agile way to avoid surprises by providing a continuous, responsive loop of forecasting, planning, monitoring and analyzing progress and results, and adjusting forecasts and planning.
The approach used by many companies today relies heavily on spreadsheets. Reports are manually entered on spreadsheets which must then be collected, checked, collated, and integrated to create reports to finally be analyzed and acted on by finance and the executive team. This system relies on many hours of manually intensive data entry and manipulation and is generally cumbersome, slow, and error-prone. And the final product are goals and plans handed down periodically as directed, usually, by finance. Measuring results and making changes to plans requires this slow, unreliable and inefficient process of creating, collecting, and consolidating spreadsheets all over again.
The basic principle of CPM may make it sound deceptively similar: plan, execute, measure, adjust, repeat. The difference is that CPM automation streamlines and collapses these steps so that they happen instantly, automatically, and simultaneously — dramatically increasing speed, efficiency, responsiveness and efficacy.
Instead of waiting to work up and submit their reports up the line at budget time – often just once a year, managers throughout the business routinely enter results directly into the system using an interface that feels comfortably similar to a spreadsheets. And as data is entered, the CPM system generates up-to-the-minute rolling forecasts. These forecasts are shared with the manager and throughout relevant departments and the executive team instantly via easy-to-read dashboards and customizable scorecards.
In creating this kind of instant collaborative environment, Accounting becomes more a custodian of the process instead of its sole owner, while accountability and ownership are distributed throughout the enterprise to rest with managers. When CPM is implemented in concert with a sound management methodology, it transparently communicates that strategy throughout the enterprise. By automating costing of routine overhead and customizing the kinds of reports and results that managers see, managers throughout your company can be seamlessly focused on maximizing the metrics that are most closely relevant to your company’s strategic direction and helped to avoid wasting time on non-critical details or sidetracks.
To avoid surprises in the midst of rapidly changing economic and market conditions, it’s critical that you can anticipate what would happen to your business under various different conditions. CPM offers the ability to run and evaluate all kinds of what-if scenarios. For instance, what if you add five more resources to engineering? CPM automates evaluation of the case, taking into account all associated costs – from salary and benefits to office space to furniture to phone and beyond – quickly presenting answers. And no matter how you want to tweak the variables, CPM applications makes quick evaluation possible, generating alternative results instantly. What if your sales continue to grow at the current rate? How much net revenue will that mean to your bottom line? What if sales level off, or current customers start spending less with your firm? Possible “what ifs” are virtually limitless, and having quick access to answers can be invaluable as you plot your future plan.
In addition to competitive advantages of CPM, there are further advantages to a Cloud-based CPM solution such as Adaptive Planning. A Cloud-based solution lowers the total cost of ownership by eliminating expensive IT investments in infrastructure and maintenance costs. Without upfront IT costs, the risks are lowered as well. And when InnoVergent integrates Adaptive Planning into your company’s other enterprise applications such as NetSuite, Adaptive Planning can draw from and update relevant data, or can expose where data originates by bringing up the original source at the click of a mouse.
Coupling your strategic management goals to an integrated, Cloud-based CPM application such as Adaptive Planning gives you the power to let people throughout your company know exactly where things are, where they’ve been, and – importantly – where you’re taking them. And it helps you minimize troublesome surprises.
