As data and analytics become more commonplace, Chief Financial Officers (CFOs) are being asked questions that go far beyond financial performance and get to the organizational drivers beneath those traditional metrics. Their analyses are expected to be timely enough and of high enough quality that they can be used to direct the course for growth within the organization. This can be a challenge, especially given the breadth of underlying performance factors that impact top-line financials. A tool that is becoming more widely used to help understand, analyze and control the wealth of organizational data is the Enterprise Performance Management (EPM) system.
EPM systems are used to help define, align and control the financial cycle by maintaining quality and timeliness of data analytics while correlating financial metrics with the key business performance metrics that impact them. This capability is increasingly critical as businesses operate in hyper-competitive and evolving environments, with accountability for transparency, control and responsiveness to corporate leadership and governance, shareholders and regulatory agencies.
A similar discipline for managing IT financial data, Technology Business Management (TBM), is making strides in establishing next-generation metrics that help organizations achieve transparency and control in their IT spend in support of the evolving demands on IT. Companies are finding that they can improve cost transparency if they have not only actionable data but also the capability to rapidly analyze and visualize the data.
Like CIOs that use TBM, CFOs that are moving away from spreadsheets and legacy systems and are becoming more adept at using EPM data find they’re getting a more comprehensive view of the business metrics that drive the bottom line. They’re also finding they are able to tap into the functional expertise available in their organizations to better interpret what the data means for forecasting or evaluating performance, and how the data informs or is informed by various processes.
In the end, TBM and EPM tools need to support a business’ processes. Their value to the organization isn’t merely in financial reporting, it’s also in helping control the business processes of the financial cycle: strategic goal-setting, budgeting, forecasting and those processes used to collect the data needed for analysis and react to the results of that analysis. By enabling more accurate planning and budgeting, these tools help decision-makers lay the groundwork for automating, expediting, governing, tracking, measuring and monitoring organizational investments in their companies.
With these capabilities in place, leaders can quickly identify a new market or delay a high-risk spend initiative, and then respond just as quickly. The value becomes evident when a TBM solution helps companies maintain and reduce technical debt so they can shift dollars to innovate and grow the business, or when an EPM solution facilitates the integration of data and the connecting of dots across the business, especially when predictive analytics are used to help steer the future course.
Though EPM software compresses the time it takes to understand changes, accurately trace those changes to their origin and make adjustments needed to keep growth on track, it’s important to remember that software isn’t the magic bullet for all business challenges. It would be misguided to assume that, once you’ve invested in and deployed such a system, change automatically begins. The change that happens is only as good as the people who are executing it in their particular business context. Following the practices of organizational change management and supporting people through change is key to implementing a TBM or EPM solution that works. That’s how companies can best see the return on investment they expect and assure the growth they envision.
I recently discussed the power of analytics and EPM-enabled business intelligence as a panelist in CFO Magazine’s webcast, The CFO Playbook on Technology: Using Enterprise Performance Management to Support Growth. Listen to the on-demand replay, or contact me directly to discuss further.
About the author
Ms. Chowning is a Service Integration and Management thought leader with over 25 years of transformation leadership experience within the IT Industry spanning product and operations service delivery, client relationship management, and strategic organizational change. She has leveraged her deep, IT leadership background and extensive experience implementing IT service and management strategies within multiple disciplines and industries to help clients drive strategic business alignment, manage their entire IT domain in an integrated fashion, increase quality, and decrease expense.