Achieving integrated financial planning with CPM software

Mastering budgeting, forecasting, and longer term planning has always been an art form. Knowledgeable finance and accounting professionals gather data from sales, operations, and other personnel about what might occur in upcoming months and years. They then manipulate the data using spreadsheets to produce a set of future-oriented financial statements for consideration by the organization’s leaders. Inevitably, leaders have questions and concerns that lead finance and accounting professionals to work many hours (over many months) to slice and dice the data, change it, compare it to actual results from prior periods and previous plans, and then to provide some sort of rationale and commentary that leaders finally agree to confirm.

From the early days of using calculators and manual spreadsheets and later to Easy Calc on a tele-type terminal, financial planning and analysis staff (FP and A—I used to be one) always tried to improve their performance by using whatever technology solutions were available. Just as authors and publishers use technology to improve their effectiveness and efficiency, so too do FP and A staff.

Today we have software products that are dramatically superior to anything we have used in the past. Rather than relying on spreadsheets, we can use Corporate Performance Management (CPM) software that consists of multi dimensional/multi attribute/multi perspective data cubes that allow us to download operational and financial data from the likes of ERP systems and general ledgers, both past and current, and then to link it all together so that companies can accomplish their budgeting, forecasting, management reporting, and financial reporting in dramatically reduced amounts of time. They can design data cubes to plan, monitor, and report on operational processes such as order processing, production forecasts, and inventory management—all of which links automatically into financial data cubes, integrating the data. To make it even better, FP and A staff can populate data cubes with past results and prepare extrapolations automatically to help staff and managers from all departments improve their forecasts and analyses.

The resulting projections and comparative reporting are substantially more reliable, of higher quality, and easier to drill into than any information sources we have had in the past. CPM software users can also update their data ‘on the fly’ using what-if analysis and simulation modelling techniques to help managers and leaders make better-informed decisions. Hence, integrated financial planning represents a major advancement for companies who can redirect their finance and accounting staff toward valuable activities that benefit the larger organization, rather than old labour intensive compliance reporting.