Trend

Looking beyond ERP

Enterprises are looking for greater visibility in their business operations. To this end they are embracing corporate performance management tools, says Abhinav Singh.

It’s a demand driven world. The days of state-sanctioned monopolies are long gone. Foresight on part of the top brass becomes essential in such circumstances. Corporate Performance Management (CPM) systems help the members of the ‘C’ suite slice and dice the ERP data to their requirements. This is endorsed by Gartner that has predicted that by 2006, 90 percent of Fortune 1,000 companies will have some sort of performance management system in place. Five years ago, people were doing tactical reporting to show what their enterprise applications were doing but today people are trying to make information work for them by using analytics to learn how their business really runs.

ERP just isn’t enough

Traditional Enterprise Resource Planning (ERP) systems were developed to automate and integrate business functions on an operational or transactional level. They focussed purely on internal processes. However, there was a need to manage not only operational processes but also corporate performance and strategic management-related processes across functions, geographies, and lines of business. Faced with this situation, corporate bosses are looking beyond ERP and other transactional applications for solutions that will help them manage their businesses more effectively. CPM systems combine past information with incoming data, letting top management monitor organisational performance in near real-time. These systems also build upon the existing data analytic systems to create a single set of information that underlies financial planning, reporting and data analysis systems. The growing pressure to meet financial disclosure regulations and improve a company’s competitiveness is fuelling an increase in demand for CPM software.

An Indian heavy machinery construction company (the company has requested anonymity) has realised that CPM can help it turn strategy into action by letting it focus, communicate and collaborate on the overall goals from a single vantage point. CPM gives the senior management in this company a high-level view of key financial and strategic information from individual business units, divisions and ultimately facilities. It has enabled better conversation among management as they can drill down and find answers while they’re in a board meeting. The ability to see which sections or units are underperforming facilitates proactive decision-making. Nagaraj Bhargava, Director, Marketing, Alliance and Sales Operations, SAP India says, “Most organisations which move towards CPM are usually users of ERP with sound IT-enabled systems to help them in decision-making by analysing large volumes of data generated by these systems.”

George Varghese, Head, Marketing and Alliances/Life Sciences and ITeS, SAS India says, “Organisations are using CPM to improve their performance and align their resources with the overall strategy. For our unit in India we are using CPM tools that have helped us do quality reporting of our day-to-day activities and plan more effectively.” Highly competitive industry segments such as the BFSI, retail, telecom and energy are expected to embrace CPM in a big way.

Across India Inc.

Being integrated with the management planning and control process, these systems allow organisations to link strategies to operational plans and budgets, support continuous monitoring and planning, and ensure that everybody involved in the decision-making process has the up-to-date information.

Rajiv Kumar, Country Marketing Manager, Indian Sub-continent, SSA Global Technologies (India) adds, “CPM tools help CEOs drill down to the lowest performance indicator in an organisation. Deploying them results in better visibility for top management. In India, BFSI and telecom are the front runners in adopting these tools.”

As competition heats up in the performance management market, business vendors are lining up to provide guidance and perchance consulting. Gowri Shankar, Executive Director, Technology Solutions, TAKE Solutions explains, “CPM is expected to be adopted by a large number of Indian organisations, irrespective of their size. Larger organisations with multiple departments are expected to adopt it more effectively. There are many R&D organisations in India which have adopted CPM and they are able to align their departmental ‘Key Result Areas’ with their overall goals.”

Compliance with standards

Bhargava says, “CPM helps an organisation in two ways. Firstly, it offers capabilities like business planning and simulation and management dashboards, which help in holistically planning and monitoring results and progress on an ongoing basis. Secondly, it offers tools for complying with regulations like Sarbanes-Oxley, BASEL II and provides tools like a compliance calibrator, risk management and audit control systems.”

Visibility in corporate finances and compliance with regulations such as the Sarbanes-Oxley Act and BASEL II, which deals with the disclosure of financial risks, are forcing CEOs and CFOs to ensure accuracy of information. This regulatory fervour and the efforts to make businesses more productive are giving shape to a new software market in business performance management tools worldwide. Business performance management systems build existing data analytic systems to create a single set of information that underlies financial planning, reporting and data analysis systems.

The T+1 settlements by banks (same day clearance of cheques) could be another driver for CPM. That said, CPM requires that applications be integrated, so that customers, suppliers and operations can all be aligned toward the same goals.

Planning better

CPM tools have been designed specifically for enterprise development, communication and monitoring of strategy. They enable senior management to define corporate objectives and overall strategies. Operational managers can then build supporting tactical plans to achieve those corporate goals. Once built, a plan can be assessed for overall cause and effect viability and be modified as required throughout the year. CPM tools have innovative and intuitive ways of communicating and visualising a plan. Tools that focus on ‘cause and effect’ relationships are set to change the way CXOs formulate plans and monitor strategy. Thus, they enable the management to measure and manage corporate performance effectively.

abhinav@expresscomputeronline.com