Thursday, January 25, 2007

Integrated approach to Reporting

This article was previously posted at:

A couple of weeks ago I received the Statement of Qualifications (SoQ), which was developed by one of our practitioners (link Edwin). The Statement of Qualifications is intended to inform our clients about our vision with respect to Corporate (or Integrated) Performance Management, the methodology and tools we use to implement Corporate Performance Management and some detailed business cases of CPM-projects we did in the past.

Deloitte successfully implemented a great amount of CPM-projects from which we developed best practices on how to create an integrated reporting cycle. All our experiences (good experiences and of course some bad experiences) helped us to develop this practical framework and I am convinced the document gives the reader a lot of insight in the way a CPM-project should be implemented.
I would gladly share a chapter of the SoQ with you. To be more precise, it deals with our vision on how to implement an integrated reporting cycle and I would like to invite all of you to read the chapter and leave your comments on the blog. I am really curious about your point of view and experiences on this subject.

If you are interested in receiving the complete Statement of Qualifications, please send one of our practitioners an email and the SoQ will be send to you.

Information: Identifying requirements and sources

  • The first step toward integrated reporting is to identify the critical information decision-makers need and to select definitive sources. To determine an organization’s information requirements, start by examining its performance scorecards at the corporate, business unit, and functional levels. Identify the competencies and critical success factors that drive the success of the business and enable the organization to meet its strategic goals.
  • Then use those insights to link high-level and detailed performance measures to the organization’s success factors and goals. It is also important to address the organization’s detailed reporting requirements. Those typically include: financial data (e.g., consolidated P&L, tax, statutory), customer and operations data (e.g., channel, backlog, sales pipeline), and people-related data (e.g., headcount, turnover).\
  • Once the information requirements have been defined, the challenge is building consensus on where the information will come from. Agreeing on an authoritative source for data is more difficult than it sounds. Most organizations have multiple applications that provide different answers to the same question, so decision-makers must decide which source will provide the one definitive answer everyone will regard as the truth. Achieving that consensus generally requires new procedures for reconciliation and synchronization.

Process: Capturing and managing data

  • In some cases, an organization’s information requirements will include data that do not currently exist. Filling those gaps typically requires modifying an organization’s processes and systems to capture the data at its source.
  • For consistency, key performance measures should be gathered at the same point as the detailed data — eliminating discrepancies and ensuring a single version of the truth.
  • In many cases, process steps can be eliminated to speed up the process and improve reliability.

Technology: Organizing information for delivery

  • Effective reporting translates raw data into meaningful insights that are directly relevant to the targeted decision-maker. Many companies strive for a single, do-all reporting solution. But in our experience, that rarely makes sense. Most reports fall into one of three categories, each requiring a different reporting approach:
    • Executive information consists of high-level measures and key performance indicators that provide a quick overview of business performance.
    • Analytic information provides focused, in-depth analysis across time periods, processes, locations, business units, and/or functional areas.
    • Production and control information focuses on specific business activities within a defined time period (e.g., daily disbursement report, cash collection report). This information is generally contained within a single application or transaction system.
    • While some organizations have successfully implemented a single solution for all three types of reporting, they often find themselves frustrated by the functional limitations of a single solution. Leading companies with IPM generally prefer to specialize, using ERP and transaction systems for production reporting, while applying data warehousing tools, online analytical processing, and advanced data analysis techniques to executive and analytic reporting.

Delivery: Disseminating information

  • There are a dizzying number of options for presenting information, from wall posters, presentations, paper reports, and spreadsheets to e-mail and voicemail, PDF files, exception-based alerts, and interactive analysis tools. The right choice depends on both the situation and the particular needs of the decision-maker. Critical factors include cost, timeliness, importance, location, and technical constraints — as well as the sophistication and behavioral preferences of the targeted decision makers.
  • While no solution is perfect for all situations, self-service web delivery is fast becoming a central part of every organization’s reporting strategy. Decision-makers already know how to use a web browser, significantly reducing the learning curve and providing a consistent interface for future enhancements and modifications. Web-based tools are also cost-effective to maintain — streamlining the reporting and decision-making processes.

Tuesday, November 14, 2006

The Future Of Company Reporting Looks Bright!

Author: Rutger van den Berg (

Last week at the Global Public Policy Symposium in Paris, the CEOs from the largest professional services firms presented a united vision proposal for the profession and the future of financial reporting.

The paper was developed in an effort to focus discussion on issues that directly affect the services provided by professional services firms. The symposium participants included the senior leadership from BDO International, Deloitte, Ernst & Young, Grant Thornton, KPMG, and PricewaterhouseCoopers, as well as an array of regulatory officials and investors from around the world.

As you might imagine, the vision paper and symposium attracted heavy media coverage. The CEOs signed an op-ed piece about their shared vision that appeared in the Wall Street Journal. All CEOs participated in media interviews for CNN International business, the Wall Street Journal, and the Financial Times. By working together, the CEOs are helping to shape public opinion about issues that will map the future of company reporting.

I think this is good news if you take Corporate Performance Management seriously. Why? Well first of all, because this will help to improve the quality and usefulness of company reporting. Thanks to Internet and digitization, information will become more of a commodity product, that stakeholders can customize and consume the way they want it. For example, some investors may want to know about the earnings, cash flows, and perhaps other variables for a company currently and over some past period. Others may want each of these variables compared to other companies in the same industry or a similar “peer group”, or compared to averages for the market as a whole (or some portion thereof).

Second, it is directed at improving the frequency of company reporting. Why, in a world where most public companies’ financial records are, or soon will be, in digitized form, should investors and other parties have to wait a full quarter to receive pertinent financial information? Technology allows far more frequent reporting, even daily, although with different levels of assurance about its accuracy than for financial statements that are subject to regular audits.

Last but not least, this vision is aimed at providing more qualitative and non-financial information that helps stakeholders to understand how businesses perform in the future. Yet financial statements are backward looking documents. They tell how a company has performed in some recent period. Perhaps some of the information contained in the financials is indicative of future performance, but much of it is not.

Instead, non-financial measures like innovative success, customer satisfaction, product or service defects or awards, and employee satisfaction would provide powerful incentives to corporate executives to manage their companies in ways that benefit not only their shareholders, but their employees, customers and the wider economies in which they conduct business. In particular, companies that look likely to prosper but in fact may be in trouble would have stronger incentives to take corrective action sooner than otherwise. Conversely, companies whose prospects are really brighter than current financial data may indicate may not be penalized by investors, and thus find it easier to borrow funds for expansion, to retain or expand their customer base, and to retain or recruit new employees.

In short, the new reporting model should be more useful to stakeholders, more frequent, and help in predicting future company performance. It will impact the way executives manage their businesses, lead to a convergence of internal management information and external reporting, and will leverage existing CPM systems and developing technologies like XBRL.

If the leaders of the big international audit networks succeed in bringing their vision to life, this might very well be the next wave after compliance and IFRS. And this time, it appears to be one that will really benefit both internal and external information producers and consumers. And I think that’s really good news!

Thursday, October 26, 2006

What does the P in CPM really stand for?

At the start of any CPM initiative, the future tends to look bright for everybody involved. There is great vision and leadership, major benefits to be achieved, and the best possible software to support the initiative.

After a few months however, the initial enthusiasm usually begins to decrease. Senior executives have new issues to worry about, project team members are swamped with everyday routines, and the software appears to be unable to fulfil all requirements. The project that was so well managed in the beginning is now merely muddling through. New requirements are creeping into scope, the software is being tweaked to the max and beyond, and the original strong vision seems to be long forgotten.

But a few project trips, some executive pep talk, several stiff conversations, and a lot of hard work later, the project is finally ready to 'go live'. All is well that ends well! Or is it? Finance staff now seems to be having a lot of issues getting their data into the new system. Remote locations can't even connect. Producing reports is taking longer then ever before. The system keeps crashing for no apparent reason. It is slowly becoming clear what the P in CPM really stands for...managing the performance of the CPM system.

The first step is usually to perform some stress and performance testing, remove a few obvious bottlenecks and simpy upgrade the hardware. Most of the times this is not enough. As the systems grows over time, new performance issues arise that prove even more difficult to resolve. Improving performance is a war that has to be fought on several frontlines at the same time. More than a state-of-the-art IT infrastructure, it involves hard decisions on the architecture of the whole CPM system, trading off functionality with performance, changes to the process and organization underlying the CPM system, and, yes, some more stiff conversations.

In hindsight it is always easy to explain the poor performance. It usually comes down to taking more time to think things through at the start. Are all the must-have requirements really that critical? What else do we want from the system after the initial implementation? What is the simplest way to start? Why don’t we say goodbye to some of the dysfunctional practices that have developed over the years? These are not easy questions to answer. But answering them is critical to the ultimate success of the CPM initiative.

To end this blog on a positive note: there are a lot of experienced people out there that can help you in answering these questions, and making your CPM future look brighter.

Author: Rutger van den Berg (

Thursday, August 18, 2005

Six Performance Management Imperatives

Mark Smith of Ventana Research defines performance management as a methodology and process of managing performance of an organization and its business processes to achieve a commonly understood set of goals and objectives.
Furthermore he gives six Performance Management Imperatives:
  1. Compliance Management. Regulatory compliance brings new pressure to find better methods to assess policies and processes from finance to operations. Compliance assessment requires systems that automate the manual reviews and analysis and are proactive in monitoring business activities and processes to reduce audit costs. Efficient links between people and processes need to be adopted in the enterprise for compliance, new information technology and systems.
  2. Profitability Management. The push for managing costs and optimizing revenue streams is sharpening the focus on profitability across the enterprise. The influence of finance beyond the budgeting process is creating new rigor in different forms of profitability, including customers, products, operations and financials. Organizations need to build a BI foundation to support applications and systems for profitability management. Process Improvement. Despite the increased buzz around business process management, organizations need to focus on assessing and improving their existing operational processes before automating and controlling them with new ERP or CRM systems. Most organizations and IT suppliers have failed to take this easier path to process improvement. Measuring, monitoring and improving processes is not as easy as it seems, but it is essential for enabling performance management.
  3. Cost Management. Avoiding and reducing costs to meet the corporate and financial requirements of your organization should be part of your standard operational processes. Business must streamline operational processes for efficiency improvement and IT must continue portfolio and vendor consolidation to meet cost management objectives. Leveraging existing investments in CRM and ERP and accessing and integrating data assets into timely, relevant and contextual information is critical for enabling performance management.
  4. Performance Improvement. The underlying theme of performance management is improving business results, and, while it seems obvious, management has not adopted the performance management process as part of their daily operations. Assessing and refining processes to the next level of efficiency and effectiveness requires a much closer alignment of information and systems. Lack of support for linking strategy, planning, and execution in most organizations is still a major barrier to realizing optimal performance improvements.
  5. Business Innovation. Transforming or applying innovative processes and methods to gain a competitive advantage should be a top priority. Unfortunately, the assets and ideas in organizations aren't fully leveraged to improve the value of the organization. Organizing a process to take advantage of information technology and systems for business innovation should be part of every organization. One of the largest unrealized opportunities in organizations today is fully leveraging ideas and knowledge to transform business processes into continuing innovation.
  6. Assessment. Investing in BI is an important step toward improving information visibility and ultimately performance, but is only one piece of the larger performance management program that organizations need to undertake to achieve superior business results. The six business imperatives outlined here drive the need for rigorous performance management processes. How organizations apply performance management to their business will determine their competitive advantage. Ventana Research recommends that organizations that want to address these challenges leverage existing investments while examining new ones to bring innovation and performance improvement to the enterprise.

Wednesday, March 16, 2005

Hyperion and Peking University to launch Business Performance Management Research Institute

In a ceremony planned for March 17 in Beijing, Peking University and contributors including Hyperion (Nasdaq:HYSL) will launch the Business Performance Management Research Institute at the university's Guanghua School of Management campus. The institute, believed to be the world's first, will train students on the practice of Business Performance Management.

Guanghua School of Management is widely recognized as China's top business school. The university and Hyperion will team to help students, business leaders and entrepreneurs develop the skills and techniques to drive visibility and higher business performance.

Hyperion Chief Technology Officer John Kopcke says "Companies around the world are demanding greater visibility into the factors and indicators that drive performance. The leadership of Peking University deserves enormous credit for helping address this need. With this bold step, it will help today's executives and tomorrow's business leaders.

According to the Wall Street Journal, dated March 9, 2005, China is increasing its commitment to advanced business training, launching MBA programs at 30 universities in just the past three years. The business school training is reaching out to traditional students as well as current business leaders, with some 50 percent of graduate business students at China's top three schools believed to be chairmen or CEOs.

Wu Changqui, associate dean of Peking University's Guanghua School of Business, recently said in the Wall Street Journal, "Companies in China have come to an important point where entrepreneurs can no longer manage their companies based on their past experiences. Executive MBA programs provide them a forum where they can learn practices of foreign and domestic companies."

Major activities planned from the Business Performance Management Research Institute include: research projects and publications, Business Performance Management training programs, seminar series and forums, international exchange programs, and the creation of syllabi to guide the development of Business Performance Management curriculums at MBA, Executive MBA and master's programs.

Wednesday, December 29, 2004

Bestselling Corporate Performance Books

Monday, November 01, 2004

Maturity Model on Performance Management

I am looking for a model that can be used to determine and communicate the CURRENT and DESIRED STATUS of an organization on Corporate PM.

Typically I would envisage a 5? by 8? Matrix with:
> the horizontal axe consisting out of a number of increasing maturity levels, such as: Recognising, Understanding, Managing, Mastering and Leading.
> the vertical axe consisting out of the dimensions / aspects that one would have to take into consideration, such as:
1) Strategy/Vision,
2) Measuring/Valuation,
3) KPIs/Compensation,
4) Organization/Processes,
5) Culture/Communication,
6) Leadership/Planning,
7) Results/Value Creation,
8) Infrastructure/Tools.

Ideally the cells of the matrix would contain a bulletised description of the qualities an organization would require for a certain maturity level per aspect of Enterprise PM.

This tool could then be used in PM workshops to oversee the complexity of CPM and discuss, graphically plot, and agree on the IST and SOLL status for a particular organization.

Who wants to share work done in this respect? Do you use other tools for this purpose? Why? Can you add builds for the vertical aspects to consider? Please add your Comments!

Friday, September 03, 2004

PM performs

A new comprehensive BPM survey by Cranfield University and Hyperion at (the CFO's of) the 5,000 largest organisations in the United States resulted in two key findings:
1. Organizations with a formal BPM approach believe they out-perform organizations without a formal BPM appoach
2. Most organizations using packaged or custom BPM aplications to automate their BPM initiatives report better p. in the activities of the p. planning value m. chain than those using ERP appliactions or spreadsheets.

At a more granular level, Cranfield Research Fellow Bernard Marr reports:

  1. Build a Business Model - Companies with a formal BPM approach report that they more often use causal models to build a hypothesis and link objectives and p. measures to the firm strategy.
  2. Collect Data - Companies with a formal BPM approach report higher data quality and increased consistency in how they measure p.
  3. Analyse and Interpret Data - Companies with a formal BPM approach report improved interpretation of their p. information.
  4. Extracting Insights - Companies with a formal BPM approach claim to extract higher quality insights from their p. information.
  5. Communicate Insights - Companies with a formal BPM approach report that they better communicate their insights.
  6. Decisions and Actions - Companies with a formal BPM approach report better execution of their decisions and actions.

You can download the survey at

Friday, August 13, 2004

Tricks for CPM / Scorecard implementations

Here I'm starting a Blog with dirty tricks how you can increase the speed of acceptance of Corporate PM or Balanced Scorecard Implementations.
The first amazing one I found here: An oil company runs oil platforms in the North Sea. It had implemented a dashboard that was designed to help users on the platform to monitor their performance. The only problem was that these guys were used to doing things their way and weren't much interested in this newfangled method. So they weren't using the dashboard, which in turn meant that the company wasn't getting the feedback it needed if its Performance Management initiative was to succeed.

How to resolve this problem? A little bit of lateral thinking later and the company opened up a 'book' that allowed users to place bets on their performance. as measured by the dashboard. Take up has been such that not only are the dashboards now being used, and the PM system steaming ahead, but the company is also making money as a quasi-bookmaker! Hahaha...

Who else has a good implementation tip or trick? Make a Comment!

Thursday, August 05, 2004

Forward-looking PM

Thanks to the kind cooperation of Strategy and Finance Magazine, I got permission to publish a very good article by Anthony L. Politan on Taking PM to the Next Level on Value Based

As Politan explains:
When you're driving, you only glance into the rear-view mirror because, if you stare too long, you just might crash. Many businesses today are spending way too much time looking in the rear-view mirror at the road they've traveled by focusing on historical PM methods. A few leading companies, however, are applying many of the basic principles and technology of historical PM methods to forward-looking PM. This new trend is scenario-based planning, and it concentration on the future rather than on what has already happened.

By generating multiple what-if scenarios using data you already have and applying PM as if the scenarios were actual situations, you can take PM to the next level. The result: You can integrate optimal what-if scenarios with traditional budgeting and planning systems to change faster than industry norms and increase your organization's competitive advantages.

Check it out...