In two of my previous blog posts, I've discussed the problems with Excel Hell and the compromises that can result from using spreadsheets as an enterprise performance management (EPM) tool. Now, let's get positive: How can you unwind the layers of compromise in your current solution to unlock the promise of EPM?
Volume: This starts with asking "What is the right level of detail my managers need to see?" Don’t settle for replicating the same number of constrained records, or even limiting them to the same data sources. When implementing a more potent solution, you can be much more generous with the data. Don’t just look at the general ledger, think about customer and product details—whatever data your users need to make a more accurate forecast, include it.
Distribution: "Forgotten” users need not go underserved anymore. Bring them into the fold, drive transparency, accountability, and alignment deeper into the organization. It's amazing how decision quality can improve when access to information is granted to all decision makers.
Frequency: Get out of the typical annual-plan-plus-quarterly-forecast rut most companies are in. Unless your market influences (like commodity prices, competitive landscape, currency rates and more) change like clockwork once a quarter, you are leaving your business exposed if you don’t increase the frequency of your planning. Consider adopting a monthly rolling forecast process, and aligning with your weekly or daily flash reporting.
Complexity: Don't shy away from driver-based models that are too complex to maintain in Excel by itself. Implementing such a solution will be very helpful when learning to manage by the numbers. Adopting a driver-based plan allows you to create many what-if scenarios for comparison, and will facilitate greater linkage to other processes on the EPM continuum.
Integration: What was unthinkable to any real extent in the past—linking your financial plan to other EPM processes—is now not only possible, but a significant source of value. Every company has some form of strategic plan, whether in Word, PowerPoint, or an email. But is it integrated with your financial plan? For most companies, the answer is "not likely." What about Sales & Operations Planning (S&OP)? Again, unlikely. How much value would there be in defining a strategic objective, then confirming you have the right resources in place and the right proportional responsibility assigned to actually achieve the objective? Ah, now we're talking. What if, through your sales force, you could validate the market demand, and prepare the production capacity for your products…and have the appropriate capital needs at the ready to meet all necessary activity? How valuable would that be? As they say in the infomercial world, "But wait, there’s more!" To finalize this integrated scenario, let’s have these systems aligned and highly optimized so that you can integrate all movement in the market drivers, reassess the achievability of your strategic initiatives and make adjustments to ensure you are making progress on your targets every month? That's real value. And it is possible, today!
Some readers of this post are exploring implementing an EPM solution; some have already done it. By thinking about EPM in a more objective and holistic way, much more value can be reaped from this technology. Very few companies have the right perspective and trajectory to ever realize this value.
Will you be the next corporation to pave the Excel Hell goat path...or will you set your project’s sights on a much higher source of value?