Deciding Between Leveraging Your Current Planning Processes or to Design New Ones
Perhaps the most common question I hear when designing Enterprise/Corporate Performance Management (EPM/CPM) systems is:
Is it better to:
- Replicate current planning processes to minimize the user impact?
OR - Fine-tune pre-designed system template processes to reduce implementation costs?
OR - Design new processes to take advantage of leading practices and technologies?
The short answer is: it depends upon the level of Business/Finance Transformation your business needs. This Part 2 post will help you identify the best path forward.
The Part 1 post describes the value of conducting a ‘current state’ analysis which is the foundation of any transformation. These posts are focused on EPM/CPM systems, which are implemented to improve a company’s planning, budgeting, forecasting, reporting and analysis capabilities. These capabilities will collectively be referred to as just “planning”, since that activity requires all of those capabilities.
| Business/Finance Transformation refers to redesigning a group’s work to better align and be more effective at executing against the group’s and organization’s goals. Those goals can be strategic, such as wanting to provide analytical insights into past performance or provide forward-looking options. The goals can also be tactical, such as wanting to improve productivity, accuracy and timeliness for quicker reactions to management or market conditions. Transformation efforts first link desired outcomes to the responsible people. Then it designs the corresponding work processes and technologies needed to achieve the goals and measure the results. |
EPM/CPM systems are customizable and flexible right out of the box. They are similar to Excel in that designers can model practically any solution. A blank canvas is provided along with a large assortment of functions to leverage before needing to add any custom programming or ‘macros’. Also like Excel, many of these EPM/CPM solutions provide templates from which one can learn or create a quick simple solution. It is important to note that as explained in Part 1, EPM/CPM systems are much more flexible than other systems, such as ERP, because planning differs drastically from company to company. So, there are more methods and design options available to customize the solutions.
The flexibility of EPM/CPM systems allow you to create your solution in an agile manner, growing organically or in a structured methodical way. Despite which way you decide to implement, having a clear scope and path is vital to success.
Replicate Current Planning Processes
Replicating a current planning process can be a very effective way to scope out the first phase in a multi-phase transition. After users are comfortable with the technology, they can better contribute towards recommending or designing improvements. When the second phase is released, the learning curve is more focused on the new processes and much less on the technology.
However, if the goal is to have only a single phase, relying just upon the current state to define your needs and not considering forward-looking goals could lead to some missed opportunities. Those future aspirations of the business can be uncovered even through a minimal Business/Finance Transformation exercise. Also, by taking a few moments to understand the leading-practices used by top companies, as well as some of the key features available in the new EPM software, one can gain further inspiration on how to improve upon the current state. With that insight in mind, informed decisions can be made between including certain new functionality early, excluding them completely, or just putting in the ‘plumbing’ (data and system foundation) now to prevent a costly retrofit in the future, for when it is time to add them later.
A system design that just copies a previous state may inherit the original system’s limitations and weaknesses. For instance, manual steps that were required in your previous processes due to technical limitations may not be needed in the new system. However, without fully understanding the use case, the goals, and the original technologies, those manual steps may be replicated unnecessarily in the new system.
XXX Going this route will typically get the first phase (or the only phase) released quicker than the other approaches. If
Depending on the company culture
while this approach may be the quickest, it tends to miss out on the greatest benefits of deploying an EPM/CPM system in the first place. XXX
Those looking for more dramatic improvements, beyond just simple automation, are able to empower their team with an aligned mission, business insights, and additional efficiencies when a Business/Finance Transformation is used to reevaluate underlying assumptions and processes.
Whether Business/Finance Transformation is addressed through a formal initiative or informally, there are two general directions from which to choose. Your options are to adopt a planning template or to implement a customized planning solution. When adopting a template, most of the Transformation responsibilities typically fall to the customer to adjust their business processes to the template provided. But when implementing a customized approach, the customer and the implementation team jointly define how the people, processes, and technologies should coalesce, and then develop an enabling system.
All things being equal, most customers would prefer a customized solution. However, many decide to use a template because they believe it will be implemented quicker, cost less, be easier to upgrade and won’t require a costlier consulting effort. Contrary to popular belief, these benefits are not always realized, as the templates are better used as a frame of reference than as the technical underpinning from which to build your system.
Fine-Tune a Pre-designed Template System
Most EPM/CPM vendors now provide app stores, hubs or markets where you can download pre-designed templates that can plug into your EPM/CPM system. Many aim to reduce development time, save on implementation costs, and benefit from a proven design by taking advantage of these offerings.
Those templates are often tailored to demonstrate the ‘art of the possible’, showing prospective customers the different ways to utilize the software. Some of these systems are billed as a ‘plain vanilla’ approach or an ‘industry standard’. They are also provide great value as sales examples, reference systems, training tools and prototyping aids.
The decisions made by the template designers when creating the templates may favor the needs of an initial client, or may have prioritized ease-of-use or ‘sexy’ features over other real-world factors. More common compromises made within standard templates are to security, maintainability, and scalability – areas which one really can’t appreciate until well after the software purchase. Additional tradeoffs that go into designing a system may include flexibility, integration, performance, upgradability, practicality, and the level of automation versus manual processes. The importance of these factors differ from company to company and are not ideal within a general-use template.
While these predesigned templates can sometimes be used in a production environment, the level of fine-tuning and additional customization allowed can be limited. So, before moving forward, it is important to perform a gap analysis to identify the differences between your needs and what is already provided. Those differences would then be prioritized and further investigated to outline the impact and effort needed to make the required modifications. Of course, that effort would finally be compared against the pros and cons of a completely custom design.
| Mini Case Study: Assuming Templates Alone are Sufficient The CIO group at a rapidly growing public company was charged with establishing new Accounting, ERP, and CPM systems simultaneously, as quickly and inexpensively as possible. They decided to give preference to using standard templates and utilize minimal customization to help reach those aims. Halfway through the implementation, the CFO group realized that the standard planning template didn’t support some of their basic planning needs, such as how they divided labor among their team and what level of resources they had to dedicate to the new system. Since the CPM consulting leads were unable to propose a satisfactory resolution, the CIO group brought in and tasked a new CPM lead with creating a customized solution in half the originally allotted time. Although the new team was successful, the additional efforts put strains upon the company’s time and resources to accommodate the additional design workshops, prototyping, and a compressed testing cycle. Had even brief Finance Transformation and gap analysis exercises been performed early in the project with CFO group involvement, this situation could have been avoided. |
Implementing a Custom Designed Solution
XXX What are the results of a gap analysis performed between a template and a desired custom solution? The results typically reveal that leveraging the templates as an example and then building a custom solution is often far more effective than modifying the templates directly. Starting with templates makes it difficult to undergo a Finance Transformation that truly addresses the business’s needs ahead of placing priority on the software’s capabilities and limitations. XXX
A custom solution is driven by your Business/Finance Transformation goals: what the important metrics measured are for growth, productivity and profitability; who is measured against those metrics and what are their controllable areas. It starts with a roadmap that prioritizes the most important goals and corresponding features to build, so the greatest value can be achieved as quickly as possible, with a phased approach if needed. MORE XXXX
A good architecture provides access to the relevant data and the constructs to plan against it. A strong design leverages the strengths of the technology and mitigates the technical limitations that may impact usability, scalability, performance, maintenance, or security.
| Mini Case Study: Unexpected Benefits from a Custom Design Two separate companies had very different challenges for their planning. One global consumer product company needed to plan and forecast their net revenues in each of their European countries, which all had different rules, customs, and laws around sales discounts, rebates, incentives, and coupons. Another regional services company needed to plan and forecast their contract based revenues, all of which had different criteria including different satisfaction terms, timelines, minimum requirements, etc. Both companies previously had complex Excel spreadsheets that differed significantly and wanted a new system to standardize their methodologies, but still allow all the flexibility they needed. What neither of them had realized was that after a deep analysis, despite all the differences between the methods and rationale in their spreadsheets, they were not only able to standardize, but also drastically simplify their methods and calculations, while still providing user managed options to accommodate a variety of exceptions. In addition, newer functionality that employed algorithms for seasonality, trending, and predictive analytics was able to further improve their forecast accuracy and drastically reduce their end of year ‘true-up’ or reconciliation between their plans, budgets, and actual results. By considering the nature of your business and its goals, you can recognize benefits beyond just efficiencies. |
| Mini Case Study: Looking Beyond the Mechanics A global Fortune 500 company had a complex arrangement of distributed and linked Excel workbooks used to calculate a planned consolidated tax expense amount across multiple countries, currencies and legal entities. Over the course of a year, an appointed ‘expert’ technical consultant attempted to create mimicking workbooks within its software, only to eventually quit saying that technical limitations prevented a solution. However, a new consultant was introduced that understood the business/tax issues at hand, as well as the inputs and desired output. He then chose to reformulate the calculations, leverage the system capabilities and designed a more streamlined and effective solution that was realized in just weeks. By looking beyond just the perceived technical requirements and creating a system that solves the business or functional requirements will be more effective and efficient. |
Conclusion
Since the implementation of a EPM/CPM system impacts how work is done, this opportunity should be taken to redesign it for the better. Whether you are expecting to create a custom system, adapt planning templates, or migrate your current planning, incorporating Business/Finance Transformation at the start of your project should be the foundation upon which a EPM/CPM implementation is built. Even a modest Transformation effort will better align your goals with the processes and technologies that will be developed for your people, create a more effective solution and prevent future retrofitting. Each starting scenario has its own considerations, but properly designing from the start will drastically improve your chances of getting your EPM/CPM system right the first time.
Glenn Chamuel is a EPM/CPM engagement manager and system architect with over 20 years of business/finance transformation, accounting, technology implementation, and EPM/CPM experience.