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Want to better align finance and ops using EPM? Start with better data access.

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Want to better align finance and ops using EPM? Start with better data access.


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Proper alignment is critical to success in business, right? On the most basic level, that’s fairly obvious. Finance and operations have to be driving toward the same goals. Growth priorities and resource allocations, demand planning and supply chain planning — they all need to sync up smoothly in order for the business to succeed. Indeed, that’s the whole rationale for enterprise performance management (EPM) software.

Picture this scenario. Your marketing organization is promoting the latest product fresh out of R&D. But your sales team is incentivized to sell the product that was hot last month, while your supply chain and sales and operations planning (S&OP) teams are gearing up to produce the products that were backordered last quarter. Meanwhile, your finance team is counting on a profit margin based on assumptions from the beginning of the budget year.

This kind of situation is not all that unusual. Production cycles and sales cycles inevitably overlap. But the better aligned your business functions are, the less friction you’ll have in the system, as well as less waste, fewer unpleasant surprises and better financial results.

Aberdeen on alignment through EPM

A new knowledge brief from the Aberdeen Group focuses on this issue of alignment. Titled Analytics-Powered Enterprise Performance Management: Aligning Financial and Operational Objectives, the knowledge brief outlines key organizational practices and capabilities that are essential to improving alignment. Chief among them are communication, coordination and collaboration and the solutions that keep disparate areas of the business moving in the same direction. “Without effective communication, coordination and collaboration between different stakeholders,” says the brief, “there is no way to improve organizational performance.”

Based on Aberdeen’s annual Enterprise Performance Management and Financial Planning, Budgeting and Forecasting survey, the knowledge brief divided respondents into Leaders and Followers, based on their capabilities and their business performance. “While 34% of all respondents selected poor communication, coordination and collaboration as their top pressures, a deeper dive into survey data reveals that Followers were 86% more likely than Leaders to feel this pressure.”

Break down the data silos!

Leaders were able to overcome their alignment challenges, in part, by improving data access and utilization. Data that is untapped or underutilized benefits no one. And we’ve all heard how important it is to share a “single version of the truth.” For that reason, the report says, “Leaders evaluate their options based on both internal and external data, creating a comprehensive picture of what the next best steps are.”

Improving access and utilization of data tops list of “most championed strategic actions” of Leaders.

 

That all starts with getting data out of silos and into a single repository. “Data tied to business drivers frequently resides in disparate systems (ERP, CRM, etc.) or countless spreadsheets. With a centralized repository of data, EPM users can accurately model these drivers and provide all stakeholders with a comprehensive, reliable view of company performance.” The brief added that, “having a centralized repository of performance data enables cooperation and coordination between different stakeholders and business drivers.”

Keep the spreadsheet interface

With regard to those “countless spreadsheets,” rest assured that keeping your data in a central repository doesn’t mean that you have to abandon the familiar Microsoft Excel interface. Aberdeen observed, “Fortunately, the functional shortcomings of spreadsheets can be circumvented by EPM solutions that retain full spreadsheet functionality and formatting while offering sophisticated planning, analysis and reporting capabilities. This allows users to leverage existing spreadsheet skills to explore and analyze data faster.”

Communicate, coordinate, collaborate

To tie data access back to the need for communication, coordination and collaboration, Aberdeen said that “Leaders aim to improve communication between key stakeholders in order to drive accountability across the organization.” Plans and forecasts are most useful when they can be “built collaboratively, using the most up-to-date numbers and figures while simultaneously giving stakeholders the ability to course correct in the process.”

“As a result, these companies are better positioned to pursue appropriate modifications to their tactical and strategic approaches. In order to adequately vet such modifications, EPM users are more likely to perform ‘what-if’ scenarios and compare potential outcomes of their strategic choices.”

There’s no time like the present

Finally, the ultimate benefit of better alignment is, of course, better financial results. “In the end,” Aberdeen said of the Leaders in their survey, “they decrease time-to-decision while increasing revenue and margins.”

Alignment is necessary to make the best use of your resources and to fuel growth. And, as the Aberdeen analysts see it, there’s no good reason for not adopting a modern EPM solution today, because “given the time-saving automation in this space, long and resource-intensive budgeting and forecasting processes are an unnecessary drag on operations and a waste of resources.”

To learn more about how Leaders use EPM to deliver a better planning process and better business results, read the Aberdeen knowledge brief, Analytics Powered Enterprise Performance Management: Aligning Financial and Operational Objectives.

And to take a deeper look at an EPM solution that delivers the kind of capabilities Aberdeen is talking about, read our latest SmartPaper on IBM Planning Analytics, Beyond process efficiency — driving business value in the age of analytics.

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