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What is Corporate Performance Management (CPM)?
Corporate Performance Management is the term that describes the methodologies, metrics, processes and systems used to monitor and manage the performance of an enterprise. It encompasses the activities which ensure that the organisation’s goals are consistently being met in an effective and efficient manner.
Included are the processes for defining strategic objectives, measuring performance, analysing performance, reporting and reviewing performance, and aligning the organisation’s people and its culture.
How is Corporate Performance Management (CPM) software different from Business Intelligence (BI) and Enterprise Resource Planning (ERP)?
Organizations often struggle to distinguish between the products and terminologies that can sound the same but are distinctly different. Usually the underlying reason is a lack of understanding of how today’s technologies support a variety of business processes. While the three can coexist in a corporate information architecture, it is crucial to recognize their differences. Software can be configured to do many things but trying to support fundamentally different business processes through an all-purpose platform is a recipe for heartache and which becomes more expensive over time.
CPM’s focus is on the ability to store data in a central repository collecting all inputted data as well as pull data from various sources. It is more than a reporting tool; it is used to better understand and manage the performance and health of your business and provide the ability to analyze that data in a centralized, versioned and simplified method. It is about leveraging the data to guide the organization towards achieving its objectives.
An uninformed organization would resort to an ecosystem of spreadsheets that sits beside its ERP environment to fulfil certain elements, such as planning, budgeting and financial reporting. This has proved to be a cumbersome, error-prone and unstructured method of producing information. Integrating ERP with CPM offers the opportunity to streamline all of this manual work and enables support for useful and insightful decision-making.
The ideal CPM software should be built to integrate easily with a variety of databases, flat files, external data sources, or other formats including direct access to the partnered ERP system. As ERP integrates with CPM budgeting, reporting, forecasting, financial consolidation, analysis and cash flow planning are all possible now with far less labour and far more accuracy.
Business Intelligence is one of the software industry acronyms that has multiple definitions depending on which vendor is doing the defining. However, software products that claim to be in the BI space are usually designed to give users access to data in an unstructured interface and have functionality to enable users to navigate in their own way to find the data and presenting it in the form like a report or visualization or a dashboard. However, reporting is not necessarily linked to an organization’s strategy or goals. It does not include any mechanisms for planning, controlling, or managing towards business objectives or KPIs.
ERP is designed to process, store and manage transactional data from business activities. However, they are not a substitute for corporate performance management (CPM) solutions.
ERP software alone is not sufficient for high performance
ERP is About Getting Data In vs Getting Data Out.
ERP architecture is based on an On Line Transaction Processing (OLTP) data modeling approach. Most CPM and BI solutions are based on an On Line Analytic Processing (OLAP) that is optimized for handling multi-dimensional queries and getting data out. Microsoft SQL Server Analysis Services is one well known OLAP technology.
ERP is About Detailed Transactions vs Summary Data or Trends
ERP essentially focuses on each detailed transaction that represents each activity in your business. That is a good thing! But, when it comes to forecasting or analyzing data, typically summary data is used to more easily identify trends.
ERP & Other Operational Data
If it is not manually keyed, integrated or imported into an ERP system, your ERP does not know it exists. This poses a problem if other point operational system is used in the organization.
ERP Budgeting Modules are Limited.
It is not uncommon for an organization to outgrow its ERP budgeting module. Contrast this to a dedicated corporate performance management solution that was designed from the bottom up to facilitate the entire planning cycle from beginning to end.
ERP Reporting is often Limited
It is often rare that an organization’s complete reporting needs are adequately met by these reports.
ERP & Custom Reporting
Developing custom reports based for an ERP solution can be a daunting task, especially when multiple tables need to be joined together precisely to return the right data.