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How Financial Consolidation Fits into Your Corporate Performance Management

insightsoftware -
March 9, 2020

insightsoftware is a global provider of reporting, analytics, and performance management solutions, empowering organizations to unlock business data and transform the way finance and data teams operate.

How Financial Consolidation Fits Into Your Corporate Performance Management

First, let’s define what corporate performance management (CPM) really is. CPM is the “methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise,” according to Gartner.

Corporate performance management has always maintained a strong link with a company’s finance department activities. Given the reliance on finance-related key performance indicators (KPIs) to define CPM success, the office of the CFO has become the de facto leader in defining strategies and goals for the entire enterprise.

This legacy approach to corporate performance management has some glaring problems, especially when it comes to understanding CPM efforts across the entire organization. When the finance department is the sole source of data to inform corporate performance management, it does so to the exclusion of other departments and their needs.

Today’s businesses need a more holistic approach to corporate performance management. Finance can still serve as the hub of these efforts, but it needs to leverage modern, intelligent consolidation tools that provide more comprehensive data to your CPM applications. Here’s a look at how these consolidation efforts can boost corporate performance management.

Unifying Data from Across the Organization for Better CPM

As data silos in organizations are broken down, financial consolidation can improve access to data across a company’s departments. This allows CPM to engage in strategic planning and analysis informed by the entire company’s needs, while also synchronizing goals and KPIs to improve productivity across the board.

Corporate performance management is closely aligned with the business intelligence services used in financial consolidation and other finance-related activities, which is why it’s useful for these solutions to either exist within the same platform or be seamlessly integrated to share data and capabilities. A modern CPM solution will leverage the data collected by business intelligence solutions—which themselves are dependent upon seamless, automated financial consolidation—to inform strategic planning, goal-setting, and other activities.

A financial consolidation solution can eliminate the time and resource costs of gathering and consolidating data across an organization, making it more time- and cost-effective to collect this data on a near-constant basis. As a result, corporate performance management activities are able to accomplish more in terms of strategic management, thanks to larger volumes of data across an organization, as well as greater validity of that data.

Supporting Data-Driven Decision-Making and Overall Corporate Performance Management

Corporate performance management has an integral role in shaping and guiding strategic decision-making at the highest levels of an organization. As with any decision-making process, improved access to information will always result in better strategic decisions.

CPM relies on a wide range of financial data points, including revenues, expenses, balance sheets, cash flow statements, and inventory, which are gathered and updated through financial consolidation. But in a business environment in which automated financial consolidation isn’t in place, this data can often be outdated—until finance team members are able to manually update this information and consolidate data coming from other departments, CPM will be forced to analyze information that might not be reflective of current business circumstances.

With an automated financial consolidation solution, this is never a concern. Data sets are constantly updated and validated, allowing a CPM to analyze up-to-date information that enables more responsive decision-making to guide your organization.

Synchronization of Data and Performance Goals

Because data is consolidated in real time and validated to identify and resolve any errors, CPM is able to operate using data that represents a single source of truth. By synchronizing this data, organizations can align all respective departments with the strategic recommendations and insights offered by corporate performance management.

All departments will have goals and KPIs that are unique to their responsibilities, but CPM can help ensure greater consistency when it comes to setting and communicating goals and KPIs that serve the best interests of the company as a whole.

How to Build Useful KPI Dashboards

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It’s up to leadership to ensure that those departments buy into this goal-setting process, and seamless financial consolidation will ensure that the goals being established are balancing the company’s mission with the latest data regarding current business circumstances.

Closing Thoughts on Corporate Performance Management

Corporate performance management is a core component of enterprise business strategy, but it relies on strong financial data to deliver the budgeting and strategic planning services that will support your company’s success.

Longview Close offers financial consolidation services that help you make the most of your CPM. Schedule a demo today to see how our platform can deliver value to your organization.