You don’t need to be a psychic or have a crystal ball to know what’s going to happen next with your business. What you really need is effective financial performance management, but for many organizations, that’s easier said than done.
However, there are some challenges associated with today’s financial performance management solutions – they don’t integrate with other mission-critical sources of corporate information (such as ERP systems), making it difficult to have a single strategy that drives the company forward. Some companies don’t even have ERP systems in place; instead, they use multiple versions of Excel spreadsheets. Read on to learn how to overcome those challenges in order to develop a holistic approach to managing your firm’s success.
What Is Financial Performance Management?
Financial performance management solutions are the culmination of the development of other types of business software. They combine the best of ERP software, transactional systems that handle large amounts of data from across a company, with BI systems, designed to help make sense of the volumes of corporate data stored in an ERP system.
FPM solutions offer a single platform that works in real time to generate reports, analysis, and plans for your business. They provide actionable information when you need it which users at all levels can access. When you’ve got the right data at the right time, you can make better decisions, leading to your company’s long-term success.
What Are the Challenges Associated with Financial Performance Management?
The biggest challenge with FPM is not having a single platform in which corporate information is stored. Stop us if you’ve heard this one before: your accounting department has its own software system that stores departmental information. It’s a legacy system, so it’s beginning to show its age. Employees have developed workarounds (such as creating spreadsheets containing mission-critical information), but they often don’t share those sources of information with their colleagues – and it’s the same story at other departments across the firm.
This approach leads to, among other things, errors galore. Financial modeling firm F1F9 estimates that 88% of all spreadsheets have mistakes in them, while 50% of spreadsheets used by large firms contain material errors (such as faulty formulas). Such mistakes cost time, money, corporate reputations, and employees’ careers.
“88% of spreadsheets have mistakes in them, and 50% of spreadsheets at large firms contain material errors”
“Well, we’ve got financial performance management tools in place,” you say. “We’re set.” That’s not always true. Many FPM tools lack native ERP integration, meaning that you can’t access up-to-date financial data. The upshot is that you don’t have an easy method to develop a unified strategy for your whole company, and it’s much harder to make data-driven decisions that will lead to successful outcomes.
Choosing the Right Financial Performance Management Solution
How do you know you’ve chosen the right financial performance management solution? There are several metrics you should keep in mind.
The first metric is native ERP integration. This gives you real-time access to your data – there’s no more waiting hours or even days to find out how your firm is performing. The second metric is that your information is the most up-to-date and accurate that it can be. You never have to worry that it’s not current, and therefore less useful for decision making.
“When integrated reporting, analytics, and planning functions are all in one place, you save time, effort, and money”
You should also be looking for integrated reporting, analytics, and planning functionalities. When those functions are all in one place, you save time, effort, money and avoid making mistakes.
Effective financial performance should be within reach for every company, and it shouldn’t be complicated. For more information on finding the right solution to meet your financial performance management needs, reach out.