A research firm predicts ERP will encroach on corporate performance management, but let’s get a few things straight first.
In a battle between enterprise resource planning and corporate performance management, everybody loses.
What ultimately matters to all organizations is how well they manage their resources and grow, not whether they need to extend the value of their ERP implementation or invest in CPM. For obvious reasons, business leaders will take whatever approach offers the quickest time to value, and in many cases that will mean making ERP and CPM coexist more comfortably.
“CPM, like ERP, will continue to evolve — but that evolution should never be about the technology, but what customers actually need.”
That message might not be clear if you don’t read the entirety of ‘Financial Performance Management Software Vendors Face Challenges,’ a recent article from Rob Kugel at Ventana Research. Among other things, the head of the analyst firm’s CFO practice suggests that if ERP evolves as expected, there will be less and less for CPM tools to do:
Our benchmark research on the financial close finds that 62 percent of companies with more than 1,000 employees have two or more ERP systems while 29 percent have three or more. It also reveals that 70 percent of companies have a dedicated financial data warehouse. However, ERP system architectures are evolving to enable corporations to deal with financial system fragmentation by amalgamating entries from all accounting software into a single, unified headquarters system. Vendors use different approaches, but the end result will be a single unified ledger.
Most companies would welcome a single unified ledger. Just make sure you bear the following in mind:
- What does a 360-degree view of insight look like? A lot of what we think about as actionable data today may be what finance departments see, but tomorrow will be a very different story. Just look at what’s collected, managed and stored by those working in marketing, sales or even HR and how it might ultimately have a bearing on performance. Business leaders should think of all those touchpoints as they mull the future of their CPM investments and where they need to reach.
- Make planning a priority: If you read the full article, Kugel notes that CPM could go well beyond ERP in forecasts that include things such as “capital, demand, marketing, project, strategic, supply chain and workforce planning, as well as sales forecasting and corporate budgeting.”
- Excel is not your enemy: Ventana’s benchmark study shows 70% of companies still use spreadsheets to support business planning, but argues that number could shrink as “alternatives” become available. Alternatives to what, though — to the tool that employees are most comfortable using? If it’s an alternative to the problems of marrying CPM and spreadsheets, those have already been solved.
CPM, like ERP, will continue to evolve — but that evolution should never be about the technology, but what customers actually need.