Performance Management

Performance Management in a data-driven company

Performance Management is the ability to interpret in retrospect and to ensure that there is coherence between the strategic and financial plans going forward. This is a discipline that is increasingly based on the insight contained in data. Data-driven companies that make decisions based on facts are increasingly outperforming other companies.

Data, therefore, plays an important role in the modern financial function, which is the focal point for a wide range of tasks and activities, activities that are generally intended to ensure that the company’s strategic focus is achieved in the best possible way.

Several of these activities contain both technical and business complexities, which are often solved with manual processes and spreadsheets.

The spreadsheet itself offers great flexibility, but also poses challenges. Large amounts of historical data from different sources, combined with an increasing focus on governance and a transparent financial process, increase the need for integrated solutions in finance.

Holistic solutions embrace the natural process and data correlation between areas such as planning, consolidation, and financial reporting, and together they can create a uniform Performance Management Cockpit.

44%

44% struggle with inconsistent spreadsheets…

35%

35% acknowledge that there are errors in the spreadsheets used in the company…

54%

54% spend seven days or more closing their monthly accounts…

12 timer

On average, 12 hours a month are spent on spreadsheet customization…

Source: Ventana Research.

Focus areas

This page focuses on some basic disciplines that are useful to integrate and automate, thereby improving the company’s starting point for effective processes and business insights, and creating a sound basis as the core focus point for the data-driven company.

Legal consolidation

Legal consolidation contains a number of accounting elements to ensure proper and timely reporting. Complex group structures, changing ownership over time, and internal transactions are examples of factors that can make the task difficult, manually burdensome, and time-consuming unless the appropriate underlying solutions and systems are available.

Kapacity’s solutions:

  • User-friendly design – can be owned and maintained by the finance department.
  • Automate the consolidation process – reduces time consumption and ensures consistent quality in both internal and external reporting.
  • Integrated and scalable solution – create consistency with budget and/or forecast models.
  • Ability to complete real-time reports in connection with period closing.

Kapacity’s approach to a consolidation project

An initial clarification workshop is intended to identify the current workflow and the complexity in relation to consolidation. The four points described in the figure below constitute the framework of the consolidation model. The focus will be on automating data and ensuring that the consolidation process is as smooth and transparent as possible going forward.

The figure below shows the actual consolidation process. Kapacity’s consolidation solution releases time to analyze and understand as well as the possibility of repeated consolidations without having to wait until the next day to see the effect of even small changes.

Budget and forecasting

Budgeting and forecasting is an important area when the company needs to implement strategic plans and plan for future activities. Whether the solution should support an annual budget, a rolling forecast, or simply input for future plans generally, there are a number of benefits that a modern solution can provide:

  • Integrated processes, such as linkages between sales and finance budget.
  • Simulation/what-if scenarios – the ability to work with multiple versions also makes it easier to set up multiple scenarios.
  • Combine top-down targets with bottom-up input.
  • Use of historical data as a basis and/or distribution key.
  • Overview of the process through workflows: Who needs to complete which tasks?
  • Create a central site for planning of initiatives and follow-up.
  • Possibility to complete reports in real time in connection with planning.
  • Integration with other IT systems.
  • Beyond Budgeting and Rolling Forecast.

A budgeting and forecasting solution from Kapacity

Our approach to budgeting solutions ensures that we cover the entire budgeting process.

We start by mapping the most essential elements of the budget model at an analysis workshop. An example of this is shown in the figure on the right.

We recommend starting with the chart of accounts because this is usually the key to the solution and binds together the various budget areas of operations, balance, and cash flow.

Advanced Analytics

Advanced Analytics is about utilizing all of the knowledge stored in the data.

Gartner expresses this as follows:

“Advanced Analytics is the autonomous or semi-autonomous examination of data or content using sophisticated techniques and tools, typically beyond those of traditional business intelligence (BI), to discover deeper insights, make predictions, or generate recommendations.”

The use of statistical algorithms can also increase the quality of several areas in relation to the financial function:

  • Time-based projections as support and validation in a planning process.
  • Risk assessment – which customers are at risk, such as churners, or in relation to payments?

Kapacity’s approach to Advanced Analytics

In order to take advantage of the potential in Advanced Analytics, it is important to think through the entire process from data capture to how analysis results can be integrated into daily decisions and actions. Therefore, Kapacity’s access to Advanced Analytics is: Make it simple – make it specific.

The example below shows how historical data can be projected so that seasonal fluctuations are planned optimally.

For many companies, optimal planning in relation to demand and storage, for example, is crucial for success.

Including projected data through Advanced Analytics in the forecast process also provides an additional validation of input, and thereby an additional ability to relate critically to highly deviating plans.

You can learn more about Advanced Analytics here

IBM Planning Analytics

Kapacity uses IBM Planning Analytics (TM1) as a platform for the solutions, as described herein.

Planning Analytics provides the most complete and, not least, agile basis for the company’s financial tasks. Whether the company’s tasks are simple or complex, the solution landscape can be kept simple.

IBM Planning Analytics offers you a comprehensive user interface for all of your planning tasks.

IBM Planning Analytics has an intuitive interface, whether you require web access or you prefer to work in Excel.

Planning Analytics Workspace allows you to work with dashboards in planning, consolidation, and ongoing follow-up. The solution offers many visual tools that ensure both an overview and a focus on the individual KPI, combined with easy access to make entries in the relevant fields for a specific entry area.

IBM Planning Analytics offers you a convenient overview of your most important KPIs, making information available and useful for decision-making processes.

Planning Analytics integrates seamlessly into Microsoft Excel, so the functionality can be accessed unchanged, and various workflows and validity in the data are retained.

Your web-sheets can be exported easily to Microsoft Excel, where the data validity and functionality are maintained.

You can, therefore, work with Microsoft Excel as a user interface without losing the benefits of a comprehensive solution, where data is consolidated in real time.

On the technology front, Planning Analytics is based on in-memory technology that ensures optimal performance, even with very large volumes of data. The solution can also be run on-premises or as a full subscription-based solution in the cloud, depending on your specific needs.

Reporting can be performed directly against data used for consolidation and planning. The reports can be prepared traditionally via a portal or distributed with offline functionality.

You can learn more about IBM Planning Analytics here.

More Business Analytics

Kapacity has expertise within all of the disciplines of Business Analytics, including: