Companies looking to improve the efficiency of their performance management are investing in technologies that help centralize and enhance financial reporting, operational monitoring, compliance and forecasting.
Performance management technology is helping finance to shift from an historically delayed reporting function to providing real-time results and playing a larger role in strategic planning. By understanding data and unlocking insights into the factors driving performance, finance can help increase the organization’s ability to react quickly to market conditions and emerging opportunities.
While the term “performance management” may have different meanings among various companies and technology vendors, a common theme is enhancing an organization’s performance by providing deeper insights into its financial and operational results, and centralizing information so it can be analyzed and reported more effectively.
To better understand how companies are deploying performance management tools, the Financial Executive Research Foundation (FERF) has released an interactive research study, sponsored by Workiva, “Enhancing Performance Management.”
Some of the common characteristics of a financial corporate performance management system include the following:
• Financial consolidation using data from multiple sources
• Financial reporting
• Management reporting and forecasting
• Reconciliation/close management
• Intracompany transactions and reconciliation
• Disclosure management
In a growing number of organizations, performance management technology is helping finance to shift from an historic reporting function to providing real-time results and stronger insights into future performance. By understanding data more effectively and unlocking insights into the factors driving performance, finance can help increase the organization’s ability to react quickly to market conditions and emerging opportunities.
Performance Management Benefits
Effective performance management tools and processes allow financial planning and analysis leaders to play larger roles in their organizations’ strategic planning, risk management
and decision-making by helping them provide deeper insights into the organization’s results while enabling a closer partnership and collaboration between finance and business leaders.
Combining financial and operational data can provide better insights into what’s taking place, for instance, than either category can offer by itself.
Another potential benefit of performance management is improved collaboration between finance, business units, and information technology (IT) as the organization works to define the metrics and reports needed to better understand the business, and to implement analysis and reporting tools that business users are willing to work with.
Potential Challenges
Despite the compelling advantages performance management technologies can provide, obtaining those benefits may require overcoming a variety of implementation challenges.
For instance, data compatibility and validation are leading concerns for finance leaders because performance management systems pull data from a variety of other tools and sources.
Similarly, it’s important to perform assessments on the measures you’re evaluating to ensure they reflect risk appropriately and that the measures are being supported by accurate data.