enterprise performance management financial excellence and beyond tecreferer=http...
TRANSCRIPT
-
8/2/2019 Enterprise Performance Management Financial Excellence and Beyond Tecreferer=Http Whitepapers.technologyeval
1/12
ENTERPRISE PERFORMANCE MANAGEMENT
FINANCIAL EXCELLENCE AND BEYOND
HOW CFOs BECOME STRATEGIC ADVISORS ANDHELP OPTIMIZE OVERALL OPERATIONS
SAP Thought LeadershipEnterprise Performance Managemen
-
8/2/2019 Enterprise Performance Management Financial Excellence and Beyond Tecreferer=Http Whitepapers.technologyeval
2/12
-
8/2/2019 Enterprise Performance Management Financial Excellence and Beyond Tecreferer=Http Whitepapers.technologyeval
3/12
CONTENT
4 Executive Summary
5 The Changing Face of Business6 The CFOs Role in Transition7 Making the Transition8 Enterprise Performance
Management8 Shortcomings of the Typical
Approach9 Making It All Work
10 SAP BusinessObjects EnterprisePerformance ManagementSolutions
CONTENT
4 Executive Summary
5 The Changing Face of Business6 The CFOs Role in Transition7 Making the Transition8 Enterprise Performance
Management8 Shortcomings of the Typical
Approach9 Making It All Work
10 SAP BusinessObjects EnterprisePerformance ManagementSolutions
-
8/2/2019 Enterprise Performance Management Financial Excellence and Beyond Tecreferer=Http Whitepapers.technologyeval
4/12
Given the complexity and global natureof todays business world, organiza-tions are looking for ways to deal withintricate new realities and turn themto their advantage. CEOs and othermembers of the executive team mustrespond to immense pressure comingfrom a variety of sources, ranging fromthe board of directors and activiststockholders to regulatory authoritiesand customers. They deal with anynumber of global financial conditions,including fluctuating exchange rates,
rapidly changing economies and inter-est rates, and compliance with a variety
of regulations such as Basel II in bank-ing and government mandates such asthe Sarbanes-Oxley Act of 2002.
As a result, they are looking to theirCFOs to provide the solutions theyneed to cope with these many challeng-es. In the process, your job as CFO isshifting from the traditional financialrole dealing with standardized businessprocesses and systems to that ofchange agent and strategic advisor tothe CEO, who bears the responsibility
for ensuring the integrity of the compa-nys overall financial performance.
In this new role, you can take advan-tage of the latest advances in enter-prise performance managementsolutions to help your organizationcapitalize on the value of corporatedata, become more agile, and achievethe organizational alignment and visibili-ty needed to drive performance excel-
lence. In addition, these solutions cangive you and other senior executivesconfidence in the accuracy of yourcorporate performance data and thereports that you provide to regulatorybodies as part of your compliancerequirements.
This paper explores how enterpriseperformance management softwarecan help you maximize profitability,immunize your company against non-compliance, and optimize operational
efficiency by ensuring delivery of infor-mation when its needed, in context.The premise is that the best solutionsare integrated and adaptable to rapidbusiness change, are easy to use foroptimal productivity, and can predictfuture financial performance.
EXECUTIVE SUMMARY
4 SAP Thought Leadership Enterprise Performance Management Financial Excellence and Beyond
-
8/2/2019 Enterprise Performance Management Financial Excellence and Beyond Tecreferer=Http Whitepapers.technologyeval
5/12
As a CFO functioning in this new roleyou can take advantage of the latestadvances in enterprise performancemanagement solutions, by doing thefollowing: Helping to ensure that the compan
is executing toward strategic goals Acting as strategic advisor to busi-
ness management by providing analytical support and helping to optimoverall business operations and meregulatory requirements
Reporting on results of core financactivities and investor and share-holder relations
Personally attesting to the approprateness, fairness, and accuracy ofcompany financial reports, and thusminimizing risk of noncompliance
Your role in financial performance ma
agement typically includes working inconcert with other members of theorganization, such as the CIO and buness users. CIOs are usually responble for the integrity of the informationdelivered to the CFO and for the viabty and security of the IT infrastructurthat drives value to all aspects of thebusiness, including finance.
Todays business executives must copewith extraordinary complexity. Rapidtechnological change, complicated reg-ulatory and compliance requirements,and demand from customers contributefurther to this turbulent environment. Infact, one of the more unexpected andpositive trends that is transforming
business is the shift of power to thecustomer. Indeed, the customers grow-ing influence on the design and deliveryof products and services, thanks to theInternet and e-commerce, allows busi-nesses to more effectively meet theneeds of their market.
A worldwide marketplace means thatCEOs and CFOs are dealing withgrowth that extends beyond their coun-trys borders; in todays volatile stockmarket, international growth is often
essential for profitability. Also, withdeveloping nations taking center stageas the main drivers of global GNPgrowth, multinational corporations arelocalizing products and services tobuild their market share.
Another trend is a record level of merg-ers and acquisitions (M&As). Accordingto CFO.com, Globally, 2006s world-
wide M&A value worth $3.8 trillion beat 2000s numbers and was 38 per-cent higher than 2005s total. Inaddition, the value of deals in Europe isalso showing strong growth. The same
report states that the value of thesedeals is higher, in fact, than in the U.S.Last year, European deals increased 39percent to $1.4 trillion, compared tothe 36 percent growth that the U.S.experienced. Western Europe, China,and Canada were predicted to see themajority of activity.1
All of these factors are putting increas-ing pressures on CEOs, and indeed theentire executive team, to boost perfor-mance and cut costs while dealing with
a myriad of governance, risk, and com-pliance (GRC) issues. They need new
ways to maximize profitability whichrequires greater visibility into and con-trol over the drivers of their organiza-tions finances and operations. Natural-ly, the CEO looks to the CFO to helpsolve these problems.
1 Sarah Johnson, M&A Surge to Continue in 07, CFO.com, www.cfo.com/article.cfm/8514186.
THE CHANGING FACE OF BUSINESS
SAP Thought Leadership Enterprise Performance Management Financial Excellence and Beyond
-
8/2/2019 Enterprise Performance Management Financial Excellence and Beyond Tecreferer=Http Whitepapers.technologyeval
6/12
The CFOs Role in Transition
Over the past several years, the newpressures and challenges faced by thefinance organization are causing execu-tives to make significant shifts in theirfocus and priorities. CFOs are transi-tioning rapidly from a somewhat limited
financial role that deals with standard-ized business processes and systemsand the people needed to supportthose systems, to the role of strategicadvisor.
This new role includes ensuring thecompanys financial integrity and mak-ing informed and calculated businesschoices to meet the companys growthstrategy in accordance with overallcompany objectives. These objectivesmight include, for example, improving
financial and operational performance,growing revenue and earnings, increas-ing return on investment, and buildingshareholder value. But in any case, theCFO must ensure lean, compliant finan-cial operations; provide financial andbusiness leadership; and rapidly delivernew financial services that keep pacewith and accelerate the growth of thebusiness.As shown in Figure 1, the shift in aCFOs responsibilities is an evolving
process. The first step is the transitionfrom focusing primarily on transactionprocessing to include the managementof information flow as well. This laysthe groundwork for the CFO to beginaddressing global market concerns,working with other C-level executives
and line-of-business managers to devel-op a vision for the companys financialfuture, and ultimately playing a key roleas strategic advisor and chief planningofficer. This evolution is not a series of
well-defined steps, but rather a continu-ous process that varies in time andscope depending on the size andrequirements of each company. It iscumulative in nature; each step buildson the foundation of the previous
steps.
Several major tasks are associatedwith this new role, including: Implementing enterprise-wide, effec-
tive change management to set thefoundation for performancemeasurement
Enabling strategic direction to bedefined and monitored on an ongoingbasis
Optimizing strategic planning execu-tion and profitability management
Promoting collaboration across theorganization on initiatives, plans, bud-gets, and intelligently managingresources while focusing on initia-tives critical to corporate strategy
Working with the CIO and business
managers to achieve operationalexcellence
ProcessingTransactions
AddressingGlobal MarketConcerns
Developing a
Vision for theFuture
Becoming aStrategic Advisor
for the Business
Figure 1: TheEvolving Role ofthe CFO
6 SAP Thought Leadership Enterprise Performance Management Financial Excellence and Beyond
-
8/2/2019 Enterprise Performance Management Financial Excellence and Beyond Tecreferer=Http Whitepapers.technologyeval
7/12
Making the Transition
The key to this transition is to focuson the demands of the present whilesimultaneously working to predictfuture financial performance. For exam-ple, you may need to pay close atten-tion to driving customer revenuegrowth to increase total net revenues,adjusting the product and service mixto improve gross margins and gross
profits, or reducing operating costs toincrease net income. In some cases, aspecific asset category, such as inven-tory, property, or equipment, might bereduced to improve cash flow andincrease total assets.
A myopic focus on the future aloneputs current financial performance atrisk; an exclusive concentration on thepresent sacrifices incipient opportuni-ties. Finding a balance between thesetwo potentially conflicting views is oneof your major challenges.
As described above, your role as CFOinvolves the day-to-day business ofmanaging risk; efficient, integrated
financial planning; and confident statu-tory reporting. But making the transi-tion also means adapting to the future,
with the following:
Strategic agility Todays businesenvironment has become increasinunforgiving. A single misstep or dein executing a strategy or followingup on an opportunity can have sevconsequences. CEOs and CFOsmust be alert to emerging threatsand opportunities and be able to
adapt their strategies quickly to dewith the new situation. For the CFOthis also means being able to delivenew financial services that keep pa
with the business as it changes inresponse to marketplace and regultory pressures.
Business model innovation Exective leadership is required not only develop and launch innovative products and services, but to implemeninnovative processes and businessmodels as well. In addition, execu-
tives are required to enforce performance management throughout theorganization while acting as agentsfor change.
This means close collaboration withthe CIO, key lines of business such asales and manufacturing, and IT functions that support and ensure the intrity of the CFO-driven business pro-cesses that span the organization. Oof the major enablers that the CFO aIT organization can take advantage o
the discipline commonly referred to aenterprise performance management
SAP Thought Leadership Enterprise Performance Management Financial Excellence and Beyond
-
8/2/2019 Enterprise Performance Management Financial Excellence and Beyond Tecreferer=Http Whitepapers.technologyeval
8/12
Data dispersal At many compa-nies, the required data is scatteredacross multiple applications runningon a mix of legacy systems. To workeffectively, the application must haveaccess to all pertinent data (includingMicrosoft Word documents andother unstructured data) to ensureaccuracy and timeliness. This dataaccess also compresses processing
time.Long budget cycles Because the
applications typically are not collabor-ative or streamlined, the budgetingprocess breaks down. People on thefront lines have little or no input intobudget deliberations, then are hand-ed a budget and told to live with it.
Need for even more collaboration,communication, and processes Most enterprise performance man-agement applications lack sufficientsupport for standard business pro-cesses, teamwork, and fluid sharingof information so that everyone canbe on the same page and do theright thing.
Accountability gaps Performance
management only works when initia-tives are linked to tasks that are welldefined and people are held account-able. Most applications do not incor-porate mechanisms that allow allstakeholders to agree on ownershipof a performance management strat-egy, track its progress, and makesure it aligns with overall corporatestrategy, initiatives, and plans.
Enterprise PerformanceManagement
All areas of an organization need todefine strategies and plans, set bud-gets, analyze performance, and gener-ate financial and performance-related reports. These and other
financially relevant activities must thenbe rolled up into a larger corporateoverview.
At SAP, we view enterprise perfor-mance management as the entirescope of performance management inall areas, from HR and marketing tomanufacturing and distribution (see Fig-ure 2). Enterprise performance man-agement helps companies streamlineand optimize activities across all areasfor greater control over operational and
financial performance.
Shortcomings of the Typical ApproachBeleaguered CFOs need to managefinancial performance in a complexcorporate environment, but many oftodays software applications still havea long way to go to support theirneeds. Some of the issues with enter-prise performance management appli-cations include the following:Usability The applications can be
inflexible and hard to use, and main-
taining them can require much ITsupport.
Business Analytics Software
Performance Management Tools and Applications
Financial Performanceand Strategy
ManagementApplications
Budgeting, planning con-
solidations, profitabilitymgmt/activity-basedcosting scorecards
CRM AnalyticApplications
Sales, customer service,contact center,
marketing, Web site
analytics, priceoptimization
Business IntelligenceTools
Supply Chain andServices Operations
Supply chain (inc. plan-ning), services,
operations, analyticapplications
Workforce AnalyticApplications
$26.13 Billion
Query, Reporting,
Analysis
(includes dashboards)
Advanced Analytics
(includes data miningand statistics)
Analytical SpatialInformation
Management Tools
$8.31 Billion
$1.99 Billion$2.34 Billion
$150 Million$4.39 Billion
Data Warehouse Platform(Data warehouse management and
generation)
$8.09 Billion
Figure 2: EnterprisePerformance Manage-ment Within the Contextof Business AnalyticsSoftware (2009)
Source: WorldwideBusiness Analytics
Software 20082012
Forecast and 2007
Vendor Shares, IDC#214904, November2008.
Figures in U.S. dollars
$854 Million
8 SAP Thought Leadership Enterprise Performance Management Financial Excellence and Beyond
-
8/2/2019 Enterprise Performance Management Financial Excellence and Beyond Tecreferer=Http Whitepapers.technologyeval
9/12
Disconnected spreadsheets Spreadsheets are the most common-ly used tool for planning and strategy,and individually these are highly pro-ductive tools. But thats not the case
when information needs to be sharedand collectively updated. People arenot operating from a common data
store that delivers one version of thetruth. The inability to certify and tracesubmission to the various spread-sheets breeds a lack of confidence inthe information being presented. As aresult, people spend more timedebating the information than deci-sively taking action on it.
The performance gap Performancemanagement needs to be treated asa baseline and iterative process thathelps define overall corporate strate-gy as well as the CFOs strategic ini-
tiatives, not something that is tackedon as an afterthought. Performanceexecution often breaks downbecause of planning defects, corpo-rate culture, or lack of managementcommitment. In fact, the right tech-nology solution can go a long waytoward fixing these problems.
Making It All Work
What is needed is a new set of enter-prise performance management appli-cations that meet your current andfuture needs, helping you and othersenior executives meet the followingkey goals:
Maximize business profitability toincrease market and shareholdervalue
Optimize operational efficiency toreduce operational costs and free upresources for innovation
Minimize risk to the business byensuring that decisions are based onaccurate data, and that statutoryreports provided to regulatory author-ities are in compliance that is, thatthey are appropriate, accurate, andfair
SAP Thought Leadership Enterprise Performance Management Financial Excellence and Beyond
-
8/2/2019 Enterprise Performance Management Financial Excellence and Beyond Tecreferer=Http Whitepapers.technologyeval
10/12
SAP BusinessObjects enterpriseperformance management solutionsenable organizations to manage bothfinancial and operational performanceand capitalize on the value of theircorporate data. Businesses usingenterprise performance managementsoftware can become more agile in
driving transformation and controllingperformance. The applications canbe deployed separately or together toform a comprehensive solution. Whendeployed together, they support thecomplete enterprise performancemanagement life cycle, empoweringthe CFO to: Measure assets, profitability, costs,
and capacity at a granular level Align strategies with goals, initiatives,
metrics, and people Enable efficient planning, budgeting
and forecasting, and management ofthe triple bottom line
Achieve greater confidence in man-agement and compliance reportingthrough fast, accurate close process-es and self-service reporting
Provide frontline business users withtrusted information delivered throughnative integration with familiarMicrosoft Office productivity tools
in concert with an intuitive Web 2.0interface
With the solutions, you are better ableto meet the unique requirements oftodays global, fast-paced businessenvironment and can assume the newand demanding role of strategic advisorto the organization. To learn moreabout the full breadth of SAP solutionsfor enterprise performance manage-ment, call your SAP representativetoday or visit us on the Web at
www.sap.com/sapbusinessobjects/epm.
SAP BUSINESSOBJECTS ENTERPRISE
PERFORMANCE MANAGEMENT
SOLUTIONS
Figure 3:EnterprisePerformanceManagement
Applicationsat Work
Intelligence Platform
Enterprise Resource Planning
Governance, Risk, and Compliance
Enterprise Performance Management
Report andMonitor
Optimize
Modeland
Strategize
and Prioritize Plan andExecute
FinancialConsolida-
tion
PlanningStrategyMgmt.
Profitabil-
ity & CostMgmt.
10 SAP Thought Leadership Enterprise Performance Management Financial Excellence and Beyond
http://www.sap.com/sapbusinessobjects/epmhttp://www.sap.com/sapbusinessobjects/epmhttp://www.sap.com/sapbusinessobjects/epmhttp://www.sap.com/sapbusinessobjects/epmhttp://www.sap.com/sapbusinessobjects/epm -
8/2/2019 Enterprise Performance Management Financial Excellence and Beyond Tecreferer=Http Whitepapers.technologyeval
11/12
SAP Thought Leadership Enterprise Performance Management Financial Excellence and Beyond
-
8/2/2019 Enterprise Performance Management Financial Excellence and Beyond Tecreferer=Http Whitepapers.technologyeval
12/12
www.sap.com/contactsap
086 847 (09/02) Printed in USA.2009 by SAP AG.rights reserved. SAP, R/3, SAP NetWeaver, Duet, PartnerEdge,
yDesign, SAP Business ByDesign, and other SAP products and servicesentioned herein as well as their respective logos are trademarks or regis-red trademarks of SAP AG in Germany and other countries.
siness Objects and the Business Objects logo, BusinessObjects, Crystaleports, Crystal Decisions, Web Intelligence, Xcelsius, and other Businessbjects products and services mentioned herein as well as their respectivegos are trademarks or registered trademarks of Business Objects S.A.the United States and in other countries. Business Objects is an SAPmpany.
other product and service names mentioned are the trademarks of theirspective companies. Data contained in this document ser ves informationalrposes only. National product specifications may vary.
ese materials are subject to change without notice. These materialse provided by SAP AG and i ts affi liated companies (SAP Group) for
ormational purposes only, without representation or warranty of any kind,d SAP Group shall not be liable for errors or omissions with respect toe materials. The only warranties for SAP Group products and services a reose that are set forth in the express warranty statements accompanyingch products and services, if any. Nothing herein should be construed asnstituting an additional warranty.