Performance Management in the modern datadriven company

Performance Management in a data-driven company

Performance Management is about creating coherence between strategy, financial plans and execution. It is the ability to use the information to make even better decisions. Data-driven companies that make decisions based on facts are increasingly outperforming other companies.

Data creates insight, and insight makes better decisions. Decisions that make it easier to succeed with the company’s strategy. We call this Performance Management. With twoday kapacity, you touch all aspects of Performance Management – or we help you strengthen the specific area where improvements will have the greatest effect in your particular company.

Strategy management

Data must be considered from the start when working with strategy. This applies whether the focus is the overall strategy for the entire organization or the strategy of the finance department.

Planning, budgeting and forecasting

Legal consolidation

Complex group structures, changing ownership over time, and internal transactions are examples of factors that can make consolidation tasks difficult when the company’s key stakeholders demand the results of the month’s activities.

Profitability

A profitability model must be an integral part of the decision-making basis for decision-making of/and follow-up of business initiatives.

Risk Control

Financial Risk Control is about creating an overview and evaluating risks associated with financial management. There can be many different risks associated with financial and accounting.

Reporting

Management reporting is about supporting the organization’s most important internal and external stakeholders with financial and non-financial data – set up in an easy-to-understand way and delivered with the right frequency. The target group is often internal parties such as management and the board of directors and in other cases external parties such as lenders.

KPI, scorecards and dashboards

We all know of the endless reports that are not being used, even though they take a lot of time to prepare. The use of selected key figures (KPIs) for scorecards or dashboards is an effective method of creating a visually comprehensive overview and a common understanding of how things are going. This is the first step to being able to perform even better.

The organization
The finance department (Digital Finance)

In general, the organization is information consumers, while the finance department is information producers, and thus plays a critical role in creating transparency.

Organization

Information consumers
From strategy to execution
Value creation through the organization’s core competencies and processes, e.g. consulting and production

The finance department

Information producers
Support for the strategic planning and execution
Value creation through the finance department’s agile allocation of resources and ongoing follow-up on performance

In many finance departments, the focus is mainly on the financial processes and technical solutions, where the dependence on spreadsheets is high. For twoday kapacity, Performance Management is something that should benefit users more than it should be a tool for controlling.

By helping the finance department out of silo-based and inconsistent spreadsheet models, time is freed up for Business Partnering tasks, and at the same time, the information quality is improved.

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 the monthly accounts.

12hours

On average, 12 hours a month are spent on customizing spreadsheets.

Strategy management

Data must be considered from the start when working with strategy. This applies whether the focus is the overall strategy for the entire organization or the strategy of the finance department.

Knowledge is an absolutely crucial competitive parameter in all industries, and knowledge depends on data. However, learning from past mistakes through controlling and explanation of deviations is not enough. To support the strategy, the organization also needs to look ahead, and one of the most important tasks of the finance department is to help with this

The three biggest challenges in companies

We do not have the information or insight needed to succeed with our strategy – and when we have it, we will get it so late that we cannot use it for anything
We have not yet recognized how important information and transparency are for our ability to create value for our customers and outperform our competitors
We always want to get smarter but reports and analyzes mostly drive sub-optimization and internal competition. Not the team-focused performance behavior we need.

The five biggest challenges of the finance department

The month-end closing process and reporting are too manual and time-consuming
Increasing requirements for compliance
The rest of the company needs a Business Partner, but the finance department has a hard time finding the time
The board and management expect strategic sparring and input from the CFO, but it can be difficult to look ahead when the focus is on backward controlling
Financial systems and Business Intelligence solutions are outdated and poorly maintained. This leads to parallel spreadsheet models and inconsistencies

Planning, budgeting and forecasting

Planning, budgeting and forecasting is an important area when the company needs to implement strategic plans and plan for future activities. But planning, budgeting and forecasting are often resource-intensive processes with interdependencies where the latest updates are not reflected.

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 when it comes to data quality, overview, coherence across departments and simulation capabilities.

twoday kapacity's 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.

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. Then we can expand the solution to solve specific areas such as salary, IT and final investment & depreciation, so that balance and the future cash flow can be estimated.

Legal consolidation

omplex group structures, changing ownership over time, and internal transactions are examples of factors that can make consolidation tasks difficult when the company’s key stakeholders demand the results of the month’s activities.

The right legal consolidation solution from Kapacity ensures:

A robust solution integrated with the customer’s other systems – high credibility and minimization of reconciliation
User-friendly design – can be owned and maintained by the finance department
Automated consolidation process with the option of local approvals – and central management via workflow
Automated and transparent flow for intercompany matching
Integrated and scalable solution – create consistency with a budget and/or forecast models
Possibility for making reports in real time containing the last entries during the month-end closing process

A consolidation solution will reduce time consumption and ensure consistent quality in both internal and external reporting.

Profitability

A profitability model must be an integral part of the decision-making basis for decision-making of/and follow-up of business initiatives.

The right profitability model from Kapacity ensures:

A robust solution that utilizes existing dimensions from the budget/forecast solution
User-friendly design – can be owned and maintained by the finance department
Automated load of non-financial activity data – with minimum resource consumption for data preparation
Integrated and scalable solution with the option to expand models with new activity drivers – so the model reflects the current resource consumption
Flexibility that allows you to work with different allocation models
Opportunity to analyze the business’s performance at product/customer level and summarized at category level

Reporting

The work of compiling data for management reporting can be a time-consuming task in many organizations, and there is rarely much time left over for this exercise when the reporting needs to be shared. The work of collecting from several sources and the validation of data can be such a big task that there is subsequently a lack of time to prepare report designs and support the business.

In many organizations, reporting is being demanded more often but with the same high demands on quality as before. This increases the need for automation of data processes. Here, experience shows that implementing a Business Intelligence (BI) or Performance Management solution, reduces manual data work, provides faster insights, and creates more confidence in management reporting.

KPIs, scorecards and dashboards

Scorecards can advantageously be used for the selected handful of KPIs, that everyone should memorize. A scorecard is a brief overview of the results of the KPIs, which shows whether the target values have been reached. This can be converted to a score (hence the name scorecard) or added together into an overall “grade”. This can, for example, be used to compare managers or business areas across their KPIs.

The best dashboards create an overview of larger business areas in a way that would normally fit a longer report. By condensing and visualizing the KPIs, they are presented in such a way that one can immediately see the performance challenges that require action. Unlike scorecards, there can be several KPIs on one screen, all of which show the “raw”, unfiltered performance. This will provide a much better opportunity to understand complex contexts and avoid focusing too one-sidedly on individual KPIs.

twoday kapacity can help select the right KPIs and design scorecards and dashboards that can become a common reference point for the entire company.

Jedox

Since its beginning in 2002, Jedox has evolved to be a software solution based on a multi-dimensional in-memory OLAP database, designed to solve budgeting, forecasting & consolidation challenges.

Jedox has in a short time taken a large part of the CPM market and is today a powerful piece of software that is an Excel-like front-end with a powerful modeling engine behind it.

The Jedox software has a natural connection to Microsoft Azure and also allows for direct integration to e.g. Power BI via a built-in connector. Our consultants have many years of experience in implementing Jedox solutions for both consolidation, budgeting, forecasting, allocation and much more.

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