Performance Management

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 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.

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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.

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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.

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Profitability

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

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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.
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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.

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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.

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Within Performance Management, we work in two dimensions:

  • 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 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 their monthly accounts…

12 timer

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

Source: Ventana Research.

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

Kapacity can help the finance department become a value-creating Business Partner for the rest of the organization.

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.

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.

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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.

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.

Read more about legal consolidation

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

Read more about profitability

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. Challenges in the work with the month-end closing process and the process of financial reporting are often caused by errors in data. This may be due to, for example, lack of data entry and an incomplete basis for accounting./span>

Experience shows that the implementation of a Business Intelligence (BI) solution, which is adapted to the area of Risk Control, helps to create better processes and more automation. It provides effective risk management and a clearer audit trail.

At Kapacity, we focus on 3 areas when working with risk control and computer systems:

  1. A risk control matrix (RCM) creates an overview of risks and matching controls
  2. A well-developed data model is the basis for effective risk management of the financial area
  3. Reports and dashboards provide transparency in the work with risk control for all users

At Kapacity, we use a method where we combine the traditional data model – for example a financial cube – with the risk and control documentation associated with the area.

Read more about Risk Control

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.

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.

Read more about management reporting here

KPIs, 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.

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.

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

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IBM Planning Analytics and Jedox

IBM Planning Analytics

IBM has many years of experience in the CPM field and Planning Analytics is today one of the most widely used solutions on the market. The solution is strong as it has been continuously developed and improved.

IBM Planning Analytics provides an intuitive web layout with an Excel plug-in and a comprehensive back catalog of functionality.

At Kapacity, we have many years of experience in developing solutions for both consolidation, budgets, rejection, allocation and much more in IBM Planning Analytics.

Read more about IBM Planning Analytics

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 M5 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.

Read more about Jedox

Want to more about Performance Management?

Do as a large number of the country’s most ambitious companies:
Fill out the form or get in touch with Stig – then we can have a chat about your challenges and dreams.

Stig Thougaard
Senior Commercial Advisor, Digital Strategy
+45 31 63 29 21
sth@kapacity.dk