Collection of tips and learning from experience in leading a team through the implementation of corporate performance management or enterprise performance management system

1. Practical Tips for Small & Mid-
Size Companies for Selecting and
Implementing a Corporate
Performance Management (CPM)
System
KETAN PAREKH
DO NOT COPY OR REDISTRIBUTE
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2. Disclaimer – Please Read
This presentation is not meant to be a step by step guide to
selecting and implementing a CPM system. This presentation
is a collection of tips and learnings from my own experience of
leading a team through this process. These are based on my
experience with company-hosted solution. However, majority
of the lessons are also applicable to SAAS or cloud based
systems that have become more popular recently.
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3. What is a CPM System?
In Simple Terms:
It is a system that performs consolidation, budgeting, forecasting
and reporting of financial and key performance indicators (KPIs)
data in one place
Complicated Definition
CPM is an umbrella term that describes the methodologies, metrics, processes
and systems used to monitor and manage the business performance of an
enterprise
CPM must be supported by a suite of analytical applications that provide the
functionality to support these methodologies, metrics and processes
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4. So You Have Decided to Take The Plunge
You are fed up of:
➢ Having financial and metrics information stored in multiple spreadsheets that are generated
from different systems, which still don’t give you what you need to manage the business
➢ Reporting and variance analysis can be very time consuming
➢ Making minor changes to budget/forecast or performing ad-hoc analyses take up a lot of
time
You have finally decided to go for it. What next?
This presentation provides practical advise to CFOs and other finance exectives for selecting,
implementing and maintaining a CPM system from an executive with first hand experience
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5. CPM Systems are Complex
“Hot food is really hot. If you think you can handle hot food, try
medium first.” – Warning on the menu of a Thai restaurant
• What makes them complex?
➢ Require coordinated effort from finance, accounting, IT and business stakeholders
➢ Need major investment of time, resources and money to implement
➢ Require constant resources to administer, maintain and keep up with evolving business needs
➢ Require specialized training for system users
➢ Finance personnel who are used to working in a user friendly and easy to manipulate systems do not
appreciate the complexity of CPM systems which are much more structured
• That is compounded by the tall promises that salespersons make
➢ Salespersons underplay the complexity of implementation and rollout
➢ People who implement the CPM system are unaware (or feign ignorance) of these promises
CPM systems are really complex. If you think you can handle
the complexity, try a simpler system first
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6. Is it Worth the Effort and Money?
• Thorough scoping and product selection process
• Setting smart and reasonable goals
• Properly executed implementation and rollout
• Proper training for the current and future users
• Commitment of resources for administration, maintenance
and upkeep of the system
We must pay attention to
these critical aspects
• Bad project management
• Lack of resources for implementation and administration
• Budget and schedule creep
• Expensive features that are too difficult to use
• Poor user experience resulting in limited adoption
• Inadequate training
There are numerous
failed CPM
implementations
resulting from
The answer is a resounding YES but ……..
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7. Project Scope
Create a project team from various stakeholders and touch points (e.g., finance, accounting,
IT, business owners) that develops scope
Constitute a 2-4 person steering committee of executives of the stakeholders (e.g.,
controller/CAO, CFO, CTO, etc.) that approves the scope
Break out project into multiple phases
• Allows for wider user adoption and builds support for the system
• Gives implementation team a break from extra work required to test and validate the system
• Provides better understanding of resources needed for implementation, administration and maintenance of the system
• Provides better understanding of system capabilities and its ability to meet organizational needs
The first phase should be to catch the low hanging fruits
• Provides basic functionality to solve 80% of the problems for the key stakeholders
• Leverages standard functionalities of the system and minimizes customization
• Takes weeks/months rather than years
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8. Project Scope (contd.)
Keep long term sustainability of the features and functionality in mind
• If you can imagine it the vendor can build it – but at what cost, time and effort?
• Every feature and functionality has to be tested and validated by the company at a significant internal cost
and disruption
• Vendor has no incentive to keep it simple, so it is your responsibility
• Change is the only constant. Complex features and functionalities will be harder to change after the vendor
has completed the implementation and moved on
• People who are trained on how to fix/change the system may leave the company
• Ensure that the scope includes detail documentation for future reference
Include training in the scope at discounted prices
• On-site training for the implementation team
• Schedule training so the staff has the opportunity to use the system immediately
• Follow-on training for the new users
Future phases
• Features and functionality requirements for future phases should be primarily user driven
• Exercise leverage during initial contract to negotiate discounted rates for implementing future phases
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9. Role of IT
Involve IT early in vendor selection to ensure that:
• There is a clear understanding of the IT resources needed and their ability to commit them during the
implementation stage
• The timeline, logistics and sequencing of implementation steps are clear
• IT can support the solution post-implementation without adding material incremental resources
• The existing tools (e.g., windows, outlook, excel, etc.) will continue to work with the new system
• Distribution of tasks between IT and finance is clearly defined and understood during and after
implementation
IT has a long history of implementing these types of projects, so their
experience and insight are very valuable in:
• Vendor and product selection
• Scoping
• Project management
• System management
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10. Product & Vendor Selection
System should be able to easily import accounting data from existing GL system, forecast and
budget from excel models/systems and KPIs from BI systems
Ensure that finance can administer the system and IT can support the system with minimal
additional resources
Lots of standard features and functionality that require minimal customization
Easy availability of trained consultants and contractors who can assist with various tasks
Ask the vendor for a product demo but do not put too much weight on it - you may not even utilize or
implement the features you were impressed by during the demo
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11. Product & Vendor Selection (Contd.)
Talk to Finance & IT references provided by vendor or sourced independently
from companies that have implemented the product
• Suggest developing a standard list of questions for such calls
• Initial calls should be with the entire selection committee with follow-up calls as needed
• Document responses from these references
If possible, attend vendor’s annual user conference (vendor will be happy to
arrange free passes) to get an unbiased view from current users about:
• Product roadmap
• Customer issues and vendor responsiveness
• Implementation and post-implementation best practices and pitfalls
Select a version that:
• Has been successfully implemented by many other companies
• Still has several years before it is phased out
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12. Vendor Contract
Flexibility to adjust the number of software licenses and annual maintenance fees for:
• Growth of the company (organic or through acquisitions) – Purchase additional licenses, training and
implementation at discounted rates
• Sale of the company or subsidiaries – Carve out licenses and maintenance contracts for the subsidiary or
terminate contract without penalty
• Split of the company - Split the licenses and maintenance contracts
Ability to make changes to the scope of the project such that:
• Increase in the scope does not come at very high bill rates
• Reduction in the scope gets you appropriate credit for current or future use
• Changes to the project requirements results in reasonable changes to the project cost
Ability to terminate the project without a huge penalty
Like it or not, management changes happen, companies get acquired, split or sold,
financial conditions change. Therefore, one must account for foreseen and unforeseen
circumstances that may occur.
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13. Implementation
• Project Manager, Steering Committee (to oversee the project), Project Leads (for making day to day decisions) and
Project Team (for doing various implementation tasks and testing)
• If possible assign project leads on full-time basis or at least reduce their regular responsibilities so they can focus
on implementation
• Project leads should be representatives from Accounting, Finance, IT and Key Business Stakeholders
• Remember, project leads will later serve as super users and system experts
Project
Team
• Vendor should prepare a detailed design document that can serve as a reference post implementation
• Design document should be signed off by vendor and project leads and approved by steering committee
• Develop a flexible and reasonable implementation timeline taking into account accounting close, forecast
and budget cycles
• Remember, implementation generally slows down around summer and holiday periods
Scope
and
Timeline
• Prepare a training plan to train various levels of users and for various tasks: super users, heavy users,
system administrators, light (occasional) users, etc.
• Build a training rollout plan - First rollout for super and expert users to identify and correct issues followed by
a rollout to the broader group
• Schedule training very close to the rollout such that most users will have it fresh in their minds
Training
and
Rollout
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14. Simplifying ImplementationCausesofcomplexity
- Complicated workflow with many
inter-dependencies, e.g., bringing
actual results from multiple databases,
GL system, etc. that has to happen in a
specific order and in different time
windows
- Complex financial modeling involving
complicated formulas, e.g., balance
sheet and cash flow forecast models
- Models that have frequent changes to
logic, e.g., revenue forecast models
with potential for new product
introductions that have vastly different
drivers requiring system changes
- Data that need to be kept confidential
from most of the users and
administrators needing complicated
user security and access requirements,
e.g., compensation data
PotentialSimplification
- Eliminate inter-dependencies by
allowing system to function in the event
a process gets delayed or the data
changes
- Build it in phases. Until then, keep it in
spreadsheet models and enter the
results in the system
- Build in simple temporary work-
arounds that rely on spreadsheet
models until you get around to updating
the system
- If possible, keep data in a secure
database or in secure location that is
accessed temporarily for calculations
but is not stored in the system
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15. Post-Implementation
• Solicit user feedback
• Project Leads should meet regularly for a few months to discuss issues and
improvements
• Set aside budget for additional work for fixes and improvements
Project Team
• Develop a plan to train new employees due to team expansion, attrition, leave
coverage, etc.
• Build redundancy in personnel who can perform administrative tasks (rollover,
adding/removing users, changing access security, resetting passwords, etc.) to
ensure coverage and continuity
• Periodically assess need for system upgrade
Training,
Administration,
Maintenance
and Upgrade
• Winners: Derive benefit from the system as it will make their job easier
• Losers: Are burdened with additional systems-related tasks (administration, input,
etc.) that make their job harder
• Management should reassign work to reduce the burden on the losers and help them
leverage the system to improve their efficiency so they embrace the system
Winners and
Losers
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16. Final Thoughts
CPM system is more complex than we imagine, so keep it simple
Take a phased approach – the first phase providing basic functionality and later phases adding complex
functionality based on user demand
Build a core implementation team of the key stakeholders (including IT) and allocate proper resources
Do your diligence in vendor selection including talking to companies that are using the system
Select a stable version that is good for the long run
Use your leverage during the selection process to negotiate a favorable contract for additional phases
Pay attention to documentation, training and rollout plan
Ensure redundancy in administration and maintenance of the system
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17. Good Luck
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