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Agile finance and performance management - EY

October 2016. Agile finance and performance management A combination of external performance measurement business intelligence. This applications under the broader integrated set of tools, based upon market factors and the ever the definition of common processes, theme of enterprise (or corporate). increasing desire for performance management (EPM). master data and information, forms improved efficiency is The combined acquisitions of "best the basis of what is now commonly referred to as Agile finance . driving unprecedented of breed" applications with business interest from Chief intelligence (BI) technology and Issues and opportunities Financial Officers (CFOs) to reporting frameworks all seamlessly A common source of pain for many integrate back to the system of transform their financial record (ERP).

Agile finance and performance management Page 2 In addition to the enabling technology, frequently the budgeting process itself is inherently flawed.

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Transcription of Agile finance and performance management - EY

1 October 2016. Agile finance and performance management A combination of external performance measurement business intelligence. This applications under the broader integrated set of tools, based upon market factors and the ever the definition of common processes, theme of enterprise (or corporate). increasing desire for performance management (EPM). master data and information, forms improved efficiency is The combined acquisitions of "best the basis of what is now commonly referred to as Agile finance . driving unprecedented of breed" applications with business interest from Chief intelligence (BI) technology and Issues and opportunities Financial Officers (CFOs) to reporting frameworks all seamlessly A common source of pain for many integrate back to the system of transform their financial record (ERP).

2 Organisations is the cumbersome processes. nature of the planning process. Many Financial performance management medium-sized and large companies Some of these factors include (FPM), the core of EPM, includes a still use spreadsheets to execute collection of related applications that enterprise planning and budgeting Increasing compliance include financial planning, budgeting, processes as the basis for significant requirements forecasting, management reporting, strategic decision making. Frustration with existing data financial consolidations (for Spreadsheets have proven to be management practices statutory and external financial ineffective for several reasons.)

3 Dissatisfaction with traditional reporting), and activity-based Spreadsheets are subject to financial processes and the extent management (costing). FPM expands significant error rates, similar to they still rely on human into EPM with measurement, or BI. software programming, but interventions style applications that encompass spreadsheet-based application operational (non-financial) analytical Rapid market changes driven by development is often done by end applications and integration with economic factors and the impact users without the discipline of other systems such as sales and of digital disruption creating even professional programming methods.

4 Operational planning (S&OP). greater acceleration in decision In addition, spreadsheets are ill- making timeframe's The best of these applications are suited to handle large volumes of New technologies which are related by function and by a data and consolidation of such data. common data platform and user Companies using spreadsheets for supporting a transformational interface layer. The functional enterprise financial planning agenda and lower cost relationships between them are processes are characterised by high deployment options based on the concept of delivering levels of expensive human effort, For many years large enterprise information for managing the long cycle times, data integrity and technology vendors have been business, consistency of planning, control, reporting and compliance, version control challenges, and seeking to integrate a variety of management and analysis and relative inflexibility.

5 Financial, operational, and Agile finance and performance management Page 1. In addition to the enabling performance review processes. performance category and technology, frequently the budgeting Agile forecasting and business enterprise management are very process itself is inherently flawed. performance measures can be mature, recent significant Common problems include deployed to run the business instead technology advancements in misalignment with corporate of traditional budgeting and latent transactional processing and in strategies, rigid hierarchical accounting information. memory computing (IMC) are set to structures that enforce a command- change how the ERP and the and-control orientation, imprecise or Solutions functionality enterprise performance disparate assumptions, dysfunctional The key components of a conceptual management (EPM) application co- behaviors, and drawn-out gaming applications architecture for Agile exist and how finance professionals behavior that tends to diminish finance include: interact with them.

6 The operational performance . and CRM analytic applications and finance performance management the BI architectural components are Organisations need more Agile The heavy lifting component of mentioned here for completeness, processes that enable forward- Agile finance includes native and real but are not the focus of this paper. looking management of the time integration with source data business with up-to-date forecast As performance management systems. finance process information. This should applications evolve, it is important to enablement includes budgeting, supplement budgeting or indeed distinguish between products planning and forecasting and less largely replace budgeting.

7 Many offering pre-packaged functionality commonly deployed applications companies have adopted rolling and those that are actually tools for such as activity based costing and budgets and forecasts to better building such applications. Off the strategy management . These tools predict and react to evolving shelf with regards to enterprise support driver based analysis and market conditions. Some faster- performance management is an scenario modelling as well as ad hoc paced businesses ( high-tech) often misunderstood term. Whilst reporting. are taking the concept even further, adopting a simplified best practice.

8 Using virtually continuous Analytics approach to transactional processing forecasting and real-time reporting Analytics applications comprise a set can deliver significant benefits, how to dynamically run their businesses. of tools that combine financial the organization deploys and uses information with operational performance management Key to this is developing a plan in a information and provide a largely framework is where it will derive timeframe that doesn't cause the user driven graphical environment competitive advantage. A tools- business to see the plan as obsolete. for analysis and reporting.

9 Customer based approach is often better suited It also requires processes that relationship management (CRM), to the analytical and performance frequently measure progress against supply chain, sales and operational management requirements. the plan and enable action on performance management analysis and workforce planning are In addition, the following functional information. The plan must reflect common. capabilities are often relevant: business strategies and objectives Enterprise management Integration to financial and with appropriate targets to measure The enterprise component consists enterprise resource planning progress against, in order to of metrics-based tools for measuring (ERP) transactions systems for encourage appropriate behaviors.

10 Business results against goals. importing data, organisational Comparison with prior periods and Aligning a company's strategy to data, and exporting results, actual results is common. However, measurable key metrics on a regular ideally with predefined data the comparison with industry basis using dashboard-style displays mappings. benchmarks and competitors is often enabled by BI technology. Workflow automation, neglected. Historically this incorporating routings and alert information has been difficult to Information delivery notifications (important for obtain or too voluminous, as is the Information delivery is the means by iterative, input-driven processes, case with consumer goods, to which key stakeholders consume the such as budgeting and to alert warrant inclusion in the planning information both physical and digital.)


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