Canada: CFO Agenda Issue 1: Transforming Performance - Powering An Effective Organization

Last Updated: August 2 2012
Article by Kishan Dial

The challenges facing CFOs today are multifold. On the one hand they need to manage the performance of their organizations, and on the other hand they need to leverage quality management information to support business decisions. As if this were not enough, their roles are further complicated by external circumstances such as the recent economic downturn.

Day-to-day concerns may continue to dominate and create immediate performance pressures, but the downturn has left a long-term impact – not just financially but also in terms of risk-taking ability and compliance. Margins are being squeezed and CFOs need to pay more attention to not only the top line, but also to operational factors that affect the bottom line. The appetite for risk has reduced, curtailing the lows but also limiting the highs. Governments, under pressure to maintain economic stability, have responded with tighter and increased regulations such as IFRS 9 and Basel III, adding another dimension to CFOs' concerns. This situation is tricky. CFOs need to pay closer attention to these increased pressures on a day-to-day basis, but they have to simultaneously focus even more on organizational goals and performance.

It's important more than ever for organizations to create goals and measure their performance against these goals. The increasing pressure on organizations makes it imperative to be able to measure themselves constantly against their goals, and a large part of the onus falls on the CFO. Most importantly, CFOs have to be confident in the measurements that lead to decision making. At the heart of this process lies gathering the right information to develop effective metrics and measurements. Decisions based on the right information are the ones most likely to help CFOs manage their organizations' performance. Gathering this information is quite a science, as is making effective use of it to achieve organizational goals. This holistic approach of making informationbased decisions and implementing the decisions across the organization is known as enterprise performance management (EPM). The remainder of this article will focus on EPM as a powerful tool for CFOs to effect organizational change and transformation.

EPM has been observed to be of significant use to CFOs with varying agendas – those looking at mitigating risk, meeting regulations, expanding the business effectively, cutting costs in ways that bolster the bottom line rather than affect the top line, transforming their business processes, being ahead of the curve or even those who just want to help their organization put its best foot forward.

Many CFOs are burdened by legacy information systems that hinder improved performance management and slow down the cycle time of information. What this leads to is a state where performance is being limited by outdated systems with limited data-gathering abilities. Clearing this bottleneck is critical to success, and this is where EPM can help transform the organization, so that performance management is enabled by information systems rather than limited by them.

EPM can be rolled out by consolidating or outsourcing management information to enhanced service centres, thereby enabling CFOs to obtain meaningful and timely performance metrics or key performance indicators (KPIs). Standardized and clearer management information obtained in a timely manner enables the comparison of results against organizational objectives, helping to stay on track.

It is important to understand that EPM spans the entire organization, and is not specific to a department, unit or function. It is also a continuous process and cannot be restricted to any one part of the organization's planning cycle; it begins with strategy, filters into the plans, affects the way in which measurements and forecasting are done, and finally, it helps recognize and reward good performance and identify areas of improvement. A strategy is not meant for any one part of the business, and EPM ensures that all the parts of the business are working together towards the same goals. The figure to the left outlines the EPM process in detail.

"A critically important objective of implementing EPM is to determine the lowest cost and highest effectiveness model. This, in turn, drives confidence that the organization is moving in the same direction and pace as your vision" says Kishan Dial, National Finance Effectiveness Leader, PwC. EPM also helps CFOs determine where the business should focus to meet objectives and maximize performance, so that each function and individual is adding value to the organization. Conversely, it helps identify which parts of the business are not helping to meet the organization's goals and which parts are in fact detrimental to growth and need to be transformed.

If done right, EPM helps to convert business strategy into tangible metrics and action points. It provides CFOs with a clear and transparent picture of performance across the enterprise, and also helps set targets and objectives for teams and individuals against which they can be measured. This simplifies reporting and accountability, thus providing robustness to the organization and streamlining the CFO's work.

For an organization to perform at its best, every individual needs to add value. That is why CFOs need to focus on the people within the organization as well as the numbers, using a management style that is as much about influencing attitudes as it is about facts and figures. And this requires top-down leadership. Involving the whole organization in achieving business goals can produce real momentum, which is why it is critical to a successful EPM program.

There are many useful by-products of rolling out an EPM solution across the organization, as each individual unit or function also gets streamlined along the way. With control and compliance built into the organization's fabric through EPM implementation, CFOs can get early visibility to the procurement strategy and its profit and loss impact, thus facilitating more collaboration with suppliers to achieve a common goal. Similarly, logistics/supply chain can also be positively affected, since the information and numbers obtained allow for enhanced forecasting, processes, skills and tools. In order to improve the final outcome, efficiency has to be built into the entire supply chain.

Another major impact of applying EPM effectively can be on marketing and sales effort and spend. The data obtained while rolling out EPM lends clarity to many critical aspects of the organization, including determining the effectiveness of sales techniques, the true cost of doing business with a certain group of customers and the initiatives which deliver value for money. The right information makes it easy for CFOs to determine what is driving customer satisfaction and experience, and where the organization is not meeting customer expectations. In this manner, the benefits of EPM can be seen in most, if not all, aspects of the business.

"EPM should not be treated as a standardized tool kit which can be implemented across different organizations. It differs in its characteristics based on the organization, the industry it operates in and its own special circumstances and goals" says Dial. For example, while the banking sector may be preoccupied with changing government regulations, the entertainment and media sector may be grappling with the change of consumption patterns in consumers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions