“How are we doing?” From small-business owners to CEOs of major corporations, executives are constantly trying to answer this question about their business. Determining the direction of a company and making wise business decisions starts with a clear understanding of the big picture.
Gartner is credited with creating the term and concept of Corporate Performance Management (CPM) in 2001, to provide companies with business insights that can be used to improve overall financial performance.
So, let’s look at Gartner’s definition of CPM.
Corporate performance management (CPM) is an umbrella term that describes the methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise. Applications that enable CPM translate strategically focused information to operational plans and send aggregated results. These applications are also integrated into many elements of the planning and control cycle, or they address BAM or customer relationship optimization needs.
CPM must be supported by a suite of analytical applications that provide the functionality to support these processes, methodologies, and metrics.
To clarify, CPM is not one specific strategy. SearchDataManagment.com, a knowledge guide for data management professionals, says “CPM is a subset of business intelligence (BI) that involves monitoring and managing an organization's performance, according to key performance indicators (KPI’s) such as revenue, return on investment (ROI), overhead and operational costs.”
Benefits of CPM
What is it about time that makes it so valuable? Even though nearly every sales pitch for a service or app revolves around saving time, time can’t be saved. Ever been to a bank where you can deposit your saved time and come back later and retrieve it?
Time can, however, be used more efficiently.
And that’s where CPM comes in. Just like individuals, companies are desperate to use their time well to keep up with today’s fast paced business environment.
CPM enables companies to develop a streamlined and more productive workflow. The key is to improve communication throughout an organization. According to G2, CPM does this by “aligning and executing organizational strategies to improve productivity for the company as a whole…streamlining workflows and identifying problem areas that need improvement.”
How Is CPM Used by the Financial Suite?
With CPM, a finance department can move beyond the often tedious and time-consuming chore of producing reports. The reports can be regarded as a tool that enables the beginning of a process to gain valuable insights, such as how money is being allocated and ensuring it is spent wisely, rather than the end goal.
With CPM software, “Finance can do more than simply report what has already happened and can become more effective at forecasting, analyzing multiple scenarios, and spotting long term trends,” says Bizible by Marketo, an Adobe company. This greater contribution makes a finance team invaluable.
“The main aim of CPM is to drive companies towards their success by allowing managers or executives to manage and track the company’s financial health against goals,” says Software Suggest. “It helps measure financial success against various metrics.” Incorporating this wide range of systems and data, CPM enables the financial suite to make informed decisions about every aspect of a business.
According to G2, CPM software is often used with enterprise resource planning (ERP) systems, accounting software, and business intelligence software.
Benefits of CPM for Construction Financial Professionals
One of the challenges construction companies and others in the AEC industry face is working with multiple companies on a project. The challenge of collaboration impacts every department. For example, financial professionals who work for a general contractor may be responsible for payments to multiple subcontractors.
As such, industry professionals are constantly striving to create the elusive document and data that everyone can agree is accurate and up-to-date. The nightmare scenario , per RSM, a leading provider of audit, tax, and consulting services, is having “multiple versions of the same data from a variety of sources, or limited visibility of data,” and not being able to determine which is correct. This leads to uncertainty and confusion, which can delay a project and impact costs.
“CPM software provides a ‘single source of truth,’ and by doing so reduces the risk of errors and gives greater insight into your financial status through improved reporting facilities,” according to RSM.
Therefore, CPM fosters collaboration as it allows all parties to operate based on the same information. For example, a construction company can give partners in other companies access to relevant information. This allows each partner to stay up to date on changes as they occur, which speeds up, as well as improves the decision-making process. In an industry where time demands are growing exponentially, increasing speed of information sharing is priceless.
Read the full eBook on the benefits of CPM for construction financial managers here.
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By automating workflows, consolidating financial data, and enabling real-time reporting, we allow contractors to make efficient and effective financial decisions.