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The theme of transforming the finance organization is hot again. The term “finance transformation” refers to the longstanding objective of shifting the focus of finance departments from transaction processing to more strategic activities such as providing the rest of the organization with forward-looking analysis. I focus on the technology and data aspects of this type of business issue in these analyst perspectives because they are usually essential to achieving some business objective. However, technology rarely fixes a problem by itself. If it were a simple matter of just buying software or having better data stewardship, it would be relatively easy to achieve finance transformation. But it’s not simple at all. When it comes to changing how the finance and accounting organization operates, there’s no substitute for leadership. Doing that requires changes in the habits of the department, which include the CFO changing how the department works with the rest of the company.

Our benchmark research on the Office of Finance confirms that most company executives want their finance department to take a more strategic role in running the company. It also shows little progress in achieving finance transformation. To be sure, there are enough examples of the finance organization taking the lead to provide trade publications and vendors with case histories, but for the majority progress has been slight. When we compared the attitudes of executives and managers about the finance department’s performance generally, we found a big disconnect between how well people in Finance think they’re doing and what the rest of the company believes: Half of research participants who have finance titles said that the department plays an important role in their company’s success, but just one-fourth (24%) of the rest of the company said that. In fact, most people outside of the department said that Finance is doing only an adequate job.

As with most situations in business, there are multiple factorsvr_Office_of_Finance_08_it_takes_too_long_to_close_the_books that prevent finance departments from becoming more strategic. The accounting close illustrates the range of challenges that finance executives may have to overcome in improving the department’s performance. Closing the books within one business week is generally acknowledged to be a best practice in finance. Yet our research finds that only 40 percent of companies complete the quarterly close in six or fewer business days and 53 percent close monthly in the same period. To accelerate the close, finance executives often must address multiple issues to improve performance.

Technology plays an important role in accelerating the close. Our research correlates using more automation and fewer manual spreadsheets in the close process with closing the books sooner. But that might not be the only thing that’s holding up the close. Another factor – one that’s hard to measure – is the impact of other parts of the business on preventing the department from finishing the process in a timely fashion. For example, nonfinance processes (such as doing inventory) that aren’t completed until the second or third week of the following month may hold up completion. The accounting organization has no direct control over when work performed in other departments is done. And those outside the finance organization may resist making these changes, which may seem to them arbitrary or unwarranted burden-shifting.

Some issues that hold up the close or create avoidable work in finance and accounting departments are not always easy to spot. For example, I recently wrote that companies that have even slightly complicated revenue recognition requirements under the new accounting rules ought to write and manage their contracts with customers with the explicit aim of minimizing the workload of the accounting department. Contracts that are poorly or inconsistently drafted or that do not enforce common language will make finance departments hire additional staff or temporary accountants and potentially delay the quarterly close. In addition, those working outside of the accounting department often don’t realize that they are doing things that complicate the accounting process. This is especially the case when, for instance, data is collected in spreadsheets rather than in a dedicated enterprise system or when the data entered is incomplete, inconsistent or not collected at all. Often, it’s less burdensome to address the source of the accounting hassle at the source. Here is another situation in which leadership matters. Unless the senior leadership team understands the ultimate impact of, say, people not following procedures or neglecting to fill in a couple of fields on a form, it’s unlikely they will be motivated to enforce the changes that must be made. It’s even harder if the CFO does not have a good working relationship with the rest of the organization or cannot effectively communicate the need for change.

A truly strategic finance organization is one that embraces continuous improvement, uncovering the root causes of time wasting activities, addressing them methodically and investing the time saved into finance transformation projects. Addressing the sources of time-wasting finance and accounting processes requires a CFO who is unwilling to accept the status quo and has sufficient interpersonal skills to drive change. The senior leadership team also has to support a more strategic finance department. For example, the CEO needs to make it clear that closing sooner is everyone’s business and with good reason. How soon after the end of a period the finance organization closes its books affects the timeliness of the information it provides to the rest of the organization: In our research, half of companies that complete their monthly close within four business days said the information the finance department provides is timely, compared to just 29 percent of those that take five to eight business days and 19 percent of those that take nine or more business days.

Implementing change in business is never easy. Finance transformation almost always requires fixing information and technology issues, especially those that automate and enhance control of finance and accounting processes. Without leadership by the CFO, though, very little will happen.


Robert Kugel – SVP Research

Tagetik is a long-established vendor of financial performance management (FPM) software. Its full-featured suite includes planning, budgeting, consolidation, close management, disclosure management, analysis, dashboards and reporting. The software can be deployed on premises or in the cloud as multitenant software as a service or in a private cloud. Tagetik also offers pre-built integration with SAP and SAP HANA, Microsoft SharePoint and Qlik to best support a range of financial management needs.

The current release, Tagetik 5, has a pleasing and productive consumer-style interface. Its design approach aims at enhancing the user experience and making it easier and less time-consuming to perform common tasks in finance and accounting departments. FPM is a mature software category that generally deals with the full cycle of finance department activities as well as the underlying information technology systems that support them. Thus there are limited differences between vendors’ suites in the required features and functions. We find that buyers often select products by how they execute particular tasks and especially how easy it is to perform them. In response FPM vendors have been putting greater emphasis in the design of their software to enhance the user experience, often through a consumer-style interface.

Tagetik addresses the ease-of-use issue in its current release, Tagetik 5, by making it easier for business analysts to create and update basic dashboards without the need for IT department involvement or coding. This facilitates communication and performance monitoring. Users can work in Microsoft Excel, but behind this interface are all of the capabilities of a well-developed software application and database, which eliminate issues that occur when desktop spreadsheets are used in any repetitive collaborative enterprise process such as financial planning and closing. Unlike in desktop spreadsheets, rolling up and consolidating data submissions of any number of participants in a process is almost instantaneous in Tagetik 5. Moreover, unlike desktop spreadsheets, it stores the data with important attributes such as the time period, corporate structure (division or regions, for example), product (anywhere from families down to specific stock keeping units – SKUs – if desired) and currency.

The software also offers comprehensive and easy-to-use administrationvr_fcc_shortening_financial_close_updatedcapabilities, especially in creating and modifying business processes for the full range of financial performance management activities. This capability is more than just a convenience for a few people in the finance department. It can make it easier for whole companies to accelerate planning cycles and facilitates high-participation planning and budgeting processes. Modifying processes also enables companies to tightly manage their accounting close process. Our benchmark research on the fast, clean close shows that companies that successfully shorten their close most often (in 71%) attributed their success to being able to manage the process effectively and consistently. With a limited amount of training and no coding, finance department users of Tagetik can define and manage every step of the close process. It supports a continuous improvement approach to managing the close by making it straightforward for the department to modify these individual processes and subprocesses as they assess sources of delay and inefficiency in their close.

Tagetik also supports more strategic finance processes. For example, it provides a platform that enables all parts of the business to plan in ways that conform to their needs and preferences and while still combining these plans into an integrated view as our next generation business planning research found makes planning processes to work better. For vr_NGBP_02_integrated_planning_works_betteranother, it facilitates the integration of long-term and strategic plans and company budgets. Our research in strategic and long-range planning finds that two-thirds of those that have fully or mostly integrated the two types can respond to changes immediately or soon enough, compared to just 22 percent of companies that have little or no integration.

The suite’s Disclosure Management offering was designed to help corporations manage the creation, editing and publication of external disclosure documents such as those required by the U.S. Securities and Exchange Commission or other regulatory bodies such as bank regulators in European countries for their Common Reporting (COREP)requirements. However, this capability is also useful for automating a range of report creation functions, especially documents for internal or external use that combine text and data. For instance, users can create Microsoft PowerPoint and Word templates with text, numbers and graphics that can be automatically updated with the latest period’s data. Using this capability accelerates production of reports while cutting the staff time required to produce them. It’s easy to achieve bullet-proof accuracy since the numbers in the tables are assembled from a single authoritative source, and references in the text to a specific item in a table (an absolute amount or a percentage change, for example) are always in agreement, even when there are last-minute changes. Thus it is relatively easy to put together a periodic PowerPoint presentation for the senior leadership team or board of directors. It’s especially handy for creating monthly, quarterly and annual reports because once designed, the numbers can be quickly updated to the latest period.

I recommend that companies looking for a financial performance management suite – especially those that are replacing a point solution (such as obsolete financial consolidation software) or those moving away from spreadsheets – add Tagetik to their list of vendors to consider.


Robert Kugel – SVP Research

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