The Most Useful Graph Ever

By Randall Bolten, longtime Silicon Valley CFO, author of "Painting with Numbers: Presenting Financials and Other Numbers So People Will Understand You,” and adjunct professor at U.C. Berkeley Extension​

RANDALL BOLTEN grew up in Washington, D.C., the son of a CIA intelligence officer and a history professor. He is passionate about the importance of presenting financials and other numerical information in a cogent and effective way, and in his current life is the author of Painting with Numbers: Presenting Financials and Other Numbers So People Will Understand You (John Wiley & Sons, 2012).

He is a seasoned financial executive, with many years directing the financial and other operations of high-technology companies. His experience includes nearly twenty years as a chief financial officer of software companies.

He has held the CFO position at public companies BroadVision and Phoenix Technologies, and at private companies including Arcot Systems, BioCAD, and Teknekron. Before his CFO positions, he held senior financial management positions at Oracle and Tandem Computers.

He received his AB from Princeton University, headed west to earn an MBA at Stanford University, and ended up staying in Silicon Valley. 

In addition to writing Painting with Numbers, he currently operates Lucidity, a consulting and executive coaching practice focused on organizing and presenting complex financial information. He divides his work time between Glenbrook, NV and Washington, DC, and maintains an office in Menlo Park, CA.

FP&A Tags: 

Well-designed incentive compensation plans – especially sales commission plans – are an incredibly powerful way to motivate great performance. But designing a great plan is both an art and a science, and prone to design mistakes that are expensive and end up not motivating the desired performance. The commonest and most serious error plan designers make is to lay out the rules before deciding just what it is the enterprise is trying to accomplish. You can avoid that mistake with a simple, straightforward graph that I’ve drawn hundreds of times in my career. Follow these steps:

1. Draw your axes. “Performance” goes on the X-axis (i.e., the horizontal axis) and “Compensation” goes on the Y-axis (i.e., the vertical axis). For now, you don’t have to graph actual dollar amounts… just think in terms of percentage of target amounts:

2. Plot the obvious points. Those would be 0% of target comp at 0% of target performance and 100% of comp at 100% performance. You might also find it useful to draw a reference line through those two points. (That reference line happens to be the graph for a plan with a commission rate that is constant across all levels of performance.)

3. Plot some additional points and connect those points with straight lines or curves. Work with line managers and senior managers to get a sense of how much incentive comp they believe is appropriate at specific levels of performance. For example, here’s a graph for an “accelerated” sales commission plan – that is, one where above-quota performance is rewarded with increasing commission rates, and below-quota performance is penalized, where management has specifically suggested compensation of 40%, 165%, and 250% of target comp for performance at 50%, 150%, and 200% of target, respectively. Note that the compensation curve sits below the reference line for performance below 100% of target, and above the reference line for performance above 100% of target:

4. Plot the same graph, but this time with actual performance levels and comp amounts.  Here’s what the graph might look like for the accelerated plan described above, where “Performance” is Sales, with a quota of $2,000,000, and target commission is $100,000:

You’re now ready to flesh out the comp plan with spreadsheets and other formal documentation.

Just for comparison, here’s another example, this time for a typical management MBO plan where no bonus is earned until a specific performance level, such as 60%, is met, and the maximum bonus is the target MBO amount:

In this way, you can visualize any approach to incentive comp, form conclusions about whether that’s the approach you want, and then fill in the blanks to design a comp plan that actually does what you intended. 

Sometimes a picture IS worth 1,000 words. 

RANDALL BOLTEN grew up in Washington, D.C., the son of a CIA intelligence officer and a history professor. He is passionate about the importance of presenting financials and other numerical information in a cogent and effective way, and in his current life is the author of Painting with Numbers: Presenting Financials and Other Numbers So People Will Understand You (John Wiley & Sons, 2012).

He is a seasoned financial executive, with many years directing the financial and other operations of high-technology companies. His experience includes nearly twenty years as a chief financial officer of software companies.

He has held the CFO position at public companies BroadVision and Phoenix Technologies, and at private companies including Arcot Systems, BioCAD, and Teknekron. Before his CFO positions, he held senior financial management positions at Oracle and Tandem Computers.

He received his AB from Princeton University, headed west to earn an MBA at Stanford University, and ended up staying in Silicon Valley. 

In addition to writing Painting with Numbers, he currently operates Lucidity, a consulting and executive coaching practice focused on organizing and presenting complex financial information. He divides his work time between Glenbrook, NV and Washington, DC, and maintains an office in Menlo Park, CA.

The four phases of Integrated Business Planning

By Niels Van Hove, Mental Toughness Coach & Supply Chain Consultant 

Integrated Business Planning (IBP) is often seen as a natural progression from Sales and Operations Planning (S&OP), which came to life in the 80’s to align sales and operations. As S&OP found its origin in the supply chain, IBP is often biased with supply chain terminology and reasoning. It can be argued that current IBP development is still driven by a supply chain bias. With this lack of diverse thinking, IBP innovation runs the risk of being not truly ‘integrated’.

Contrary to most current defined maturity phases of IBP one can find on the internet, we also can define IBP maturity phases from a more strategic angle. Many experts agree that IBP has a monthly check and balance with the budget and the strategic intentions of a business. Therefore, a well executed IBP cycle will provide monthly visibility and measures progress against business objectives and strategy in the long term horizon. Furthermore, we can say that a business strategy and the required strategic resources and capabilities have the goal to get a company closer to its vision.

According to Collins and Porras a company vision exists from its core values, core purpose, a BHAG (big, hairy, audacious goal) and a vivid description.  The core purpose is the reason for being; it captures the soul of the organization. Where you can fulfill a strategy, you can’t fulfill a purpose. Core values define what the company stands for. A company will stick to them, even if it became a competitive disadvantage in certain situations. Well defined, integrated and truly lived, purpose and values will drive companywide behavior. Imbedded company behaviors will drive a sustainable company culture, which will last over time. A well-defined achievable BHAG with a vivid description provides employees with an envisioned future they can identify with and which creates an emotional attachment, which makes them go the extra mile.  As CEO Bob McDonald says on the emotional component and innovation at P&G; ‘People will innovate for financial gain or for competitive advantage, but this can be self-limiting, there is a need for an emotional component as well – a source of inspiration that motivates people‘.

If a company wants to track its budget and strategy and we use this vision framework and IBP as the planning process to support the business, IBP can be defined with the following maturity phases:

1. Integrated planning:

In this phase, companies start to focus on integrated planning between previously siloed functional areas. Some functions are more advanced than others. A company might have focused on state of the art finance processes and systems, but doesn’t reap the full benefits of that due to lack of integration of other functional areas into the finance process. Some integration exists, but not across all functional area’s and there is not enough integration with finance to make a monthly financial prediction on EBIT level in the long term horizon. S&OP as most define it will be in this phase.

2. Dynamic budget planning:

In this phase, enough functional areas plan in an integrated way for the process to provide their input to the P&L to create a fully loaded forward projected P&L. Finance understands the ‘volume’ input and the other functional areas understand the financial ‘value’ planning. This will provide the company visibility on how it is tracking versus the budget or annual operating plan on a monthly basis on EBIT level. Why EBIT level? Because I heard too many times in a boardroom the argument, when only gross profit was on the table; ‘we can’t decide on this because we don’t have EBIT a number’. We can also expect these companies to deliver monthly balance sheet and cash flow prediction. For these companies, there is no separate budgeting or forecasting cycle. Every month can be the budgeting cycle. Dynamic indicates that opportunity and risk scenarios across all functional areas are integrated into the financial projection.

3. Dynamic strategy and capability planning:

In this phase, the company has defined its strategic goals, measurements, and targets and is capable of checking and communicating monthly if they are on track to meet the strategy in the horizon beyond the budget. The strategic intent, which can be defined on lower levels like product segment, country or business unit level, will also guide in decision making for decisions on the budget horizon.

The company has also defined its core strategic capabilities to meet its strategy. There are many strategic capabilities possible.  Ideally, a company shouldn’t have more than a handful as if it will define more it will erode the focus on these capabilities. Some examples are:

  • Risk management: for companies that have extended and complex networks that are sensitive and dependent on changes in global and geopolitical events. For example companies with global supply chains, but also the Finance industry.
  • Innovation: for companies that in a highly competitive market can outpace their competitors based on innovation and new product development. Often seen in technology industry and CPG
  • Commodity trading: for companies that are highly influenced by commodity cycles as the commodities can be more than 80% of the COGS of their core products. For example, food & beverage companies that have crops and livestock as core raw material.
  • Demand is driven supply chain: for companies that can get the competitive advantage from driving their business from the front end of the supply chain. For example food, beverage and consumer package industry. Often in retail and consumer environment, which are promotional driven and where POS information is available,
  • Knowledge management: for companies that are highly dependent on knowledge workers and the exchange of knowledge between people and business units. Companies that have IP to integrate, sell and protect. For example Consultancies and software industry.
  • Supply exploration: for companies that have to spend high amounts of capital to find new or increase the supply of their core product. For example oil and mining industry.
  • Collaboration:  Collaborative IBP can be a separate phase for companies that see the strategic advantage in collaborating with their suppliers and customer in the longer horizon and therefore want to integrate their business plans. For companies that have the power in the supply chain through size or uniqueness of offering this will most likely not be a strategic focus.

The list can go on and on with Technology, Sustainability etc. Once a company has defined its strategic capabilities and has defined goals, measurements and targets for these capabilities, it needs plans to implement or improve these strategic capabilities. An update on status, progress, risks and mitigations for those plans will be part of the IBP cycle in this phase. Dynamic indicates that sensitivity analysis around the plans to reach the goals of the strategic capability is part of the update.

4. Integrated vision & purpose:

In this phase, companies have a well-defined purpose, values and an achievable BHAG with a vivid description that people can identify with and which create an emotional attachment. The company aims to integrate this with the IBP cycle.  A company can decide not to pursue strategic opportunities because doing so would compromise their core purpose or values. A large multi-billion dollar beverage company, for example, decided not to enter the very lucrative market of premium RTD’s (Ready to Drink) alcoholic beverages because the alcohol content was too high. Although the opportunity was achievable and margins were very interesting, the alcohol content would not be in line with their core purpose of ‘bringing more sociability and wellbeing to our world’. The purpose guided decision making in the strategic horizon.

The company values and the emotional attachment will be tracked in the monthly IBP process and have actions, goals, and measurement. Executives follow progress to understand if employees believe and identify with the companies values, BHAG, and purpose and show emotional attachment. This can be done by 360 degrees feedback, engagement surveys or roundtable discussion between executives and employees. Executives also have to lead by example in behavior and actions. Their own behavior will have goals and measurements and progress is tracked,

For all phases, communication is important, although it can be argued that it’s most important when developing an emotional connection. An IBP document on the key decision, outcomes, progress and wins in the IBP cycle can be communicated to a well-defined stakeholder group in the company. This will both give the stakeholders an understanding of business performance, priorities, improvement opportunities and successes, as well as keep the engagement with the company vision, purpose, and the IBP process. Executives have to realize and appreciate that this communication document is the results of all the hard work from middle and lower management to gather all required IBP information for the executives to make decisions in the IBP meeting. This communication makes sure the IBP meeting is not seen as a ‘black hole’ which only sucks up information and doesn’t provide feedback.

Once a company masters these four phases, it tracks and plans on a monthly basis the budget, the strategic intent and strategic capabilities, the company values, and purpose and the emotional attachment of the employees. If a company then links these plans with shorter term control plans and execution, we might call it real Integrated Business Planning.

Would these four phases be IBP innovation?

Mastering Dashboards to Build Value

By James Myers , Global Finance Executive and FInance Transformation Consultant

Dashboards have become a powerful tool for FP&A to share insight and gain respect. When designed correctly, they deliver a clear message on what’s working and what’s not, and the actions to take to fix the issue. Technology now enables us to create dashboards in minutes, allowing us to share information in ways we could never before…you must leverage this technology! The big question has moved from “How do we create dashboards?” to “How do we harness this powerful tool to drive business behaviour?” Do it right and you win the day for FP&A!

Why are dashboards so important?

  • They make complex things understandable
  • They are excellent communication tool to Upper Management
  • The help with business alignment driving behaviour in various directions
  • They can be interpreted at a glance – executive can consume volumes of insight quickly and don’t have to page through endless reports and PowerPoint presentations (which they never do)
  • Makes data accessible to everyone (access dependent) in a user-friendly on-demand way

Without a focused strategy, most dashboards have:

  • Too many metrics making it difficult to decide what’s important
  • Too many messages in each metric, making it difficult to interpret
  • Conflicting metrics which result in internal conflict
  • “Vanity Metrics” that give “the rosiest picture possible” but do not accurately reflect the key drivers of a business.
  • Poor user experience making it hard to access the data
  • Low Adoption – “But, no one using the dashboards as the provider of no or limited value” (my personal favourite example)

In my experience, my top 3 recommendations for improving the quality of your dashboards are:

1.      Simplify

2.      Measure adoption

3.      Actions


1. Simplify

“The ability to simplify means to eliminate the unnecessary so that the necessary may speak.” - Hans Hofmann
Usually, there is so much noise created by dashboards it’s impossible to figure out what’s important. Having it focused on fewer metrics than more is the key to a successful dashboard. Reduce the number of metrics down to about 3 or 4 to have an impact. 

To be able to determine the most effective metrics requires a deeper understanding of what drives the most value in an organization. This can be determined by talking to key stakeholders - understand what decision they need to make and the information they need. For a more encompassing solution, you will need to start with the strategy and work backwards: understanding the actions derived from the strategy; the drivers of these actions and ultimately the measures for success that will drive these actions

2. Adoption 

"We must learn what customers really want, not what they say they want or what we think they should want." – Eric Ries
Adoption is the leading indicator of the value you are generating. Frequency and time of use are key to determine the success. The biggest challenge is making sure that your dashboard is solving a problem or adds value to a stakeholder. By using design thinking and empathising with your users is the first step in improving the quality of your dashboards. 

Take time out to put yourself in their shoes and understand what the real business problems are that you are trying to solve. Once the dashboard has been developed, the next step is to continue the feedback loop and have an iterative improvement cycle. Continue to measure your adoption metrics and for any unexpected changes do a deeper dive – speak to stakeholders to determine why their frequency has increased/decreased after a new improvement. 

3. Actions

“Action is the foundational key to all success” – Pablo Picasso
Metrics that help drive actions are worth more than those "Vanity metrics" that just tell you where you are. Actionable metrics reflect the key drivers of the business and lead to informed business decisions and subsequent action. Actionable metrics need to be driver based and the more you understand the drivers of your business, the easier these will be to create. At all costs, avoid the trap of “Vanity metrics”. IT’s tempting to use measurements that give “the rosiest picture possible” (Eric Ries) but they do not accurately reflect the key drivers of a business. Things like the vaulted Revenue Performance – tells us where we are, but provides no clear guidelines on how to increase revenue or mitigate the risk of a decline!

Evaluating CPM/FP&A System: Nine Key Areas for Consideration


There are many software products that claim to support CPM, but often they only support some aspects, for example financial planning and reporting. One of the issues is that the term CPM is synonymous with budgeting, forecasting and management reporting which by itself cannot provide a complete solution. 

Similarly, some vendors have multiple products covering different parts of CPM. For example, many have a scorecard application that they deem suitable for strategy management; a separate solution for collecting budgets and forecasts; and yet another for reporting and analysis. In the context of this framework, these multiple solutions can only work if they are truly integrated and can be made to operate as a single system. Without this level of integration system maintenance becomes an unbearable nightmare that cannot suitably adapt to the dynamics of the economic environment. 

It is worth pointing out that CPM from a vendor’s point of view is a mature market and most have similar capabilities. For organisations looking for discreet planning, budgeting, forecasting and reporting solutions, there is a wide range of choice with vendors offering good solutions. But for organisations wanting to implement a complete CPM solution it is easy to be misled on what product suites can and can't do. 

This evaluation section of the framework outlines the key areas to be investigated so that those evaluating solutions can accurately assess whether the products selected will meet their planned and future needs of CPM. 

One area not covered in this evaluation is a detailed assessment of the technology that underpins a CPM solution, whether that is SQL, OLAP, ROLAP, or In-memory BI. One of the reasons is that having a common technology platform or a system built on a leading ‘open’ database is no guarantee that the vendor has an integrated solution or that it will perform. Solutions should be assessed on their ability to solve a business problem over a period of time. The choice of technology should be up to the vendor to provide the best application they can for the price being offered and that from a customer point of view gives the best return on its investment. 

The evaluation areas here are primarily concerned with a product's capability to meet the CPM framework discussed in this document. They include: 

  1. Data Model – the kind of data that the model can hold

  2. Dimensions, Members and Structures – the way in which dimensions and dimension members are managed
  3. Functionality – the functions required to support each process within
  4. CPM Reporting capability – the types of reports required to support decision-making
  5. Workflow – how users are led and directed through CPM processes
  6. Audit capabilities – how data and structure changes can be tracked and reported
  7. Affordability – how to assess the cost of ownershi
  8. Vendor Ability – how to assess the commitment and expertise of a vendor
  9. Demonstrations – what things to look for and test in a workshop session 

1. Data Model 

At the heart of every CPM system is a data model that stores information relating to: 

  • Strategy and the organisational objectives being supported 

  • The business environment in which it operates 

  • The way that business value is generated
  • How financial resources have been allocated
  • Forecasts on where the business is heading, and
  • Financial results that have been/will be achieved

Each type of data is different and contains both structured (e.g. numbers) and unstructured (e.g. text) information that is held at different levels of granularity and for different time periods. Some data will be required on a monthly basis while other – for example forecasts involving contracts – are better handled by assigning a date. This means that if the date changes, then the system should know how to roll this up into the appropriate reporting time period. 
For organisations that deal in seasons, for example retail, the ability to define time as a span between specific dates is important, while results would still need to be accumulated on traditional monthly basis. 
All these requirements means that a single multi-dimensional model cannot (without serious compromises) meet the different needs of CPM, and yet this data still needs to be bought together if performance is to be planned and managed.

Things to look for

  • Ability to hold multiple data sets with different levels of granularity, dimensions and member combinations to support strategy, tactical plans, budgets, forecasts, management reports and risk. 
  • Ability to define and accumulate time in multiple ways. 
  • Ability to store data at a day level, with the system aggregating data into the right time hierarchies for reporting. 
  • Able to define and hold individual initiatives with associated dimensions and members, along with flexible start and end dates. 
  • Ability to attach unstructured data – comments, notes, documents, responsibility – with any data item. 
  • Ability to combine different data types for reporting and analysis, along with any unstructured data. 
  • Ability to define financial accounts as to type e.g. Debit/Credit, Balance Sheet, P&L, Statistical, etc. This information is used to ensure data rolls up through time and other dimension hierarchies correctly and that variances respect natural sign conventions. 
  • Ability to define statistical accounts/measures so that any assigned calculations take place in the correct order and at the appropriate level in a hierarchy. 

2. Dimensions, Members and Structures 

Much of the data within a CPM model will be organised as hierarchical structures e.g. organisation; strategy, product families. Many members will be common across different CPM data sets and so any change in definition should automatically be applied to related sets. 

Hierarchies change with time, but in order to preserve historic reports, original structures need to be retained. For assessing potential changes, the CPM system should allow alternative structures that can be used to report the impact of change, should that change be adopted. 

Finally, hierarchies are not the only way to select and analyse data. The ability to use attributes where members are selected and grouped according to a range of ‘tags’ assigned to them is an important capability. For example: 

  • Members in the account dimension can have attributes that identify them as being measures of success, resource, risk, etc.
  • Members in the strategy dimension can have attributes that identify whether they are objectives, themes, initiatives, etc.
  • Product hierarchy members can have attributes that denote colour, or whether the product is ‘new’. 
These attributes can then be used to create an alternative grouping of members, irrespective of where they fit in their respective hierarchy.

Things to look for:

  • Master data management of dimensions and members. It should be possible to apply a change in a member and have it automatically update any data set where it is used 
  • Ability to hold ‘cause and effect’ structures for strategy modelling. These should allow data to be accumulated to multiple parents according to the methodology being used (e.g. what is the total cost of all initiatives supporting objective A), as well as by organisational unit, etc. 
  • Structure changes that are time stamped with previous versions being held 
  • Ability to consolidate and compare the impact of different structure versions for reporting and analysis purposes 
  • Ability to assign and analyse data by multiple attributes and not just by a dimensions’ physical structure. 

3. Functionality 

Functionality can be split into two areas – that which is common to all areas of CPM and that which is specific to a particular CPM process. With the latter, a capability to support a specific process may well be useful in other processes. Reporting capabilities are covered in section 5.5. Here are the things to look for in a CPM solution: 

Common functionality: 

  • Ability to convert local currency data into base currency(ies). This should be a true financial conversion supporting multiple rate types (e.g. opening rate, average rate, closing rate); detection and posting of exchange gain/losses; and the ability to choose from multiple rate versions (e.g. actual, budget, forecast) 
  • Consolidation of data from ‘leaf-node’ members into hierarchical groups
  • Ability to load data from external systems including the mapping of account and department 
codes into the appropriate CPM data set members
  • Ability to delete data from a CPM data set
  •  Ability to copy data between periods, versions and other combinations of dimensions and members
  • Full security system that automatically restricts users access to functionality and specific areas of data 
  • Ability to present data entry screens to users along with restricted areas that cannot be changed
  • Ability to support multi-languages for both help and setup information
  • Ability to support web, social media, and mobile access

Strategic planning specific functionality: 

  • Supports the methodology being used by the organisation e.g. Balanced Scorecard, Performance Prism, Six Sigma, etc. This means that the system uses the same terminology as defined by the methodology.
  • Ability to set up ‘strategy maps’ that show cause and effect and allows senior managers to define, for example, themes and objectives; to allocate measures of success, implementation and resources.

  • Support for ‘Driver-based’ planning where entering a few key data items generates related data such as a summary P&L. 

Tactical planning specific functionality: 

  • Ability for users to add initiatives that support defined strategies, comprising of combinations of dimensions and members that describe a course of action. 

  • Ability to assess combinations of initiatives in terms of resources consumed and their impact on corporate goals. 

  • Ability to ‘Time shift’ initiatives i.e. to change their start and end data which then causes all associated data to be ‘moved’ in time.
  • Ability to ‘approve’ and ‘reject’ and ‘lock’ initiatives from change 

  • Ability to select initiative combinations based on their ability to optimise resources to meet a 
specific goal
  • Ability to hold combinations of initiatives as different versions of a contingency plan. These do not consolidate with other data and can be ‘re-called’ as required.  

Financial planning specific functionality:

  • Ability to perform a ‘Top-down’ spread where a single number can be allocated back from a top- level node through to leaf-nodes in a hierarchy. It should be possible to ‘exclude’ members during the spreading process.
  • Ability to spread data across members of a dimension according to a range of profiles. It should be possible to exclude members when carrying out the spread.
  • Ability to perform allocations according to set rules that can be invoked by an administrator
  • Ability to define an approval process with appropriate levels of data locking.

Forecasting specific functionality: 

  •  Ability to hold data by contract, project and status 

  • Ability to perform time-series analysis and use results to predict future periods

Risk Management specific functionality: 

  • Ability to hold 'risk' and 'impact' factors
  • Ability to calculate risk profile
  • Ability to conduct 'What if?' analyses without affecting data held
  • Ability to hold contingency plans that can be invoked when risk materialises 

Statutory reporting specific functionality:

  • Ability to collect, match and eliminate ‘intercompany’ information 
  • Ability to store ownership data that can be used to adjust results for minority or joint ownership 
  • Ability to eliminate third party ownerships
  • Ability to support ad-hoc and recurring journals that ensure Balance Sheet integrity

  • Audit trail and reporting – see section 5.7
  • Ability to analyse statutory impact over more than a one year time horizon.
  • XBRL support

4.  Reporting Capability 

Reporting occurs throughout all CPM processes, while the Management reporting process brings together a range of information that determines whether the plan is on track and what decisions can be taken to improve performance. Audit report capabilities are covered in section 5.7 

Things to look for: 

  • Ability to create dynamic Strategy maps. I.e. as initiatives are added, the system should be able to position that initiative within the strategy map without having to redefine the report.
  • Interactive Dashboards / strategy maps. i.e. users should be able to select ‘off-grid’ members such as the time period being shown or the department for which data is being shown.
  • Ability to generate Financial statements and accepted layouts / formatting
  • Ability to generate variances that respect Debit/Credit and account type (e.g. Balance Sheet, P&L, 
Statistical) assignments.
  • Ability to ‘drill-back’ to underlying detail/source systems from which the results were produced.
  • Ability to automatically match common dimensions and members from multiple data sets for the purpose of generating a report.
  • Ability to bring any information including unstructured data, from any data set and place it anywhere on a page.
  • Ability to perform simple calculations between multiple data sets on a page.
  • Ability to change common dimension member selections from one place where multiple data sets 
are on a page.
  • Ability to generate charts that are linked to reported data sets. 
  • Ability to sort / group data according to content, dimension member and assigned attributes
  • Ability to omit rows/columns where combinations return ‘blank’ data.
  • Ability to set up ‘key-words’ that can then be used to drive the content of a report. E.g. Current Month, Current Year – can be set in one place that is then used to generate report content for that setting.
  • Ability to group different types of reports into books that can be run as a single action. These respect user security and will omit any data/pages the user is not allowed to access.
  • Ability to access data securely from a spreadsheet 
  • Ability to create pdf, Word, Web and other output formats
  • Ability to deliver content via Mobile devices

Alerting capabilities

  • Ability to alert users/managers when a specific variance has been exceeded 
  • Ability to request a response to an alert 
  • Ability to chase up users who have not responded to an alert 
  • Ability to review all alerts to determine: Which areas generate the most alerts, the status of response to alerts; how quickly users respond to alerts 

5. Workflow 

Workflow relates to the way users are directed through the different tasks involved in a process. There are two types of process: 

  • Structured processes are those that are followed through a specific task e.g. budgeting. It’s structured in that the activities, the people involved and the timescales are known in advance. 
  • Unstructured processes are those that occur when an event or an exception are encountered. In this case the particular activities to be triggered and the people involved are only known when the exception occurs. 

Structured processes can be dealt with through menus but it does requires users to know where to look and to choose the right option. This can make it hard in creating an efficient process as there is no way to prioritise options for specific users. 

Unstructured processes cannot be realistically handled by menus and will require dynamic workflow capabilities to trigger activities as and when they arise. As these activities are completed they themselves will trigger other activities to be carried out. For example, a sales forecast that is 10% outside of a limit, may trigger a request for more information and confirmation of the levels expected. When this is approved it could trigger re-planning by the factory, or an action by marketing to increase advertising spend. These will then have a knock-on effect onto other departments. 

Both types of process should be supported if CPM is to become a continuous, efficient process aimed at managing corporate performance. 

Things to look for: 

  • Ability to define tasks i.e. discreet pieces of work such as enter data, load data, run consolidation, run report, etc. 
  • Ability to combine tasks into sub-processes that are automatically configured for individual users 
  • Automatic generation of “To do” lists that are specific for each user and contains the work to be done, the deadline and any approval process 
  • Automatic warning of task deadlines
Automatic escalation of non-action on a task
Automatic triggering of tasks based on dates, an alert, exceptions or events Overview of active processes/tasks, highlighting deadlines and status Ability to ‘unwind’ a task or series of tasks with full audit trails. 

6.  Audit Capabilities 

The ability to audit any plan or result is a key requirement of any corporate system if the numbers shown are to be trusted. This includes collecting comments on what the numbers actually mean as well as how they were gathered and transformed.

Things to look for: 

  • Audit trail on structure changes. All changes should be date-stamped along with the user making the change. Ideally there should be provision for storing comments on why the change was made. 
  • Historic results should remain with historic structures for audit purposes, however it should be possible to consolidate historic data with newer structures for comparative purposes that do not overwrite historic results.
  • Audit trail on processes. It should be possible to review all planning tasks and activities over a period of time. This can help identify bottlenecks that can improve process times in the future and help document the way in which decisions were made.
  • Audit trail on all data changes. It should be possible to track how each number was entered; any adjustments and transformations it went through; and how it consolidated into any total. All changes should be time and date stamped, along with user details and the process activity that changed it. As with structure changes, there should be a provision for storing comments on changes that are then available in reports.

7.  Affordability 

This area of the evaluation considers all the costs involved from initial purchase, through implementation and to the resulting systems’ on-going cost. It also looks at the expertise required to setup and maintain the system, and what else an organisation may have to purchase in order to realise their vision for a complete CPM solution. 

Things to look for: 

  • The initial purchase cost

  • The cost of increasing the number of users

  • The length and cost of training for an administrator and end user
Estimate of implementation cost
On-going software maintenance cost

  • Other things that need to be purchased to make the solution complete

  • The level of expertise to use and maintain the resulting system.
Does the system provide ‘Best practice’ templates, to kick-start an application
  • Can ‘users extend the application for their own local reporting purposes. 

8. Vendor Ability 

This looks at the vendor’s commitment to CPM and the maturity of the product. Maturity can be both a blessing and a curse – Mature products can offer a large reference base but also may be coming to the end of their life, which then may require an upgrade or redevelopment cost. 

Things to look for: 

  • How CPM fits into the future of the company
  • The other products the company sells and supports, and how much is dedicated to the CPM 
application being sold.
  • Other products the vendor may have that seem to compete with the solution being proposed
  • How long the product has been around and where will it be in 5 to 10 years time.
  • The level of business expertise they can offer in helping redesign processes and metrics
  • The level of technical expertise to implement the solution
  • The financially stability of the company providing the solution.
  • The experience and capability of the company installing the system 

9. Demonstration Workshop 

So far the software evaluation has focused on capabilities that can be viewed in isolation to each other. However, to support CPM these capabilities must be delivered in a seamless way so that the solution operates as single application. The only way this can be properly evaluated is by performing a number of scenarios that cross different processes. This is the purpose of the demonstration workshop. 

It is unlikely this can be accomplished without some planning from the vendor and so the scenarios to be evaluated should be communicated in advance and covered in detail during an interactive workshop. The aim is to gauge the levels of integration that exist and the effort required to maintain them. 

Strategic Planning scenarios 

  • Create a strategy map showing actual measures for the current and target measures for the next 3 years 
  • Define a new objective. Set targets for success and the limit on resources that can be consumed by supporting initiatives.
  • Show how the new objective updates the strategy map 

Tactical Planning scenarios

  • Combine a number of initiatives to review the resources they would consume if approved. 
  • Review initiatives by start date 

  • Delaying an initiative by 7 weeks: Show the impact of this delay on planned resources 

Financial Planning scenarios 

  • Show how the system directs departments through the planning process.
  • Show how a top level strategic financial goal is spread down to individual departments as a target
  • Move a business unit between divisions and compare the impact on plans.
  • Show how a department has its plans approved.
  • Show how to create an alternative version of the budget which has a different departmental structure

Forecasting scenarios

  • Show how potential sales contracts and/or projects are recorded. 

  • Change the status of a potential future contract (e.g. from tentative to approved) and how that 
updates the overall forecast 

  • Change the date of a potential future contract and how that updates the timing of the overall forecast 

  • Show how to add a new product, associated forecast data and how this updates the overall forecast 

  • Show how the system handles issues such as when a forecast misses a future target 

Management reporting scenarios

  • Show how the system handles the mapping and import of actual data
  • Show how actual results updates:

             o Comparison with strategic plan (i.e. updates the strategy map)

             o Comparison with tactical plan

             o Comparison with budget / forecast 

  • Show how to report the impact of initiatives on    the achievement    of strategic goals
  • Show report that sorts initiatives according to    overspend against budget
  • Show how to create a report that combines strategic goals, initiative status vs. budget
  • Show basic financial statements: Balance Sheet, P&L, Cash Flow    


The aim of this framework has been to clarify the purpose of a CPM system; ways in which it can be implemented; how it relates to supporting BI/Reporting applications; and how to evaluate CPM software solutions. 

It outlines an ideal implementation although it is unlikely that a company will ever implement it in this way. However, it provides a goal for an IT systems strategy that will genuinely help managers and executives manage performance. 

By adopting such a framework, organisations will realise a number of high-level benefits it provides, including: 

  • A single, consistent framework by which the whole organisation manages performance 

  • Focus on the things that are critical to the organisation as a whole 

  • Reports and analyses that tells the story of ‘what and why’ 

  • Information in context that links strategy with resources and monitors the effectiveness of processes 

  • A documented audit trail that shows the decision-making process 

  • A mechanism by which IT projects can be assessed and placed in the context of improving 

How to Become an FP&A Professional

By Simone da Silva Collins, Finance Manager, Polycom

Simone da Silva Collins is an FP&A professional working in Polycom, an industry leader in unified collaboration solutions.

She provides business partnering to various departments of Polycom in EMEA. She was previously the Group Finance Analyst supporting the Executive Team at Intec (now part of CSG), a provider of Business Support System (BSS) software and related services, primarily for the telecommunications industry. She also worked for Telewest (now part of Virgin Media) for over 7 years providing commercial and financial support to the Interconnect team.

Simone is originally from Macau in SE Asia. She gained her Masters at Manchester Business School. She has also recently achieved FP&A accreditation.

Have you thought of becoming an FP&A professional?

When I was studying for my accounting qualification, I assumed I would become a traditional accountant. I did not know then how wrong this assumption would prove to be. This article gives an insight to my path in becoming an FP&A professional and short guide on how to become one.

I graduated from university with a Bachelor degree in Accounting and Business and started working for a local audit firm. At first, it was quite interesting: looking into the figures of different companies and industries, trying to make sure all the relevant evidence was there and that it made sense. However after some time, I realised auditing wasn’t for me – it just did not challenge me enough.

After a few years of managing budgets for a local government department and acquiring an MBA  as well as an international accounting qualification (ACCA), I moved on to reporting and financial analysis at a national cable telephony company – at the dawn of the telecoms bubble in the UK. It was a good time to join the industry because there was a lot going on. I got involved not only in cost analysis but also provided assistance to other parts of the organisation including retail, wholesale and fraud. I found it exceedingly rewarding being able to support other stakeholders in minimizing risk, protecting revenue and, in some cases, growing revenue. It was then that my ‘eureka’ moment arrived: I wanted to pursue a career in which I not only provide insight but also helped promote business growth.

My next role took me closer to being a business partner. I guided my counterparts in the forecasting cycle and process, as well as reviewed the financials for the group CFO to see how we were performing against expectations. This was when one of the FP&A attributes of being inquisitive came into play. I asked my regional counterparts and decision makers what the reasons behind the variances were and what the plans were to mitigate unfavourable trends. I got to learn more about the drivers of the business. However, being inquisitive also came with its own challenges. One of my challenges was to encourage my counterparts and decision makers to share information so as to build a complete picture of what was driving the company’s financial figures. I also needed to learn to recognise if what my business partners were telling me was realistic and aligned with the direction that the financials appear to indicate. I found that through having regular reviews and discussions with my stakeholders and providing credible analysis, I gradually gained their trust. With trust, I was in a better position to encourage knowledge and information share. For me, as an FP&A professional, it is important to engage my stakeholders. This is a two-way relationship: input from my stakeholders and finance support from me.

During this role, I also got the opportunity to be involved in systems development with a view to improving the forecasting efforts. System development is an area in which FP&A is becoming more and more involved – from defining the scope and system requirements to UAT. By improving forecasting efforts, I enabled the FP&A team to free up more time to engage with their decision makers and be part of value add activities,  that is to take a more proactive role in assisting the company  to align  its actions with its desired strategic outcomes.

My current role is a trusted business partner and ‘go to’ person for all finance matters. Although I am engaged in traditional month-end reporting, I reach out to my decision makers to help align finance with business operations. Therefore, unlike the traditional finance function which looks at what happened, my role involves assisting decision makers in assessing what should happen, what financial impacts are anticipated, why the financials may indicate deviation and how to get back on track. I find that communication and transparency are essential in fulfilling my role.

So where do you begin?

One generally begins by gaining an accounting qualification through formal education and work experience followed by a professional qualification. Professional organisations such as AFP, ACCA and CIMA, to name just a few, offer certifications and qualifications with a focus on various aspects of the finance profession.

The next step is to gain experience by working with both the traditional accounting function and the business stakeholders. You may find some FP&A migrate from traditional accounting function to more business partnering as a natural and lateral move in their career. The existing rapport with accounting function and accounting knowledge enables FP&A professionals to understand the technical aspects of transactional accounting. As a result, FP&A professionals can spend more time unlocking the business intelligence data.

Apart from the academic and technical background, FP&A professionals should also be equipped with soft skills such as listening, influencing and persuasion. A service delivery mindset is essential. FP&A is not about producing fancy reports: it actually helps the business move forward.  Although FP&A skills are transferable, there is industry and organization-specific knowledge that can only be gained by FP&A proactively reaching out.

I believe that to become a successful FP&A business partner, one needs to nurture their relationships with their stakeholders. This paves the way for an FP&A professional to become their trusted adviser.

I see FP&A as the next career move for someone who has a solid accounting background and someone who actually wants to promote business growth.

Simone da Silva Collins is a FP&A professional working in Polycom, an industry leader in unified collaboration solutions.

She provides business partnering to various departments of Polycom in EMEA. She was previously the Group Finance Analyst supporting the Executive Team at Intec (now part of CSG), a provider of Business Support System (BSS) software and related services, primarily for the telecommunications industry. She also worked for Telewest (now part of Virgin Media) for over 7 years providing commercial and financial support to the Interconnect team.

Simone is originally from Macau in SE Asia. She gained her Masters at Manchester Business School. She has also recently achieved FP&A accreditation.