Corporate Performance Management software from an IT perspective

White Paper

Historically, enterprise-level organizations (those with annual revenues over $1 billion) have used these applications. Recently, CPM has become more attractive to companies in the mid-market. Yet many IT professionals know very little about CPM and often dismiss it as a sub-category of Business Intelligence (BI).

Designed for IT professionals, this white paper explains what CPM is, how it offers value to companies, and clarifies the benefits that it can bring to finance and IT departments.

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What is Corporate Performance Management?

The Gartner Group, which provides research and analysis services regarding Information and Communications Technology (ICT), first coined the term Corporate Performance Management in or around 2001. From the Gartner website: “CPM is an umbrella term that describes the methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise.”

CPM includes the following functional components:

[Download PDF for charts]

CPM refers not only to these functional aspects of managing a business, but also to the specialized software that various vendors have developed to help a company’s staff perform these functions. The word ‘specialized’ is important here since even though a spreadsheet program can help with, say, preparing a company’s annual budgets, it is considered ‘general purpose’ software and so is not usually regarded as CPM.

Some industry pundits have attempted to position CPM as highly strategic in nature and talk about aligning strategies and business goals using CPM software. However, the applications in the table above are often performed by people who may not even be aware that CPM software exists. Monthly financial reporting, for instance, is performed by many finance departments whose employees don’t think of the process as strategic, but simply as a job that has to be done.

While some senior executives in enterprise-level companies would agree regarding CPM’s alignment of strategies and business goals, and this is true, we also view CPM software as automating business processes. If you look at the functions in the table above, they share the following in common:

  • They are mostly performed and/or controlled by people in the finance department.
  • They are repeatable processes. Companies develop their budgets every year; management reporting can occur every month or every week.
  • They are analytical, not transactional. Organizations do not use CPM software for invoicing or payroll.

The third point is very important. The first wave of financial automation occurred decades ago with the development of accounting systems. Now accounting software appears everywhere; a small operation can easily automate its accounts as needed. CPM represents the second wave of automation in finance.

CPM is important

For many years, finance professionals have used spreadsheets for analysis. Spreadsheets sufficed when these needs remained relatively modest, but the needs of finance have changed:

  • More data. As ERP systems have become more sophisticated, organizations use them to track what happens at a finer, more granular level; companies can place more departments in the General Ledger and more accounts in the chart of accounts. Additionally, the business environment has become increasingly complex, requiring analysis of everything from product lines to customer types to inventory levels. Finance is overwhelmed with data.
  • More often. Planning used to happen once a year with the preparation of the annual budgets. Now, many companies produce monthly rolling forecasts and can perform some CPM functions, like inventory planning and sales planning, on a daily and weekly basis.
  • More people. Historically, planning and reporting involved finance and relatively few other departments. Today, planning, analysis, and reporting are more collaborative, involving employees from all parts of the company. Finance has to manage the collection and dissemination of information from and to more users. This requires reliable workflow solutions, tracking the movement of important and/or sensitive data.

Finance is compelled to help the company perform more effectively, and must balance these pressures against the costs of implementing a CPM system to automate analytical business processes. Historically, CPM has been expensive, with high license and implementation costs, available only to big companies and regarded as a major investment. Most affordable software has featured limited capabilities, usually being restricted to either spreadsheet-based reporting or simple planning.

However, the value proposition of CPM software is changing. In the case of Prophix, this takes place for three main reasons:

  • Prophix has a low cost business model that involves extensive use of Internet technology for customer acquisition and service delivery. We pass these cost savings on to our customers.
  • Prophix is a fully integrated and unified solution that contains all CPM functionality in a single product. This minimizes installation, maintenance, and training costs.
  • Prophix is not customizable. Our solutions are implemented by business professionals who configure the software instead of using IT consultants to write expensive customization code.

Innovation allows us to offer companies an affordable CPM system of exceptional value, providing far more than simple planning and reporting.

Perhaps more importantly, the nature of CPM itself is changing. Planning, for example, has traditionally been dominated by preparation of the annual budget. But planning has changed. The twin pressures of ‘more data’ and ‘more often’ (as above) have given rise to completely new applications.

[Download PDF for charts]

One of our customers, a retail company, uses Prophix for inventory planning. Every week, via email, each of the company’s stores receives a spreadsheet that contains the corporate suggestions for which products should be shipped the following week (based on the automated analysis of actual sales from the POS system). However, the store manager can spot local trends and change the order, returning the spreadsheet by email. This is weekly inventory planning (or ‘demand planning’) at the SKU level.

When planning becomes more detailed and more frequent like this, it essentially functions as an operational part of the business. This speaks to the emerging trend in CPM known as Integrated Business Planning, where a CPM product serves as a platform for developing operational analytical applications. Companies then use these applications as the basis for planning at a higher level, for budgeting or monthly forecasting.

ERPs do not generally offer operational planning, since these applications are specific to the needs of individual companies. When two companies use the same ERP then they both enjoy the same business benefits. But when a company uses a CPM solution to develop operational applications that meet its unique business needs, then this company owns a competitive advantage.

Companies often use CPM systems for project costing in their IT departments. When organizations use resources such as people, software, and servers for multiple projects, companies can struggle to pinpoint the costs of individual initiatives. Allocating costs to projects using cost drivers—such as the number of hours worked or machine usage—can help IT to understand where an organization uses its resources, justify project costs, and provide the basis for charging costs back to other departments.

Many other examples of operational analytical applications exist, including manpower requirements planning, personnel cost planning, revenue reporting (bookings vs. billings vs. revenues), vehicle costs (leasing/maintenance/fuel), commissions reporting, and so on. CPM solutions satisfy the numerous requests for analytical applications, from structured reporting and analysis to forward-looking solutions for planning, budgeting, and forecasting.

CPM benefits for finance

It may appear that the main benefit of using CPM software involves minimizing the time required to perform these finance department processes and so, after moving from spreadsheets to CPM, customers will seek to reduce their headcounts. In fact, typically, employees do not lose their jobs. The people who perform these analytical processes, whether using spreadsheets or CPM software, are usually well educated, valuable employees. Instead of copying and pasting spreadsheet formulas, they can spend more time analyzing and understanding the numbers. CPM liberates them from their day-to-day spreadsheet chores and helps them add value to their companies.

An organization will normally enjoy quantifiable benefits from using a CPM solution. Many of our customers have shortened their budgeting cycles from 3 months to 3 weeks. Others that previously took up to 5 business days to copy, format, print, and collate reports every month can now send out reports electronically as attached PDFs in a matter of minutes.

Sometimes, companies enjoy benefits of a more surprising nature. One of our customers saved over $300,000 per year just by analyzing departmental requests for capital expenditures and making sure that no one bought unnecessary equipment. Prior to using a CPM solution, the company spent so much time manipulating spreadsheets that they didn’t have the bandwidth to spot these anomalies.

 Many of the most important benefits to the finance department are not so easily quantifiable. Simply giving finance staff the time to analyze and understand the data being churned out daily by their ERP systems provides enormous benefits. This enables finance to make greater contributions to the management of the business. 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. These kinds of insights can be invaluable.

Historically, CPM software was very expensive, partly because implementation required extensive customization. However, as noted above, Prophix is not customizable—instead, users (or our staff) can configure it to do exactly what our customers want. The people who designed Prophix own extensive domain experience and have built most requirements into the software.

This pre-configured structure not only results in faster implementations (typically, less than half the time required to implement a customized solution), but also means that users can install future releases of the software with absolutely no professional services costs. Most customized solutions require major expenditures on professional services with each installation of a new software release.

CPM and other software categories

Spreadsheets are not enough

CPM applications replace spreadsheets. Spreadsheets are personal productivity tools, and many finance departments suffer when they use spreadsheets for analytical business processes. Some problems include:

  • Spreadsheets require a great deal of manual work (such as copying formulas and formats, emailing spreadsheets, copying data, etc.), which takes time for highly-paid finance professionals. This manual work is tedious and can easily lead to mistakes.
  • Spreadsheets feature limited capabilities for collaboration. CPM processes like budgeting can involve many people, yet spreadsheets have no workflow capabilities; companies cannot automate the tracking of their latest plans and the software leaves no audit trails.
  • Spreadsheets are not scalable. As businesses grow, companies need to add or adjust departments, personnel, or other entities. The complexity and manual intervention involved leads to errors and questionable results.
  • Spreadsheets have serious security limitations. It is very easy to email a user the wrong spreadsheet containing sensitive data. Even if a spreadsheet is password protected, people can bypass the password protection quite easily.
  • Spreadsheets cannot perform holistic data analysis. When managers need to review budget submissions from multiple departments (HR, operations, finance, sales, and marketing) they encounter difficulties when they attempt to track justification, comments, and other supporting details to approve, reject, or adjust their final budgets. Fully interactive data analysis becomes nearly impossible.

Finance departments seek ways to overcome these problems and better manage their analytical business processes.

Unfortunately, many people view spreadsheets as the most desirable solution for all planning and analytical needs in the finance department. As a result, in most companies that do not have a CPM system, users in finance have no choice but to extend their use of spreadsheet software and employ the ‘programming’ functionality of spreadsheets (such as macros).

The danger of taking this approach is that non-IT staff become developers of applications for people in all areas of the company. These applications will not typically conform to the standards endorsed by IT in areas such as project management, security, documentation, and testing. The consequences can be serious.


Business Intelligence (BI) usually refers to the technology that companies use to report their data. The category includes many types of software— everything from ad-hoc query tools to dashboards, scorecards, and more. BI software products are graphically-oriented, featuring charts and graphs and the ability to use these visual objects to do more than just display data; users can usually use a chart to drill down for more details or to select what they see without using a menu bar interface. The name of the game in BI is ease of use for the casual user; at least one vendor boasts that its interface requires the least number of mouse clicks.

CPM, however, involves the processes used to plan, report, adjust, and analyze business data. Businesses typically implement CPM software for financial processes such as budgeting, forecasting, management reporting, and financial consolidation—although CPM may also be applied to other areas of a company. Often, CPM solutions support specific business processes such as supply chain management for manufacturing or merchandise planning for retailers.

One of the most common misconceptions regarding Corporate Performance Management involves its relationship to Business Intelligence (BI). While CPM and BI can be viewed as similar, important differences exist. This confusion has been compounded by the frequency of acquisitions in the software business, which has led many vendors to offer both types of software, even though they sell two or more solutions that feature different underlying technologies and user interfaces.

Some industry analysts recognize BI software as part of CPM, while others take the opposite view. In reality, the two software types differ significantly and companies acquire the applications for entirely different reasons; BI adds new functional capabilities that were previously not available to users, while CPM automates existing financial processes like budgeting, forecasting, financial consolidation, and reporting.

BI requires a data source, which is usually provided by a company developing a data warehouse. Data warehouse development can be expensive, especially when we factor in ongoing maintenance costs. CPM acts a bit like a data warehouse and a BI system combined, but is designed for specific applications. CPM solutions include specialized:

  • Extract, transform, load (ETL) functionality that end users can employ for account mapping, etc.
  • Integrated reporting that has a different paradigm than that of BI (see below).
  • Data management tools that allow end users to manipulate data and perform calculations.

End users in finance will understand how to use a CPM solution. They can do most of the work themselves without the need for IT involvement, except for data provisioning and ensuring that the software meets the company’s policies related to auditability, security, data governance, and software standards.

CPM products also differ from BI in their reporting capabilities. BI systems are designed only for online viewing of data, whereas a CPM system will also support more formal reporting, with reports designed by end users. Both CPM and BI give users access to data in either an ad hoc ‘slice and dice’ way or by providing users with access to saved reports. However, they typically feature very different paradigms in this regard.

[Download PDFs for charts]

There are other ways in which CPM and BI differ.

  • BI reports only on historical data, whereas CPM is also forward-looking and can be used for planning, budgeting, and forecasting.
  • BI is used for reporting from existing data sources; CPM also allows individual users to enter data (such as plans, budgets, and forecasts).
  • BI typically does not include any workflow functionality, whereas CPM manages processes to help users enter, approve, reject, and report data.
  • Although BI has some analytical features (such as sorting or calculating simple ratios), CPM software offers much more. For example, CPM functionality enables users to perform complex allocations and conditional calculations, much like a spreadsheet.
  • BI generally offers a less structured way of presenting data and users can decide what they see. The BI-like components of CPM, such as scorecarding and dashboarding, are much more structured—and users have access only to what the company wants them to see. Some refer to these aspects as ‘Structured BI’.

Many commentators regard this last point as a major differentiator; in many cases, providing users with access to large amounts of unstructured data can cause confusion and give rise to each person formulating his or her own version of what is important. CPM, on the other hand, guides users to the information that their companies recognize as important.

CPM and the IT department

IT challenges with CPM

CPM is a ‘non-traditional’ application of computer technology that IT professionals often do not understand. CPM applications are ‘technical’ in an accounting or finance sense—that is to say, anyone using a financial consolidation application must have an appropriate accounting background, and other uses of CPM products (such as budgeting or profitability analysis) also require accounting or business experience. At the same time, vendors build CPM systems for multiple users, demanding IT governance, with all the challenges that can bring. As a result, IT professionals often feel uneasy when looking into CPM software.

It is important for the IT department to understand its role in the CPM world. Modern CPM products cannot be customized—and since they are not designed to be modified using computer code, this minimizes the complexity of installing software updates. However, a CPM application like Prophix has ‘user exits’ that allow for the modification of components in certain ways. For example, users can implement calculations using the MDX (Multi-Dimensional eXpressions) language and leverage userdefined SSIS (SQL Server Integration Services) packages. CPM systems are designed so that finance professionals can import data, define calculations, and produce reports with minimal to zero help from IT. Of course, in most companies IT supports the use of CPM, but not as programmers; they help with software installation, user security, and the more technical aspects of importing or exporting data.

On a more technical level, most CPM products use OLAP databases that are very different from relational databases. IT professionals that design systems using relational technology are often trained to produce highly normalized data structures that feature many tables in order to minimize data redundancy. Relational databases are designed to perform well with these types of design. Just as tables constitute the basic building blocks of a relational database, objects called dimensions are their equivalent in the OLAP world. However, in a CPM system, it is almost always best to minimize the number of dimensional structures in order to optimize performance and ease of use. This can seem highly counterintuitive to IT professionals.

CPM follows a common trend. With the launch of most business software categories, custom-built applications are only available to the large companies who can afford them. The next tendency is for customers to buy tool kits that make the development of CPM easier, but which still require expensive customization.

A configured solution not only minimizes the costs associated with installation, implementation, and training, but also offers the benefits of a system that is unique to the company. Hosted and shrink-wrapped alternatives include limited flexibility, and hence do not offer any competitive advantage. Whereas a configured solution extends the use of a CPM solution into operational planning and analytics, less flexible systems feature basic limitations.

CPM benefits for IT

IT departments can use CPM for many applications that might otherwise require investment in either development or acquisition of software. As examples:

  • IT department operational planning. This often includes project management, including project planning, cost allocations, and variance reporting. Most IT departments need to understand people costs. Many of our customers use Prophix to not only calculate the costs of individual employees (including salaries, payroll taxes, hardware costs, etc.), but also to conduct headcount capacity planning. For example, one company plans multinational headcount requirements for supporting a large number of users worldwide. As mentioned above, a CPM application can not only support IT expenditure needs, but also justify chargebacks to other departments.
  • Data collection. A CPM application can also serve as a mechanism for collecting data from non-electronic sources. In many cases data needs to be collected from users. For example, a balanced scorecard system may require departmental managers to submit monthly open position reports. If this is not readily available electronically, then companies can use their CPM solution to collect data by automatically sending emails to users and consolidating the data when it is returned. This can include unstructured textual information as well as numerical data. Prophix incorporates workflow so that companies can easily track which of their users are late in responding—and automatically remind them to follow-up.
  • Data continuity. If the ERP acts as the company’s main reporting vehicle then a common concern when a company upgrades its ERP systems involves how to provide continuity in reporting. Often, a company’s chart of accounts changes and so the organization will need to map historical data to a new set of accounts. A CPM solution can provide this by serving as the primary reporting vehicle and using its ETL capabilities to convert data to a common structure.
  • Data consolidation. When a company makes an acquisition, it is highly unlikely that the acquired entity will use the same ERP and have the same chart of accounts as the acquirer. Using the financial consolidation functionality of a CPM solution as the primary reporting vehicle enables companies to map data from disparate systems to a common chart of accounts. This eliminates the need to convert all subsidiaries to a common ERP system. One of our customers saved several hundreds of thousands of dollars in unnecessary ERP acquisition costs by moving reporting away from diverse ERP systems into a centralized CPM solution.

Prophix is also attractive from a cost perspective. Prophix:

  • Fits in with existing technologies because it uses open, industry standard Microsoft technology, and co-exists with other applications (like data warehouses), but doesn’t depend on any other software besides Microsoft SQL Server (which comes bundled as run-time licenses).
  • Is a unified solution, rather than multiple products that vendors have patched together, and therefore saves companies money on installation and training costs.
  • Integrates with existing technology such as Microsoft SharePoint and all ODBC-compliant databases, and so increases the benefits derived from existing investments.

CPM software also mitigates risk by offering important benefits in terms of data governance. Spreadsheets will suffice when they are used as personal productivity tools with modest amounts of data, but when organizations use them as components of multi-user, mission critical systems then problems can arise.

Prophix encourages the auditability of processes through workflow, creates a single centralized data source (‘a single version of the truth’), and enforces proper security. Compared with spreadsheets, CPM software also offers better collaboration between departments.

CPM removes the danger of a company depending on complex, multidepartmental, undocumented systems that are developed by users who create and use data that has not been provisioned by IT. The issue here is ‘Do you know what your users are doing and what data they are doing it with?’ With spreadsheets, you often don’t.

CPM solutions elevate IT beyond simply providing the hardware and data pipelines within an organization. Prophix helps IT to collaborate with other departments throughout the company. Collaboration allows the role of IT to become more strategic, raising their role from serving as data stewards to becoming important contributors to the management process.


A category of software that has become increasingly popular in recent years, Corporate Performance Management replaces spreadsheets for a variety of finance-oriented analytical applications such as planning, budgeting, forecasting, reporting, consolidation, and scorecarding. CPM provides a controlled method for delivering analytical capabilities to a company, with security, collaboration, and workflow functions that enhance data governance.

Historically, CPM has been used only by large companies, but vendors like Prophix have a value proposition that appeals to all sizes of companies. Also, as companies’ use of technology becomes more complex, they have begun using CPM to address more complex operational planning and reporting needs.

The benefits of CPM for finance departments are clear. However, IT can also benefit from endorsing a CPM solution by implementing operational CPM applications within the IT department, tightening up data governance, and helping IT contribute to the improved management of the organization.

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