CPM Infrastructure

Corporate Performance Management encompasses enterprise reporting and analysis; dashboards and scorecards; monitoring of key performance indicators; strategic planning; profitability modeling, analysis and optimization; financial consolidation; budgeting, planning and forecasting; operational and financial modeling; and workflow process and automation.

CPM is driven by business needs but must be supported by technology. Too often, organizations try to achieve CPM with discrete and separate processes, using different and incompatible technologies. For example, word-processing documents are used to communicate the strategic plan, spreadsheets are used to create budgets, and the general ledger or ERP system is used hold actual data and generate reports. These different technologies aren’t integrated, and make it almost impossible to answer questions such as, “How does profitability by business line compare to prior year?”

The Adaptive Planning CPM infrastructure provides the underpinnings for a single, closed loop application, focused on monitoring and managing an organization's performance and the implementation of strategy. The architecture of our application has a significant impact on the usability and maintenance of our CPM solution, and the business processes we support.

Our technology includes the following:

• Centralized Database. In Adaptive Planning, data from all sources resides within a central database. This data includes budget and forecast data created within Adaptive Planning models, as well as data imported from other enterprise systems (e.g., GL, ERP, CRM, HR, etc.) Tight integration of all enterprise data within a centralized database is critical for effective planning and reporting.

  In addition, all data resides within our centralized database, not on sheets and reports. This means that each item is held only once – but the same piece of data can be shown and edited in multiple locations, without being duplicated. There is only one instance of each piece of data, no matter how many times it is displayed.

  And data can be referenced logically in formulas. Instead of referencing C11, as with spreadsheet formulas, for example, an Adaptive Planning formula can reference the Salary account, which is much more meaningful to users than C11. This also eliminates referential integrity errors.

  Our centralized database also facilitates common structure and business rules. For example, organization structure, chart of accounts, and dimensions can be used across all versions. Business rules can also be applied to all versions, or can vary by version. For example, revenue may be calculated as price x units in planning versions, but may hold imported values in the actual data version.

• Multi-Dimensional Database. This allows information to be categorized and viewed in different ways. For example, revenue may need to be sliced and diced by region, product, channel, and sales rep. Adaptive Planning provides an unlimited number of fully customizable dimensions to identify data, e.g., departments, business units, functions, geographic locations, projects, products, customers, channels, regions, sales reps, employee types, etc.

• Built-In Intelligence. Our CPM system has embedded intelligence that saves time and effort in implementation and maintenance of the system.

  Our CPM system automatically understands different types of data, which can be either financial or non-financial. This means that measures such as ratios are not consolidated, and calculate appropriately at rollup business levels. For example, if average selling price is revenue divided by units, ASP for a total region will calculate as total regional revenue divided by total regional units, as opposed to simply summing ASP for the segments of the region. In addition, non-financial measures such as headcount, volume, and metric tons are not converted as currencies.

  Our CPM system also distinguishes between P&L and balance sheet accounts, periodic and cumulative accounts, accounts that calculate monthly deltas versus ending balances, accounts in which QTD and YTD rollups should sum or show ending balances, and so forth. Our system also understands debit and credit account assignments, to correctly calculate variances for better/worse variance reporting.

  Our system automatically rolls up and consolidates data according to various structures implemented by each customer. Examples include organizational structures, charts of accounts, and product line hierarchies. These dimensions are unlimited, entirely defined by each customer, and our system automatically rolls up and consolidates data for each structure.

  Adaptive Planning’s CPM infrastructure also supports the use of multiple currencies for global planning and reporting, including automatic currency conversion calculations into multiple base currencies.

• Unrestricted Rule Access. Our CPM system allows business rules to access values in any part of the database (subject to customer-defined security). This capability allows, for example, the creation of allocation rules that spread the total cost of the facilities operation across all of the company’s cost centers, based on the square footage occupied by each center. Another use of this capability allows the creation of centralized drivers and assumptions that can be used by budget managers. For example, cost of goods sold can be calculated as the planned production volume in each plant, multiplied by the standard cost managed by the finance department.

  To evaluate these kinds of rules correctly, our CPM system performs multiple passes of the model. In the previous allocation example, the model must first calculate the total cost of the facilities operation before it can allocate the cost, and then undergo a second consolidation in order to allocate that cost. Without this capability, the CPM infrastructure would not be able to cope with allocations, the calculation of minority interests, and the generation of cash flow statements.

• Time Intelligence. Our CPM system understands the concept of time. We support financial accounting – data can be entered monthly, cash flows generated quarterly, and profitability calculated YTD or for the fiscal or calendar year. And our CPM database can hold data for any length of time in the past in the future, to enable historical comparisons and trend analysis.

  In addition, built-in time intelligence enables our CPM system to automatically calculate opening balances from the appropriate prior period closing balances, when appropriate. We also support the relative referencing of time. For example, reports can reference the last six months, and the CPM engine knows to reference data from last year, when reporting data in the first quarter of a new year.

  Our system can also generate period-to-date figures, and include references to QTD or YTD figures in formulas, without having to write rules. And these period-to-date figures automatically handle the correct treatment of P&L accounts (sum of the period) and balance sheet accounts (end of the period.)

  Finally, our CPM system understands the concept of the current period, which can be a reference point in any report. For example, a report can reference the current month and the prior month, or the current year and the prior year, for example, and the system automatically knows that the current month is October, for example, and the prior month is September.

  This built-in time intelligence makes modeling much easier to implement and maintain, especially with continuous forecasting.

• Collaboration. Our CPM system facilitates an iterative process, providing managers with the opportunity to forecast and share different scenarios with each other. It also supports the communication of objectives, goals, and measurements, and allows access to strategic planning information as it affects users. To do this, we integrate our database with shared dashboards and reports, sheet and report annotations, email, and shared document repository. The result is reduced effort in controlling an enterprise wide application, and better focus as key participants manage their areas of responsibility.

• Guided Analysis. Our CPM system helps users know what information is critical and needs attention, and what can be safely ignored. This helps users to avoid wasting time looking for exceptions that do not exist, or that cannot be found because they are buried in a large quantity of data. To do this, we highlight critical exceptions with a wide range of analytical and visualization techniques.

  Conditional formatting can be used used to help draw users' attention to performance areas that need investigation. A column or row of numbers can be color-coded or identified with a color or a symbol, according to some simple rule, such as "show all numbers less than negative $5k in red, between negative $5k and positive $10k in yellow, and above $10k in green."

  Hierarchical reports can reveal exceptions in the context of their position within a structure. For example, budget variance can be displayed by product line. Variances are shown in relation to where they fit within the product hierarchy. In this way, it is possible to view and understand thousands of exceptions quickly.

  Once an exception has been highlighted, users can drill down into data online (subject to customer-defined security). Users can view and analyze data across any appropriate dimensions, such as by project, product, customer, country, and so on. They can drag-and-drop and nested dimensions, as well as drill down to lower levels of detail, including all the way down to transaction detail imported from other enterprise systems.

• Web Architecture. The Adaptive Planning CPM system employs a web architecture, which provides simple, intuitive access independent of the user's location. Our web architecture means more than just accessing the system via a web browser. Underlying technology mean that the same protocols used across the web and in consumer applications such as spreadsheets are also emloyed in our user interfaces – bringing the benefits of a centralized database and “anywhere, anytime” access to users in the most appropriate and familiar form.