RSM Resources

For many midsized companies with international entities, quitting time is an obsolete concept. While employees at one facility may be closing up for the night, the sun may be rising over another facility across the globe.

Companies that operate internationally often work around the clock and have little time to waste waiting for reports to run or data to filter from one location to another. To stay competitive, many of today’s multinational corporations require real-time business data. And they need it on their managers’ desks already consolidated and segregated, with financial figures converted to the appropriate base currency.

What’s the best way to get the right company data to the right people in the right form if all your business units do not run the same enterprise resource planning (ERP)system? Should you convert everybody to the same ERP system? Maybe. If you are dissatisfied with your ERP systems’ functionality, you might consider standardizing all your business entities on a common system. But if the systems are merely different, not dissatisfactory, experts say implementing a corporate performance management system may make the most sense functionally, strategically and economically.

What is a corporate performance management system?

"Corporate performance management," or CPM, is an umbrella term Gartner Research introduced in 2001 to describe "all of the processes, methodologies, metrics and systems needed to measure and manage the performance of an organization."

CPM systems are software applications that overlay a company’s ERP and other systems. They perform specialized information-gathering functions and can be customized to meet data-processing, tracking, analyzing and reporting needs.

One version of the truth

"The goal is to have one version of the truth," says Ray Andrews, vice president and chief accounting officer at Thorofare, N.J.-based Checkpoint Systems Inc., which is implementing a CPM system.

Checkpoint Systems is a multinational manufacturer and marketer of integrated systems solutions for retail security, labeling and merchandising. The company maintains 73 reporting units spanning 32 countries and five continents. Founded in 1969, Checkpoint reported 2005 revenue of $721 million.

Checkpoint uses two ERP systems, Oracle and SAP, among its many locations and does not plan to change them, Andrews says. The company’s data-consolidation system, however, uses dated technology that can’t keep pace with the company’s expanding infrastructure and growing global business needs. Therefore, company officials decided to implement a new CPM system that could bridge the information gap between business entities and across continents.

"Any corporation with more than one entity needs a consolidation system," Andrews says. "The key is to set up a uniform data-collection process that can be understood and used by all our reporting units."

Road map to a successful implementation

Would your company benefit from a corporate performance management system? What’s the best way to choose the right system for your company? The following steps outline the best path to follow when evaluating whether a CPM system is right for you.

Step 1: Examine your corporate strategy. Any new software implementation should advance a company’s defined strategy rather than define it outright. Before you determine your technology needs, experts advise you to review your strategic plan. Is your company just beginning to explore global expansion, or is it at the end of its expansion cycle? Where is your company headed next year? In five years? Experts say having the answers to these questions is crucial to making wise technology choices.

Step 2: Evaluate your information needs. Once you have pinpointed your overall corporate strategy, you can begin to determine your information needs. Experts recommend you learn as much as possible about the regulations and requirements of each location where you do business and where you plan to expand. What reporting standards will you follow? CPM systems are a boon to highly regulated companies and companies that must adhere to the strict auditing requirements of the Sarbanes-Oxley Act of 2002 or accounting standards such as Generally Accepted Accounting Principles (GAAP) or Financial Accounting Standards Board (FASB).

If you have more than one business entity, experts suggest you examine your company’s operational processes and data flow to determine additional information needs. For example, does each location have a stand-alone accounting operation? Do you want to see accounting and other financial information in U.S.dollars or in local currency? Is there a shared service center? How do you manage inter company activity? How does your ownership and legal entity structure dictate data reporting? What are your key performance indicators?

Experts say these questions — and their answers —build the foundation for selecting the system that best meets your company’s needs and for drafting detailed requirements to ensure you use the standard and custom features of the software you select to their greatest advantage.

Step 3: Evaluate your technology. The marketplace is rife with software applications and vendors who claim to offer the perfect CPM solution for your company. Experts suggest teaming with a neutral third-party expert to help you sift through the hype and select the right system. Some things to consider when looking for such a partner:

• Make sure your partner doesn’t sell any specific software and has no vested interest in your choosing one package over another.
• Try to find a partner with firsthand knowledge of your industry in addition to technological expertise.
• Look for a partner experienced in dealing with multinational companies and their inherent legal, regulatory and logistical complexities.

Implementation costs can vary widely depending on the complexity of a company’s business needs and the amount of custom work required. However, experts say costs may be mitigated through careful planning and staged feature implementation. An average implementation takes three to six months to complete.

As for a company’s return on investment, it’s difficult to assign a dollar value, but the investment can pay off in the form of greater competitiveness, increased efficiency and added flexibility.

Andrews says he expects Checkpoint to realize a payoff from its corporate performance management system in time saved rather than dollars.

"With thorough data integrity, our management team can focus on what the numbers mean, not whether thenumbers are correct," Andrews says. "While it’s difficult to quantify the benefits, I expect that we will improve the speed and quality of management decisions."