Blythe McGarvie on Business Performance Management
The CFO Project is a periodic publication of Montgomery Research that offers "ideas, points of view, vendor profiles, and company case studies" that launched in October 2002. Three volumes have been published so far:- Competitive Financial Operations (2002) — "designed to provide insights for finance executives interested in creating transaction processing and performance reporting solutions that are efficient and effective on a global scale."
- Business Analytics and Performance Management (2003 – the only volume, so far, with a distinctive title) — "focused on targeting value opportunities, improving performance management capabilities, and delivering analytics to drive improved results across geographies, business units, and customer segments."
- Competitive Financial Operations: The CFO Project (2007) — explores "the way CFOs are managing [the] tricky balancing act between serving as internal 'traffic cop' and forward-thinking business leader" and presents "expertise on corporate governance, risk management, achieving compliance and transparency, business planning, executive compensation and more."
The only item I can personally vouch for is an excellent four-page case study (pdf) that I encountered a few days ago and was quite taken with. Blythe J.McGarvie, currently CEO of LIF [Leadership for International Finance] Group, writes about her experience over thirty years with the gradual maturation of tools and techniques of business performance management (BPM).
As you would expect of an expert in accounting and finance, McGarvie evaluates advances in the technology and techniques available to finance departments in terms of how substantial has been their impact on capacity for analysis and effective decision-making. She identifies several stages in her own experience with advances in BPM:
- Integration of reporting and planning, which enabled companies "to determine which products and customers were driving — or dragging — profitability." This, in turn, enabled better decision-making concerning how to improve the profitability of particular products and customers.
- Making the budgeting process a bona fide planning process, i.e., "budgeting became a more integrated, holistic and foundational business management exercise. Strategy was determined through the budgeting processes, and compensation incentives were married to business objectives."
- Integration of the operating and capital budgeting processes, so that managers were forced to take the cost of capital into account in making spending decisions. This is the economic value added (EVA) concept.
- Extending BPM beyond finance, e.g., by using BPM techniques to improve inventory management in retail operations. McGarvie describes how Hannaford Supermarkets built a detailed model — broken down by product and category — of their revenue and costs. The model enabled granular measurement of product and category profitability, an advance that "changed the way the store managers ordered inventory and how they did business."
A complete listing of the CFO Project white papers is here. A list of "solutions," organized by topic, is here. A list of all the case studies is here. Note that these three types of content are not mutually exclusive.
Labels: Business acumen, Decision-making, Strategy
posted by Karen Nelson @ 11:30 PM
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