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The Performance Management Framework

Performance Management as a term represents the evolution of a number of different applications and toolkits designed to assist in the reporting, analysis, budgeting, forecasting and consolidation processes of organisations.  These requirements will vary across industry sectors and organisational size but most can be considered within the schenatic below.
Performance Management Framework
Performance Management Framework

 

 

The above schematic outlines how requirements vary according to the size and complexity of an organisation.   The triangle represents how information flows from operations up to director level and the blue boxes the type of components needed according to organisation complexity.  Only in larger more complex organisations does the need for dedicated consolidation requirements arise.  In all organisations basic operational reports are essential with the budgeting and forecasting elements being required in all but the smallest companies.

 

What the schematic illustrates is the functional overlap between different components.  Consolidation tools are used for budgeting and forecasting but this is mostly limited to aggregation of the various financial statements for group purposes.  Consolidation tools also provide reporting functionality but again at a level appropriate for group use – it is highly unlikely that SKU data will be collected and reported on here.

 

 

At the level of budgeting and forecasting most applications will also be used for management reporting often at SKU level and indeed may also provide a basic group consolidation for initial analysis of the data providing hooks up to the group level and down into operations.

 

At the operational end of the spectrum, users will require different types of reporting and analysis.  This is typically delivered either in simple list format with relevant groupings and summaries or in a cube format with the ability to slice and dice the data into different views to enable analysis of the data.  Sometimes this cube data is used to provide basic budgeting and forecasting functionality through the use of additional versions giving a potential overlap into the budgeting and forecasting process.

 

In a typical organisation there will be many different applications used to create and manage this performance management process though it is usually through the Finance function that numerical coherence is provided.  In recent years, mostly through a series of acquisitions, software vendors have attempted to assemble an application technology framework that when combined with people and processes can deliver a truly effective organisation wide performance management solution.