Analytics-Based Performance Management
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Blog

Movie Sequel – “Accountant Pirates of the Caribbean”

Please forgive me for my persistent rant and criticism against accountants who budget poorly or continue to calculate the substantial and growing high indirect and shared costs originating from resource expenses such as salaries, supplies, power, information technologies, and travel. I cannot seem to hold back my frustration. 

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A Passionate Appeal for Activity-Based Costing (ABC)

Usually I am fairly rational and do not let my personal emotions interfere with how I interact with others. However, as the readers of my blogs and articles may have detected, my more recent writings increasingly reflect my frustrations with old school accountants. I cannot disguise my irritation and annoyance with accountants who refuse to be progressive.

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Exceptional EPM/CPM Systems are an Exception

Quite naturally, many organizations over-rate the quality of their enterprise and corporate performance management (EPM/CPM) practices and systems. In reality they lack in being comprehensive and how integrated they are. For example, when you ask executives how well they measure and report either costs or non-financial performance measures, most proudly boast that they are very good. Again, this is inconsistent and conflicts with surveys where anonymous replies from mid-level managers candidly score them as “needs much improvement.”

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Enterprise Performance Management from C-Suite Future Diaries

What might C-level executives write in their diaries in the future? My crystal ball is crystal clear. Seven years from now in 2023 here are the personal diary entries of the executives of a fictitious corporation reflecting on their experience implementing enterprise performance management (EPM) methods.  As you’ll see, the last diary entry written by the CEO is the most surprising.

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Why Is Solitude the Secret to Enterprise Performance Management (EPM)?

Enterprise and corporate performance management (EPM/CPM) methods imbedded with business analytics are a hot topic. Will they stay hot? Or are they a business improvement fad, like the quality control circles in the 1980s? My bet is these methods are keepers. Why? It is for many reasons. A major one is the EPM/CPM methods are so fundamental to an organization’s health. 

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A Circle of Blame for Failure

Here is a fictitious story. But how true could it be?

Our company’s quarterly financial results were just announced. Our loss was unexpectedly double last quarter’s loss, and we have now been in the red each quarter for over a year. How can this be happening to us? Our company has been profitable for decades!

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Enterprise Performance Management as a ‘West Side Story’

People think by comparisons. So let me give you an analogy. I am a big fan of movies – old black and white ones, new ones with special effects, and most types in between. I especially like musicals. One of my favorite musical films is West Side Story, released in 1961. It is a retelling of Shakespeare’s tragic romance Romeo and Juliet. What does a Broadway musical and its subsequent film version have to do with a successful enterprise and corporate performance management (EPM/CPM) system? Plenty. Here is the background.

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The Shift to Predictive Accounting

There is a widening gap between what the CFO and accountants report and what internal managers and employee teams want and need. This does not mean that information produced by the accountants is of little value. In the last few decades, management accountants have made significant strides in improving the utility and accuracy of the costs they calculate and report. The gap is being caused by a shift in managers’ needs – from just needing to know what things cost (such as a product cost) and what happened – to a need for detailed information about what their future costs and profits will be and why. Examples include driver-based rolling financial forecasts and true marginal cost analysis for what-if scenarios.

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CFOs – Vanguards or Villains?

I continue to get mixed signals regarding how advanced CFOs are with their journey to become the “strategic advisor” that is so frequently mentioned in finance and accounting magazines and consulting firm’s centers of excellence (CoE) websites. There are countless articles describing the vision of CFOs and their staff after completing a successful financial transformation of their processes. And I have also written inspirational blogs and articles about accountants transitioning from bean counters to bean growers. But I am unsure how much the evidence supports the vision. 

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