Not Clinging to the Static
Erickson was drawn to CPM because of a need to stay firmly on budget and on schedule: each facility it builds costs $300 million and spans more than 2 million square feet. “While we have an ERP system,” says CFO Hirl, “it does not give us the ability to consolidate and analyze information across the company. It also hasn’t proven user-friendly enough for everyone to get what they need from it. Consequently, we lacked strong budgeting and forecasting.”
Erickson spent $650,000 on a total CPM implementation, including a system from Hyperion, and trained 300 employees, mostly front-line managers, on how to use it. “They now have Web access for the entry of budgets and forecasts, which are continually analyzed, rolled up, and, where needed, reset,” says Hirl. “We’ve transitioned from static reporting to interactive analysis.”
Describing a system many CFOs can relate to, Hirl says that before the company adopted CPM, “each controller did his or her own plan. Since there was no methodology governing data sharing, performance, or consistency, we were never sure if the budget would be met, much less affect our strategy. If we wanted to compare the performance of one community to another to identify best practices, we couldn’t.” The company could, however, provide a shelf’s worth of canned reports that Hirl says no one bothered to look at. Today, employees access relevant performance data via the Web and use it to stay focused on overall strategy.
In fact, involving more people in the related processes of budgeting, planning, forecasting, and performance-monitoring may be key to CPM’s success — and not only because it will help vendors sell more seat licenses. As Targus’s McAlpine says, “Information becomes obsolete quickly if you don’t have a way to embed it into the fabric of the company.” CPM is one way, and this year may reveal whether companies consider it the best way.
Russ Banham is a Seattle-based writer. He is the author of The Ford Century, a 100-year history of Ford Motor Co.
Key drivers for those who plan to adopt CPM.
Source: CFO research services
- Need for better visibility into current results: 71%
- Need for better understanding of future performance trends: 70%
- Poor economic conditions and need for tighter cash-flow control: 42%
- Accelerating rate of change within industry: 37%
- Regulatory changes (e.g., Sarbanes-Oxley): 25%
- Pressure from shareholders/board of directors: 22%
- Other: 14%
Making the Old New Again
Auto-repair shops aren’t generally considered data-driven enterprises, but Caliber Collision Centers may be an exception. The Irvine, California-based 67-store chain has 1,600 employees and so much business that, as former CFO Debby Morris says, “we were lost in data and we had no way to turn it into something valuable and actionable.”
Rich in data but poor in IT budget, the company took a keen interest in Philadelphia start-up Satori Group Inc., a CPM firm that keeps costs low in part by leveraging the power of Excel spreadsheets. “At the time,” recalls Morris, “we lacked a workable budgeting process, which was challenged by our multiple locations.” Satori suggested a new approach: a centralized accounting system linked to a set of key performance indicators governing each region.