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Integrating business planning, performance management, and risk management

January 16, 2012 Leave a comment Go to comments

This morning, I came across an excellent article from the UK’s Institute of Chartered Management Accountants. Written by two people from Capgemini Consulting, Enterprise Performance Management has some excellent points, but one gaping hole: a very significant omission that I will comment on at the end.

I thoroughly endorse and like these points:

  • Even in the good times organisations can be caught out by the unexpected. Businesses that can’t respond in a controlled and profitable way will fall behind the competition and ultimately fail.
  • Achieving financial forecasts takes more than luck and good foresight. It requires a planning model capable of detecting changes in customer demand and sales trends and then flexing the sales activities and production to secure the targeted financial result.
  • Integrated business planning refers to the alignment of planning, budgeting and forecasting across an organisation’s key functions of sales and marketing, supply chain and finance. In executing this process effectively, an organisation can arrive at a planning result that fulfils its overall strategic goals.
  • Integrated business planning is about understanding what makes money for your business and ensuring you are equipped to make profitable responses to both market changes and unexpected events. It starts with obtaining a good understanding of which channels, customers and products make money, not just in terms of direct margin, but full end to end costs.
  • The benefits of getting the organisation pulling in the same direction, supported by reliable information, cross functional governance, technology and master data management, are substantial

What is the hole? What is the omission?

A four-letter word: RISK

Risk management has to be part of the integrated processes for business planning and then performance management. Risk management is how you consider and respond to uncertainty in the business.

If this article had included the risk management function as one that needs to be a core contributor to enterprise performance management, then I would praise it to the skies.

Have you integrated business planning, performance management, and risk management?

  1. January 16, 2012 at 10:20 AM

    Norman, here is what I see:

    Oracle combines BI, EPM and GRC visit their Virtual Center
    SAP combines, BI, GRC, Value Management
    SAS – combines GRC, BI, EPM on their site.

    So yes there is a move to integration of governance, value management and performance.

  2. Norman Marks
    January 16, 2012 at 10:22 AM

    Actually, Michael, SAP has integrated EPM (including strategy management) and GRC, as well as BI.

  3. March 20, 2014 at 12:17 AM

    CAMMS provides a complete CPM and BI product suite which includes intelligence and analytics, strategic planning, risk management, project management, budgeting and financial planning as well as reporting functions

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