The key to any successful organization is its ability to create and sustain value creation today and well into the future.  The use of Balanced Scorecards can play a vital role in helping organizations achieve that goal.  Organizations that commit to spending the time required to identify and then measure those all-important metrics that constitute a Balance Scorecard, will be rewarded with a fuller understanding of their organization as a business and a greater focus on strategic decision making.  In this fourth and final article in our performance management series, my co-author--Art Rothberg, Managing Director of CFO Edge--and I summarize the basic steps required to implement a Balance Scorecard.

Performance Management: Implementing Balanced Scorecards

Busy executives lacking the additional bandwidth needed to implement performance management tools, such as Balance Scorecards can benefit by utilizing outsourced financial planning & analysis expertise such as that which is provided by Resource Planning Solutions.  Contact us today and discover how easily you can implement similar best practice tools in your company.

Dashboards provide an effective way of measuring, monitoring and managing business performance.  The source of dashboard measures are the key performance indicators each business uses to track progress toward critical success factors.   Also, dashboards help facilitate the management of critical success factor across functional boundaries by integrating the various dimensions for a factor in one place.

When the performance management chain stretches from the strategic plan to critical success factors to key performance indicators and dashboards, the probability of management's strategic intent being realized increases exponentially.  In this third article, co-authored with Arthur Rothberg, Managing Director of CFOEdge, we provide some best practices regarding the implementation of dashboards in support of strategic business management.

Performance Management: Dashboards

Busy executives lacking the additional bandwidth needed to implement performance management tools can benefit by utilizing outsourced financial planning & analysis expertise such as that which is provided by Resource Planning Solutions.  Contact us today and discover how easily you can implement similar best practice tools in your company.

A critical component of strategic execution is implementation of tools that enable and align action.  In a previous article from this series, we discussed the development of Critical Success Factors, which are the key strategic enablers.  Today we discuss the primary tool used to align actions with Critical Success Factors, that being Key Performance Indicators.

In this second article, produced in collaboration with Art Rothberg (Managing Director of CFOEdge) and myself, we identify the necessity for, benefits of, as well as ways of developing Key Performance Indicators,  Additionally, we provide examples of Key Performance indicators along with their relationship to Critical Success Factors.

Performance Management: Key Performance Indicators

Companies that are unable to devote internal resources to the development of performance management processes can benefit by consulting with an outsourced provider of performance management services experienced in the development of these tools and processes. Please contact us if you would like additional information performance management and/or our 3D Financial Analysis program.

Skillfull performance management is an important capabiity all businesses should continue to develop and expand within their organizations.   Why is performance management so important?  Because it is focused on the future.  All the decisions we make, all the opportunity costs we incur, are focused on the future.  What could be more powerful than being able to forecast and influence what happens in the future.  Performance management provides the tools to do just that.

Art Rothberg (Managing Director of CFOEdge) and I are collaborating on a series of articles focused on the several key aspects of performance management, the first of which pertains to understanding Critical Success Factors (CSF).

Performance Management: Understanding Critical Success Factors

In this article, we define CSFs, why they are necessary, how they're developed, and provide examples of CSFs in action. Identification of CSFs is a precursor to developing key performance indicators, which are the measures that quantify and assess progress toward CSFs.

Companies that are unable to devote internal resources to the development of performance management processes can benefit from consulting with an outsourced provider of performance management services experienced in developing critical success factors, as well as other performance management strategies like key performance indicators, and operational dashboards.  Please contact us if you would like additional information.

Well it's a New Year and you're probably trying to put the final pieces together on your 2011 year-end management reporting.  Now's a good time to step back and think about the effectiveness of your current management reporting to begin contemplating changes for 2012.  Here are some questions you should be asking yourself:

1. Did our management reporting provide the insight needed to help the business make the necessary mid-year course corrections?
2. Was management reporting sufficiently linked to strategic objectives such that each part of the organization understood what role their performance played in achieving those objectives?
3. What changes could be made in the alignment and measurement of performance that would increase accountability?

If you are completely content with your organization's management reporting capability to provide insightful, linked and accountable results, then you deserve a raucous "well done!"  If you are like most of us, you may want to consider the following three recommendations when you start preparing your 2012 management reporting:

1. Be sure you have fully evaluated both your critical success factors (CSF) from both a customer facing perspective (new product launches, service level and backorder metrics, etc.) as well as operational facing perspectives (inventory levels, collection metrics, manufacturing efficiencies, etc).  With the highest priority CSFs identified, strip the next layer off the onion and identify the top three to five key performance indicators that support each CSF.  Make your highest priority CSFs and KPIs part of your monthly management reporting.
2. Make sure that each CSF and KPI is part of someone's 2012 compensation plan.   Generally, CSFs are going to be at the VP level, while KPIs are assigned to Directors and Department Managers.  A lack of accountability for any CSF and/or KPI substantially waters down the value they can produce.
3. Continuously strive to close the gap between the operational results and planning.  If you are solely using using Excel, then you may want to consider taking a look at an integrated planning and reporting solution.  Integrated planning and reporting solutions facilitate the integration of financial performance with operational metrics and business drivers, making it much easier to assess performance as well as validate important business assumptions.

Please contact us if you need help with any of the recommendations above.   Also, take a look at our "Excel Tips With Your Cuppa Joe" podcast resource.  We are now producing short (3 to 5 minutes) podcast tips and you can view while drinking your morning Cuppa Joe.  You might even find a useful tip that you can apply before you drain that first cup…

Link to: Excel Tips With Your Cuppa Joe

We have recently begun producing our own Podcast series titled "Excel Tips With Your Cuppa Joe".  These are short podcasts that you can view when you sit down with your morning cuppa Joe and possibly pick up a helpful tip or two.  Our podcasts are focused on Excel user tips that should be of particular relevance to financial analysts and accountants.  Typically, the podcasts are from 3 to 5 minutes in run time, making them the perfect complement to your morning cuppa Joe.  Let us know what you think.  Use the link below to access the podcasts.

Excel Tips With Your Cuppa Joe

I recently downloaded Microsoft's PowerPivot add-in for Excel.  I must say that in just the short amount of time that I have been playing around with it, I am really impressed.  There are a number of things that it makes easier to perform in Excel that should really catch your attention.

Here are just a few of the things that you can now do with Excel using PowerPivot:

• You can crunch data sets with more than 1,048,576 records (the current number of maximum rows in Excel)
• You can extract data from multiple sources and combine the result on a single worksheet, e.g. you could merge data from an SQL server, Access database and Excel workbook in single step , as well as create relationships among the data, which helps you analyze data as though it were from a single source.
• PowerPivot data is fully integrated and immediately available to your entire workbook, just as though you had set up a connection using ODBC (just with ODBC you are limited to a single data source).
• PowerPivot data sources are compressed making very large files more manageable on a standalone machine.
• PowerPivot extends Excel's charting capability.  You can quickly create a set of charts that are linked to the same data set.  Then with the click of a mouse you can add vertical and horizontal slicers that really start to show off the BI aspect of PowerPivot.

There a number of other benefits including how PowerPivot integrates with SharePoint enabling a greater level of collaboration between BI users.  So who can really benefit from PowerPivot (I took this from Microsoft's website)?

• Excel users who know how to structure, analyze and calculate multidimensional data in workbooks and PivotTables.
• SharePoint users who need to collaborate on Excel data with teams.
• Database and IT professionals who want to delegate business data development tasks to the business analysts that actually use the data.

I am still learning the basics, but have found this to be one of the best additions to Excel in a long time.  Check it out at www.powerpivot.com.  Just remember that you are going to need Excel 2010 to take advantage of PowerPivot.  There are both 32-bit and 64-bit versions.  You can figure out which version of Excel 2010 you installed by selecting the File tab, and then Help.  To the right you should see the About Microsoft Excel heading.  The first row beneath the heading will tell you which version you have installed.  Have fun.

Chase Morrison

Don't forget to check out our "10 Tips That Will Take Your Excel Modeling From Good To Great" tutorial on our website at:

www.rpscgi.com/special-offers.aspx

Want to be more efficient with Excel and free up more time for analysis by utilizing less time manipulating data?  You need to learn how to use Excel's Get External Data functions.  To illustrate, assume that you regularly import TXT files using Excel's File -> Open command.  Users that import the same TXT file, month after month, such as a trial balance, using Excel's File -> Open command spend far too much time reformatting the same import file with each update.  The reformatting process that I'm referring to is when you move around those vertical bars that define the column breaks Excel will use on import.  In addition to setting column breaks, sometimes you have to define whether the data to be imported is text or numeric or date. (To continue)

As financial management professionals, we all know that the numbers tell the story.  Though we cannot run a company solely by the numbers, numbers do provide feedback on performance as well as enabling us to benchmark our performance against our competitors.  By comparing ourselves to others, especially those that are considered best in class, we gain insight into our own company's latent potential.  In this article, we are going to explore how we might use DuPont analysis to help us peel away a couple layers of the proverbial onion and gain some new insight into the key variables affecting business performance and how we might influence those variables.  Through this analysis, our primary focus will be on methods we can use to improve our return on equity (ROE). (Read More)

Is benchmarking an integral part of your strategic planning process? If not, you may want to consider adding a review of your competitor's key financial metrics to your next planning session, because what you don't know can really hurt you. For example, what if you discover that a direct competitor is able to turn over accounts receivables 25% faster than you are able to collect? (Read more)