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If you have ever tried to build and maintain financial reports inside a visualization tool, the answer should be simple. Power BI works well for dashboards, but modern cloud-based corporate performance management (CPM) solutions are the best option for your financial reports.

BI vs. CPM

Let’s elaborate. Power BI belongs to a category typically referred to as Business Intelligence (BI) tools. While purpose-built, financial reporting and consolidation tools belong to a category referred to as Corporate Performance Management (CPM) Software.

Business Intelligence:

In the business intelligence category, you also find other well-known solutions such as Tableau and Domo. For the most part, BI tools are purpose-built for dashboards with rich visualizations. Also, BI tools are increasingly infused with artificial intelligence (AI) capabilities.

Corporate Performance Management Software:

On the other hand, CPM solutions are specifically designed for accounting teams to consolidate financial data. CPMs often produce professionally formatted financial reports such as: 

  • Profit & Loss
  • Balance Sheet
  • Cash flow statements

Most CPM solutions offer budgeting modules. And in recent years, the ability to do sophisticated planning such as sales forecasting and modeling.

If the difference between BI and CPM is so clear, why is “Financial Reporting in Power BI or in a Corporate Performance Management Solution” even a topic worth covering in a blog? 

Well, with the rapid rise in popularity of Power BI for financial reporting and its key competitors, an army of “hungry” consultants have emerged.  And, given a strong and flexible tool like Power BI, a sales person with the right technical skills can make almost anything, including formatted financial reports, look good.  Many companies have fallen into this trap lately of using Power BI for financial reporting. And, when you ask a skilled, revenue motivated consultant: Can you do that? Chances are that you will get a “Yes!”  And after a few weeks…or a few months, and a sizable consulting bill, you may actually have good looking Power BI financial reports.  But, as excited as your executives may be to have a single cloud-based portal for both dashboards and financial reports, for most financial executives this has a tendency to turn into a small nightmare.  Why?

Because neither Power BI nor its BI competitors were designed to manage a financial reporting process.

A lot of hard coding and hacking is needed behind the scenes in Power BI’s modeling language. Of course, if you are ready to hire a technical expert or keep your Power BI consultant permanently retained to handle model changes as your chart of accounts grows, your roll-ups change or you need to write a new report, you could survive for a while. Eventually, we can say with certainty, you will be back in Excel to do your financial reporting where your accounting team is comfortable with formulas and formatting.

Alternatively, you can deploy a CPM solution that is built to streamline the financial process. Also, you can deploy a CPM tool to deliver professionally formatted financial statements.

With a CPM solution, you can also move your budgeting process into the CPM tool and run it all in the cloud.  Now, it does not have to be an either or.

The Best Way: Use BI Tools and CPMs Together

An increasing number of CPM vendors offer pre-built integrations to leading BI tools like Power BI.

Two such vendors are Solver and Prophix. As an example, Solver is similar to Power BI in that it is an Azure cloud-based platform, and it comes with a pre-built connector to Power BI.  Below is an example of a comparison between Power BI and Solver. It clearly shows that companies looking for both dashboards and financial reporting should use a BI tool for their dashboards and a CPM tool for their financial reporting. Neither tool replaces the other.

power bi and solver

As organizations gear up for what can be the “Roaring Twenties,” having the right tools for the job might be one of the smartest strategic moves a management team can make. On the other hand, trying to fit a square peg in a round hole, could lead to frustration. The frustration is delayed reporting and wasted money. It is increasingly accepted that “data is the new gold.” When Power BI is integrated with a best-in-class CPM solution and both are running in the cloud, organizations are likely a step closer to success and industry leadership in the years ahead.

Sales Analysis Dashboard

Why companies are upgrading from spreadsheets to Corporate Performance Management Software

 

There are typically two or three key motivators why an organization starts looking for Corporate Performance Management (CPM) solution: 

  1. The pain of manual reporting or budgeting in spreadsheet is becoming a major burden on the finance team.
  2. Management sees a strategic advantage in automated reporting, planning and analysis tools to drive better and faster decisions than competitors. 
  3. The company is migrating to a cloud ERP system and also wants to update reporting and budgeting to a best-of-breed cloud solution.

Regardless, whether it is pain, strategic initiatives or cloud migration that drives the decision to find a Corporate Performance Management  solution, there are many pitfalls that can be avoided to increase the chances for success and a good return on investment (ROI). Some of these are discussed below.

Why careful CPM vendor selection is important 

 

  1. Turbulent Mergers & Acquisition (M&A) Market Can Affect You

When a vendor gets acquired, it often ends less than ideal for customers. 

A common reason that issues arise during a merger or acquisition stems from the fact that acquiring companies typically are much larger than the target company. The parent company’s politics and other internal priorities tend to drive away employees, disturb product development focus, increase prices and more. 

Eventually, many acquired CPM products die a slow death, and customers end up switching product and vendor. Comshare, Adaytum, SRC Software and Clarity were but a few CPM vendors that suffered this fate during the M&A spree that took place in the CPM space 15-20 years ago. 

Another wave of M&A is actively happening, and has been for the past 3 years. Companies involved in this CPM acquisition & merger wave include

Acquisitions & Mergers can mean your company falls victim to increased prices, turbulent support, and more. It’s important to make sure, when choosing a CPM Software vendor, to look for a vendor that is…  

 

  1. You Need to Protect Your Financial Investment

CPM solutions these days are increasingly cloud-based. Rather than purchase the software outright, CPM customers can subscribe to use the software on an annual basis. 

However, even if a subscription is reasonable, the amount of time and effort that internal staff has to put in to get a CPM solution fully up and running to include the reports and budget model and dashboards that management team needs, can be very significant. 

You can expect anywhere from $20,000 – a several-hundred thousand dollars in direct and indirect costs for full blown implementations. 

In other words, picking the right vendor and the right product carries a much larger costs than simply a year’s worth of subscription. 

 

  1. Protecting your job 

While a good vendor selection, and successful implementation, can be a significant boon to the careers of the management team in charge of the project, it can be the opposite if it all does not work out well. 

Let alone the stress and long hours that often come from enterprise software implementations,  should it not end well, it can be a scar that follows you for a long time in your career.

 

Key CPM vendor selection factors

While some organizations have too rigid software selection processes when they evaluate new CPM solutions, others suffer from the opposite problem.  

Here are Some Simple Tips for When You’re Looking for a CPM Vendor:

 

  • Avoid RFPs: Unless RFPs are simple and they focus on the important factors determined by the business users, they tend to be playing favorites based on who wrote the RFP.
    RFPs are often template-based, with far too many questions that drown the important items within the much less important topics. And let’s be honest, few team members end up reading all the RFP replies. Vendors tend to interpret questions their own way in order to provide a maximum number of positive replies. 
  • Know what you want: Communicate key objectives and critical needs to vendors and demand that these be covered in software demonstrations.
  • Look for pre-built ERP integrations: Make sure the CPM automation vendors you look at have a pre-built integration to your ERP system. Ideally they provide connectivity both to the general ledger tables and sub-ledger tables so you can report, drill down and budget to as much detail as your business users desires.
  • Look for Support for “best-of-breed” Dashboard tools: In the past, most CPM vendors developed their own, often very limited dashboard modules. The result has been that many organizations therefore also purchased best-of-breed dashboard tools in order to serve other users and other data sources in the company. However, with the rise of advanced visualization solutions like Microsoft’s Power BI and Tableau (acquired by Salesforce in 2019), the new trend is that CPM automation solutions focus on their core reporting, consolidations and planning capabilities and instead deliver their data out to best-of-breed dashboard solutions through pre-built integrations.   
  • Make Sure The CPM is Cloud-Ready: While many companies still run a number of their critical business systems on-premise, the cloud trend is crystal clear. CPM solutions are generally easier to manage in the cloud, with automated reporting tools upgrades, frequent releases, and user-friendly interfaces. Some, such as Solver CPM, can even query certain on-premise ERP systems live from the cloud, providing accountants with real time insights and drill down directly into their ERP. Make sure the CPM solution you look at was architected for the cloud and that it is to an “old”, single tenant on-premise architecture that the vendor is hosting somewhere in the cloud. 
  • Look for Vendor Stability: As discussed, there has been a tremendous amount of acquisitions in the CPM industry over the past couple of years. Most of the CPM vendors that have not been acquired by a larger vendor, have heavy Private Equity (PE) investments. Examples are Vena, Board and Centage. Notable exceptions to this are Prophix and Solver. PE firms generally want their money back within 4-5 years of making their investment so they can provide real returns to their own investors, and that often means that customers will find their vendor shifting owner again, often with resulting price increases and shifting development focus.  

 

Final Tip: Be Strategic

Whether it is too much spreadsheet reporting and budgeting pain or a tactical hint for competitive advantages with faster and better decision-making that drives your search for a Corporate Performance Management solution, a final piece of advice is to be strategic about it. Don’t look at a CPM automation solutions as a temporary band-aid, but view this technology for what it can be when properly chosen and implemented with care; one of your most important decision-making tools that can help drive growth and success for your organization in the 2020s.

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