What Complex On-premise CPM Solutions Don’t Tell You About Managing Discretionary Initiatives, and Why the Economy Mandates You Understand This Now!

There’s common weakness shared by simple spreadsheets and complex on-premise CPM solution alike. With the economy growing more challenging, it is becoming apparent that budgeting and planning professionals need to avail themselves of different methodologies to effectively manage their organization’s plans.

Chrysler’s announcement last month that it planned to shutter a mini-van manufacturing plant in St. Louis is disappointing, particularly for us locals, though the move was not unexpected. The combination of a slowing economy and rising fuel prices have been a double-whammy for the auto industry in general, and Chrysler is not immune.

The decision to close the St. Louis plant comes only years after Chrysler spent billions retrofitting the facility. What seemed like a good idea at the time, ramping manufacturing for an increasingly popular product, was one of many discretionary initiatives determined by Chrysler to be a good use of capital.

Discretionary initiatives are a hot topic for finance executives these days. The term refers to projects that may or may not be funded in a given budget year. They may be massive in scope or very small, and all have cost / benefit associations which can be measured. Examples include basic cost-cutting initiatives such as buying a new color copy machine, implementation of equipment that offers a quick pay back, or perhaps the opening of a new store.

Executives choosing which initiatives to fund and which to stall require visibility into how the various options impact their over-arching strategic plan. Too often that visibility is limited by the tools used by businesses to manage corporate and departmental budgets. Many companies still rely on desktop-based spreadsheets, which are disjointed and rarely tie into cash-flow and available resources. Other companies have committed to behemoth enterprise software implementations, which appear flexible but actually require extensive and expensive configuration—also known as one of the ‘dirty little secrets’ about on-premises corporate performance management (CPM) software. In these huge implementations of CPM, discretionary initiatives get buried in extensive budgets and cannot be managed or controlled as individual budget line items.

Software as a Service CPM offers a refreshing alternative to spreadsheet and complex on-premises solutions. Leading on-demand budgeting and planning systems contain built-in support for discretionary initiatives, and web-based accessibility to data ensures executives have the information they need when they need it. Host Analytics solutions, for example, incorporate best practices gleaned from eight release cycles.

Today more than ever, companies must understand and plan for discretionary initiatives, and choose their CPM technology provider carefully. Only then will executives avoid surprises and retain the agility—and discretion—to operate successfully.