Where’s the Innovation in Corporate Performance Management (CPM)? – A Look Back and the Quest for a Single Source of Truth

Corporate performance management (CPM) has been the framework through which chief financial officers (CFOs) and finance teams track, manage, and optimize organizational performance. As the demands of modern businesses evolve, however, the limitations of traditional CPM approaches are becoming increasingly evident.

In the first blog on Where’s the Innovation in CPM?, we examined why traditional CPM systems fall short of today’s needs. Many CPM solutions are still separate applications for each process despite decades of evolution. As a result, CFOs and finance teams are left with a patchwork of applications, integration issues, and data silos. This reality means finance must manage complex reconciliations; process inefficiencies; manual work to align actuals, plans, and forecasts; and limited insights. The first post thus questioned the following:

• Why hasn’t CPM technology evolved in tandem with business demands?
• Why do so many organizations still rely on disjointed solutions to manage financial close and consolidations, financial and operational planning, reporting, and analysis?

In this second post in the series on the evolution of CPM, we’ll do the following:

• Examine the foundational components of CPM
• Explore the history behind its development
• Discuss the long-standing challenges that have prevented many organizations from realizing a true “single source of truth”

Defining CPM and Its Core Processes

At its core, CPM is the orchestration of financial and operational processes that help organizations do the following:

• Drive efficiency in processes
• Link those processes as they feed each other trusted data
• Support finance and operational reporting to all stakeholders across the business to make data-driven decisions

Here’s what CPM includes:

1. Financial Close and Consolidation— Aligning and consolidating data across entities for accurate, timely financial, management, and compliance reporting.
   
   From the beginning of CPM, the focus has been on consolidations, which relied on the ERP to manage the reconciliations and matching of transactions. Yet consolidations have evolved right alongside CPM. Now, they unify the broader close activities of account reconciliations, transaction matching, and journal entries to streamline the full close and consolidation process.
   
   With modern CPM solutions, AI is being incorporated to drive process efficiency and insights to detect anomalies, suggest adjustments, and deliver insights. These AI-powered solutions help further streamline and reduce the time needed for the close and consolidation process.
2. Financial and Operational Planning — Creating budgets, forecasts, and strategic plans aligned across departments and with actuals to seed all planning, reporting, analysis, and variance narratives.
   
   Historically, planning operated in silos within CPM, often detached from the actuals needed for meaningful variance analysis. Reporting also focused primarily on historical data. This separation made it challenging to align financial and operational insights across the organization.
   
   Today, modern CPM has transformed into a unified financial and operational planning solution. That solution empowers finance teams to connect actuals, forecasts, and strategic plans into a cohesive narrative. With AI-driven insights and real-time data from the close, this unified approach enables proactive, data-driven decisions. Organizations can thus pivot with agility and gain insights across all finance functions.
3. Reporting and Analysis — Providing internal and external stakeholders with insights into current, historical, and future performance.
   
   Traditionally, this process has focused on financial and management reporting, with separate business intelligence(BI) tools doing the wider financial and operational reporting and analysis. Alongside the evolving role of CFOs and finance teams as the trusted source of reporting and analysis, CPM has incorporated many traditional capabilities of separate BI tools. This change is unifying financial and operational data from across the organization, aligning the data with the financial performance reporting to stakeholders across the business.
   
   Thus, the agile financial analytics capability is being infused with AI to do the following:

• Provide broader business insights and context
• Surface information hidden in the data 
• Deliver true data-driven decisions

All three processes are integral to any organization’s success. Through the processes, leadership can measure effectiveness, maintain alignment with plans and forecasts, and quickly respond to changing business conditions. Despite decades of evolution, however, CPM technology has been dominated by a multi-application approach that has not kept pace with organizational needs. That approach fails to unify the processes detailed above, reduce complexity and latency, and achieve agility to adapt to the demands of the business.

A Brief History of CPM: The Rise of Silos

From the beginning of CPM, solutions were developed independently to handle specific functions, such as consolidation, budgeting, and reporting. These standalone solutions were a product of their time as technological limitations made it challenging to integrate all required data and to integrate across systems. Consequently, CPM developed around specialized applications that each managed a piece of CPM.

However, with the growth and complexity of organizations today, their processes have become more complex, and as the volumes of data exploded, so did the number of applications and the need to integrate them for efficiency, trust, and a holistic view of the business.

But this has translated into a widespread problem: fragmented systems with unique data structures, which puts the burden on companies to spend significant time and effort to build and maintain complex integrations to keep everything working

The Quest for a Single Source of Truth: A 30-Year Pursuit

The concept of a “single source of truth” in CPM has been the Holy Grail for finance and operations teams. In theory, a single source of truth means that all organizational data — whether financial or operational — is unified, accurate, and accessible for analysis.

Achieving this goal enables leadership to make data-driven decisions confidently without the need to manually transform, move, and reconcile data across multiple systems.

Yet achieving this level of integration has proven to be incredibly challenging. Most CPM systems are not designed from the ground up to deliver this kind of unification. Instead, they’ve been piecemealed together over the years, with new modules and functions added on top of old architectures. This fragmented approach creates several persistent issues:

• Data Fragmentation — Separate systems with disparate data at varying levels of detail make it difficult to combine, align, and reconcile data without significant effort.
• Integration Complexity — Connecting multiple CPM tools requires extensive custom integrations and complex mapping to align the data. This requirement creates complexity in maintaining those integrations and adds latency in the processes. Plus, the integrations are costly, requiring resources (both finance and IT) and manual processes to manage, and can be prone to errors.
• Technical Debt — With each new application, integration, or workaround, organizations accumulate technical debt. That debt increases maintenance costs and adds latency in unifying close, consolidation, planning, and reporting. In addition, accumulated debt limits the organizational agility to adapt to changing business conditions.

Even today, companies that pursue a single source of truth face data inconsistencies and constant reconciliation work. This reliance on fragmented solutions creates a vicious cycle. Specifically, CFOs and finance teams are forced to spend more time managing CPM systems and less time driving efficiency and leveraging insights to optimize performance.

Why Traditional CPM Approaches Are Falling Short

The persistent challenges detailed above highlight an uncomfortable truth: many CPM vendors have taken the path of least resistance. They opt to “lift and shift” legacy architectures rather than rethinking CPM from the ground up for modern needs.

For vendors, this approach is cost-effective and, quite frankly, easier. They don’t have to do the hard work of unifying all CPM processes and providing intelligence for how the data and processes will work together. As a result, vendors have a faster time to market. Organizations who rely on traditional CPM approaches, however, must deal with limited flexibility, siloed data, and costly application acquisition, integration, and maintenance.

Several limitations make these legacy approaches unsuitable for modern businesses:

1. Disjointed Data Models —Traditional CPM systems lack a unified data model that can flex the level of granularity of the data by process to deliver operational relevance and adaptability across the business processes. As a result, users must manually reconcile and integrate data across disparate systems.
2. Process Inflexibility — Traditional CPM systems often lack the flexibility to support new processes, forcing organizations to adapt to the software rather than the other way around.
3. Poor Scalability — These systems struggle to scale with growing data volumes — especially for operational and transactional data— and increasing demands for real-time insights. As a result, the systems are ill-suited for agile decision-making.

Due to these constraints, the CPM market has been conditioned to accept inefficiencies. Thus, common practice expects data from different systems to be reconciled, integrations require ongoing maintenance, and reporting and analysis always lag real-time performance.

The Burden of Complexity and Technical Debt

As organizations invest in additional tools to manage CPM, the complexity of maintaining these systems increases. Every new tool added to the mix means teams must invest in more integration, more reconciliation, and more manual processes to ensure data consistency. Such investments create a significant operational burden by tying up resources that could be better spent in other areas. For example, those resources could instead be used to drive efficiency, shorten cycles, and provide insights into the business needs to optimize performance.

Over time, these integrations and customizations accumulate into what is known as technical debt. This debt is a build-up of costly, cumbersome infrastructure, processes, and tools that limit an organization’s ability to adapt and innovate.

Technical debt doesn’t just drain resources. It also limits an organization’s ability to respond to change. Organizations are often locked into their existing CPM systems, unable to easily adopt new technologies or pivot to address new challenges. As a result, these outdated systems act as a brake on business agility — rather than the accelerator they are meant to be.

Rethinking CPM for a Modern World

The good news is that there are modern CPM vendors that have rethought how CPM should function. Building from the ground up, these vendors are integrating all data and processes, rather than relying on organizations to do so. Vendors doing that hard work give organizations the time and flexibility to evolve as their businesses and markets evolve.

With built-in analytics and a modern, cloud-based infrastructure, OneStream eliminates technical debt. Organizations can then focus on strategic imperatives rather than maintaining outdated systems and approaches.

Technology has also evolved significantly over the past few years. As a result, organizations can now finally break free from the limitations of the traditional approach to CPM. Modern CPM solutions are being designed with a different vision. That vision focuses on a unified data model, unified financial and operational data and processes, real-time insights, and AI to drive efficiency, context, and insights.

For example, cloud-based CPM platforms like OneStream bring all core functions—consolidation, planning, reporting, and analysis—into a single, integrated platform. The platforms also power those functions with AI, delivering process efficiency, improving forecast accuracy, and streamlining how finance and their business partners get things done. In turn, these improvements eliminate the need for multiple tools and complex integrations. Organizations thus have a path to the single source of truth they’ve been pursuing for decades.

With a unified platform, CFOs and finance teams can streamline processes, reduce technical debt, and gain access to data as real-time as needed. These benefits allow for faster close and consolidation, financial and operational planning, and reporting and analysis to drive more efficient, timely, and informed decision-making.

The Road Ahead

As the CPM landscape continues to evolve, organizations should embrace solutions that fundamentally change how performance is managed. Organizations must therefore move beyond traditional, fragmented approaches and instead invest in modern, unified platforms. By doing so, companies can finally achieve the agility and insight needed to thrive in a dynamic business environment.

In the next post of this series, we’ll dig deeper into the modern approaches to CPM helping organizations overcome these legacy challenges. We’ll also look at how modern CPM provides a platform for innovation. Especially, we’ll look at how organizations can leverage this platform like an operating system for modern finance. Doing so will deliver the flexibility and capabilities organizations need to adapt to changes and tackle extended use cases to help optimize performance.

Ultimately, we’ll explore how unified platforms, transactional/operational data, multidimensional/dynamic data capabilities, and integrated analytics are transforming CPM and setting a foundation for future innovation.

Ready to learn more? Check out our website and customer successes. And stay tuned for the next blog to get a deeper look at modern approaches to CPM and the related benefits. These benefits are shaping the future of what defines CPM and how organizations can focus on the value they can deliver rapidly to their organizations.