Solution overview

Clarity Performance Management (CPM) is a suite of tightly integrated, highly scalable, web-based applications that support all aspects of Corporate Performance Management. Clarity Performance Management enables organizations to measure actions against their unique business strategies in order to ensure that the objectives, strategies and actions of an organization are aligned at all levels, across the enterprise.

Clarity Performance Management is unlike other products in the market as it was developed from the ground up as a web-based suite of applications, we did not add a web interface with limited functionality onto an existing application. All of CPM's sophisticated end-user features are available through a web browser alleviating complex installation and maintenance requirements thereby reducing strain placed on IT.

With Clarity Performance Management, organizations can:

• develop accurate and timely budgets and plans
• perform ad-hoc financial analysis
• create highly formatted financial statements
• consolidate financial statements across multiple entities
• deliver key performance indicators to senior management
• perform what-if modeling on future financial performance
• analyze sales results
• forecast the performance of financial and non-financial metrics
• track profitability by product and/or by customer.

Budgeting & Forecasting

Within CPM the Budgeting & Forecasting process components seamlessly feed into each other. There are no worksheet linkages or distribution lists to maintain and the CPM database provides data integrity so that you can trust the numbers. Initialize planning templates Within CPM you only need to create each unique template once. Most CPM clients need to create between 10 to 20 unique planning templates. CPM will automatically replicate the template for each business unit. Once a new business unit is added, CPM automatically creates its associated planning templates. Creating links between templates CPM allows you to create and control all of the linkages between accounts including inter-financial statement relationships. For example, the effect of balance sheet loans can flow through to P&L interest. Headcount Plan Use the CPM database to communicate directly with your payroll package to upload your existing headcount. Then, define templates in CPM to gather your projected new hires, calculate a merit increase, determine your payroll taxes and benefits, and even split individual employees across more than one department or project. Through CPM, you have the control to determine which Budget Managers see which templates. CPM will aggregate individual salaries, payroll taxes, and benefits for each department. SG & A Expense Plan Whether it be 100 or 1000 cost centers, CPM provides an intuitive environment for managing their rollout to Budget Managers and their roll-up to consolidated totals. After the plan is entered, many of our clients then define allocation methodologies through the CPM Allocation Manager to either perform inter-departmental or overhead allocations. Capital Plan Another great benefit of CPM is compiling the Capital Plan for each business unit into one, real-time, collaborative environment. Capital can be planned at the transactional level by individual purchase and depreciation tables can be maintained by category to flow the correct amount through to your accumulated depreciation and P&L depreciation. An enterprise-wide consolidated list of capital requests can be viewed at any time. If you choose, capital items can be allocated across multiple business units or even sorted by capital requests by approval status. Profit & Loss Planning Never has P&L Planning been so easy, so complete and so accurate. CPM allows for greater controlled flexibility to break your revenue and cost of goods into their contributing drivers for improved planning accuracy. Break revenue into Price x Units, or Hours x Rate, or Contractual Adjustments. Split Cost of Goods into Standard Cost x Units. Determine your price-volume mix and calculate fully contributed P&Ls at all levels or your organizational structure. Forecasted Balance Sheet & Cash Flow Many of the most complex forecasting formulas are contained within Balance Sheet and Statement of Cash Flow. Whether it be an inventory lag, Days Sales Outstanding (DSO) calculation or a plug on your forecasted cash flow of long-term debt CPM is up to the task. The rules for each of these calculations are defined in the CPM database (i.e. decision to based forecasted Accounts Receivables on a DSO), the assumptions are maintained by the end-user as basic assumptions in your templates (i.e. the number of DSO) are maintained in the CPM template and can even be changed by planning scenario. Communicating approved plans & results One of the biggest planning challenges is communicating the final budget and actual results back to your Budget Managers to make them accountable to their results. How many times has a Budget Manager been managing a version of the plan other than the approved plan? Through CPM, your Budget Managers can either have real-time access to the most recent version of the plan and actual information as it is loaded or receive scheduled report books through e-mail. Initialize templates for re-forecast For most organizations it takes days to create templates that mix months of actual data from the General Ledger with months of plan from the last forecast period. Whether it be a monthly reforecast, a quarterly reforecast, or a rolling forecast, CPM is easily configured to create these types of templates in minutes. CPM will lock down the months that contain actual data and provide forecasting tools and data entry templates for you to trend out or key in the remaining planning months.

What-if Modeling

What-if modeling in most cases involves taking a copy of data you already have and then making alterations to that data for changes to:

Profit & Loss Statement
- Absolute or % increases/decreases to revenue, expenses
- Add/move/remove products, locations lines of business
- Change headcount SG&A allocations, standard costing, interest rates, tax rates, depreciation method

Balance Sheet
- Change days sales outstanding, inventory turnover, debt-to-equity assumption
- Increase/decrease capital

Consolidation
- Change currency conversion rates
- Re-organize business units
- Create an alternate roll-up

What-if modeling provides the organization with realistic alternatives and contingency planning. When there is a change to the economic climate, what-if modeling affords the organization greater flexibility to forecast its effect and act conclusively.

The CPM database allows you to dynamically link your statements together such that any line item changes are reflected throughout your entire financial model. CPM's versioning capabilities allow organizations to easily create copies of their existing plans, then CPM's rate templates, what-if modeling, allocation manager, and goal seeking features allow you to drive out your desired scenarios.

What-if Modeling can be top down where changes are made for an entire company, division or line of business or bottom up where changes are made to individual business units. CPM Reporting allows you to compare and contrast what-if scenarios against each other.

Strategic Planning

Strategic Planning involves taking on a strategic outlook of the organization beyond just the next operating year and monitoring your progress towards this outlook. It often takes place at a more aggregate level within the organization and account structure and involves only senior level managers. It is also typically done at an annual level, not by week or by month.

Within CPM there is no limitation on the number of years forward you can plan. For each year and each version of the plan you can choose your desired periodicity whether it be monthly, quarterly, or yearly. CPM also allows you to plan at either the General Ledger account or reporting line level (groupings of General Ledger accounts). You can even define different calculation rules for the strategic plan than those that were used for the budget.

Once your strategic planning outline and rules have been defined in CPM you can begin to define your growth and/or inflation factors. Use Net Present Value on capital projects to determine which projects offer the best return for the organization and to ensure that projects which would result in a Return on Investment lower than the company's targeted rate of growth are not chosen as well as provide a well defined strategic road map to the organizations that can then be measured and tracked through key performance indicators and Balanced Scorecards.

collaboration & workflow

Organizations are constantly looking for painless ways to allow for greater participation in the planning process and create an environment of accountability. In our discussions with companies we find the following common themes in what they are looking for:

CPM Minimizes the learning curve

CPM utilizes a spreadsheet style interface minimizing the learning curve. CPM provides a single integrated platform for budgeting and reporting so that your Managers do not have to be trained on multiple applications and also reducing the confusion of having more than one version of the data.

CPM integrates process controls
CPM budget entry templates are tightly controlled and cannot be altered by managers to ensure accurate aggregations of information. They also have tight security controls to control which Managers can edit and/or view which planning templates.

CPM version control allows you to manage multiple copies of the budget and ensure that Managers are working within the correct version of the plan. Approval levels ensure that senior management approves the Manager's entry before it is consolidated.

CPM also allows you to track Budget Managers progress and track the actual dollar changes being made by user.

One shared database
CPM's single shared database allows for real-time collaboration regardless of where the user resides. Using one shared database also allows you to make changes to your templates after they have been rolled out to users so if you add an account or change a formula, you will not have to collect back the worksheets to make changes or wait until another budget pass.

With CPM's single shared database, you can also be sure that all managers will be managing to the same version of the final approved budget.

Web Architecture
CPM's web architecture has numerous advantages such as rolling out to remote locations, the elimination of desktop installations and real-time collaboration between users.

management reporting

In most organizations management reporting is highly decentralized with many managers spending time to keep their own records of invoices and sub-totals by project or initiative. Other managers end up getting frustrated because they do not have the same information as their peers and/or the information being used for decision making is inconsistent and sometimes conflicting. When information is provided by finance it is just not timely.

When management reporting is formalized within the organization, information views are typically limited to two dimensional layouts with one field in your rows - typically accounts, and one field in your columns - typically a time periodicity. Investigation of data can only occur through preset reports, which does answer the questions you did not know you wanted to ask.

CPM uses a combination of Online Analytical Processing (OLAP) and Relational database technology to create a complete reporting package. OLAP (multidimensional) databases are best known for creating aggregations of relational information (i.e. a General Ledger) by way of reporting cubes. Like a pivot table, CPM's OLAP technology allows users to interact with the data in their own way through drilling, slicing and dicing. Users can create their own reports without having to rely on IT for assistance.

CPM's Detect & Alert and Traffic Lighting functionality highlights material variances to the Manager(s) responsible. CPM's drill through capability then allows users to investigate and understand variances by drilling down into the supporting relational database to see the actual transactions.

CPM allows Managers to get the information they want when they want it, laid out how they want it. CPM ensures that all Managers who share access to the same business units see the same information. CPM's publish ready report books and e-mail distribution allows organizations to get information to any employees regardless of whether or not they are a CPM user.

financial management

Most organizations either perform financial consolidations in their accounting package, in spreadsheets or in a dedicated financial reporting application. CPM's philosophy is that this information should be stored in a single integrated platform with your budgeting & forecasting information. Why?

1.	You have already mapped links between your accounting package and CPM for the upload of actual information for variance reports and reforecast templates.
2.	CPM's tight security can be leveraged to control which Managers see what information.
3.	CPM's detect and alert, traffic lighting and drill through to actual capabilities can be leveraged for Manager accountability on variances.
4.	CPM's OLAP database and excel like-interface can be used to create highly formatted reports with trustworthy information.
5.	CPM's reports can be created by Finance and set up to maintain themselves when new accounts or business units are added.

There is of course additional functionality required to perform financial consolidation.

Organizational Structure
The CPM database allows you to fully or partially in the case of minority interests or joint ventures, consolidate business units together. New business units can be set to automatically integrate into existing roll-ups. Multiple hierarchies can be established to support multiple roll-ups of your business units i.e. pre vs. post elimination or management vs. financial reporting. In the case of multiple currencies, each business unit can be assigned an input currency.

Period ending processes
CPM's journal entry capability can be set up to automate month end entries such as eliminating entries and accruals. CPM's allocation manager can be used to create fully contributed P&Ls by tax entity to properly calculate taxes. CPM reports will automatically pick up new business units, new accounts and calculated exchange rate differences. CPM's report books can be used to automate the month-end distribution of reports into your desired file format out to your desired reviewers at your desired time.

Management Methodologies

Organizations incorporate management methodologies to link vision and strategy with performance. In many organizations multiple methodologies are incorporated to meet their objectives. Activity Based Planning is used to manage overhead costs and more accurately align overhead costs with the revenue it supports to properly execute profitable pricing strategies. Six Sigma advocates quality management as a component of improving performance through reduced overheads and increased competitiveness. Economic Value Added methodology links employee compensation with increasing the economic value of the organization with the objective of making employees act like owners. Then, there is the Balanced Scorecard and Strategy Maps which is an overriding umbrella methodology which asks the organization to create 4-categories of key performance measurements to tie everyday decision making to the overall execution of strategy.

CPM uses an open-methodology architecture that supports each of the above methodologies through a combination of database tools and customizable end-user template design to articulate your organization's vision across the enterprise.

Activity Based Management
ABC Management, the Grandfather of current performance management methodologies has come back into favor within many world-class organizations after originally being dismissed due to the complexity in keeping the model up-to-date. Now, through improved technology and real-time web-based applications, ABC Management is experiencing a re-birth.

CPM allows you to build in the activities that make up your costs and then define the appropriate cost driver for each activity to apply the activity to the internal customer based on usage by way of the CPM Allocation Manager. To the organization when linked to compensation, this encourages improvements to competitiveness and effectiveness, protects against over-utilization of resources, calculate profitable pricing strategies, discontinue unprofitable resource draining product lines, and work with your customers towards an amicable business relationship.

Balanced Scorecard
Organizations who embrace the Balanced Scorecard buy into a philosophy where 75% of their organization's value is locked in metrics that are not financial, namely, their customers, their internal business processes and their learning and growth initiatives. Balanced Scorecards involve communicating strategy to every level within the organization so that corporate strategy is integrated with everyday decision making. The best Balanced Scorecards are not a static set of measurements, but instead remain a work in progress and involve a multi-year progress of testing and tweaking performance measures to reflect better information and changes in business climate.

The CPM Balanced Scorecard solution is completely customizable to your organization's needs. CPM effectively integrates its database architecture and end user interface to provide a solution that satisfies the requirements of the Balanced Scorecard methodology. Start by defining your Scorecard perspectives, then below each of your perspectives insert your measures and finally link (calculate) your measures to the relevant determinants in your CPM financial database and supporting source systems. Complete your scorecard by designing your end-user data view and integrate your data views with CPM's collaboration and security tools to communicate your scorecard to all levels of performance management participation and link accountability to strategy.

Economic Value-Added (EVA)
An EVA management methodology changes an organization's outlook and associated management compensation plans from short-term to long-term growth after tax profits that outpace the cost of capital.

The EVA methodology involves removing the confusion of multiple measures of performance in favor of one overriding measure. This offers the organization one common language to communicate between all levels of the organization.

In order for EVA to be successful, EVA must be measured and reported for each location, business unit, product, customer and activity which in many cases is just not possible within an organization's existing technology infrastructure. EVA specialists Stern Stewart recommends that organizations employ Online Analytical Processing (OLAP) solutions, the same technology used by CPM to successfully support an EVA methodology.

CPM supports EVA through:
1.	The scrutiny of financial drivers across the organization through slice & dice technology to reduce costs and taxes.
2.	The examination of capital expenditures: both management of new capital and redeployment of existing capital.
3.	The comparison of the Net Present Value (NPV) of a proposed project to the opportunity cost of employing that same capital elsewhere.
4.	Drilling into the Cost of Capital and comparing the Cost of Capital to alternative available capital in order to ensure it is the lowest it can be.

Six Sigma
Six Sigma takes a statistical approach towards targeting the organization's defects across all company processes from defective products to errors in payables to mistakes in recruitment. When fully calculated, most organizations operate at a defect level between 20 to 30 percent of revenue, or in other terms 35,000 defects per million operations where six sigma organizations target these defects and strive towards 3.4 defects per million operations.

CPM modeling for Six Sigma involves dissecting your organization into measurable projects such as call center response by location, product delivery time to customer by region, and number of misassembled parts by plant. From here, CPM allows you to set Six Sigma performance targets and link compensation to these targets. The CPM solution allows you to continue to monitor projects that have reached Six Sigma and add new projects where improvement is necessary and to create a consolidated organizational view of defects per million operations.