used properly? What are measures of success for each department? What
performance is expected according to those measures? What are the
potential risks to the plan?
Reporting and consolidation:In this phase of CPM, you take financial
results and consolidate them for various purposes. For example, the
results are consolidated both for financial reporting (to the SEC), known
as statutory consolidation, and for management reporting (in such a
case, consolidation by business unit or product line makes more sense).Revenue, cost, and profitability modeling:Understanding the profitabil-
ity of your business activities provides perspective and guidance for your
strategic planning cycle. As you create a strategy — a plan — and exe-
cute it, it is vital to understand the profits and losses associated with cus-
tomers, channels, products, and other business activities. To do this, you
must be able to predict and track revenue and costs. Accurate models for
these numbers enable you to forecast profits, which becomes an impor-
tant factor in understanding the success of a corporate strategy and
helps you compare alternatives when allocating resources.If we take a step back, it is easy to see a parallel between the general shape
and patterns of activity in CPM and GRC. Both disciplines have a strong top-
down component. Strategy in CPM sets the broad picture. Governance in GRC
does the same thing. Strategy is of course related to governance. Strategy is
the what:governance is the how.
In fact, the components of CPM and GRC are, in most cases, two halves of the
same coin. Strategy management lays out the goals of the organization as
well as initiatives for turning those goals into action. Governance provides
the rules, policies, and applicable regulations that must govern those actions.
Business planning is more effective when it is informed about material risks
to the business, and resources for mitigating those risks are allocated appro-
priately — and risks must be analyzed in the context of business plans in
order to establish relevance and material impact. Financial results need to be
consolidated in a way that ensures compliance in order to be reportable. In
each case, parallel business processes are utilizing the same data for separate
but related purposes.
The planning stage moves to a more detailed level. In CPM, resources are
allocated and KPIs are created. In GRC, some of those same KPIs may be used
to identify and manage risks or to help identify improper behavior. Some KPIs
may be called Key Risk Indicators (KRIs), but they are usually numbers that
can be used for many purposes if they are meaningful.
In the reporting and consolidation stage, the convergence becomes stronger.
Neither CPM nor GRC can be effective without accurate data. Financial
reporting, referred to as statutoryreporting, must obviously be compliant