Performance management services

Today’s businesses face a common set of challenges in three critical areas of performance management.

First, despite requiring substantial resources, planning, budgeting and forecasting, processes are often not strategically aligned. Second, performance reporting processes are often fragmented and inflexible, and frequently produce irrelevant results. Third, performance measurement fails to effectively measure and incent the most valuable metrics.

Companies have tried to overcome these challenges with heavy investments in enterprise resource planning software and best-of-breed software applications, and these have helped in certain areas. Yet many businesses still do not make decisions based on a fully integrated view of performance which includes the drivers, the measurements and the overall shareholder value they create.

Deloitte’s Integrated performance management (IPM) approach does just what it says: it integrates the key processes, systems and tools required to plan, manage and measure performance while providing your business with end-to-end insight into what you’re doing, how you’re doing and what you should plan to do in the future.

Consolidate your approach to performance management
There are three key improvement areas within Deloitte’s IPM approach:

• Plan, budget and forecast
  Corporate plans and budgets are often too unrealistic to engage business managers and too high-level to guide investors. These issues are the result of an incomplete view of a company’s overall financial strategy, and can prevent plans, budgets and forecasts from being strategically applied to drive the business and improve performance.  We can help by:
  – Applying our Enterprise Value Map™ (EVM) to identify and focus on the key value drivers of your corporate strategy
  – Leveraging our process design and implementation expertise, as well as our knowledge of planning tools to streamline your planning process and deliver an integrated view of financial and operational data
  – Improving the overall effectiveness of your forecasts by running multiple business scenarios and generating rolling forecasts to ensure your business remains on-track
  
• Performance reporting processes
  Despite ongoing efforts, most organizations continue to be saddled with inflexible reporting processes, over reliance on manual processes, and an inability to effectively leverage their data. This makes it increasingly difficult to fulfill growing compliance-reporting requirements and provide internal decision makers with accurate, current, and relevant information. We can help by:
  – Developing a governance structure to sustain change, standardize processes and drive common information standards
  – Building flexible reporting and technology infrastructure
  – Applying vendor-agnostic advice to select the reporting tools that are right for your business
  – Establishing a single version of the truth across the organization by consolidating your data to create accurate reports that link to your underlying business drivers
  
• Performance measurement
  You cannot purposely improve something that you cannot accurately measure. By using value drivers, we can help align your measurement processes with the key activities that make your business work. Deloitte can help by:
  – Narrowing your focus on key performance indicators
  – Implementing a common finance information strategy
  – Developing performance measurements that have broad significance for employees, including clear accountability and appropriate rewards
• – Implementing balanced scorecards that cover all key value levers as well as multiple dimensions (operations, customer service, financial performance, etc.)

Improved performance management delivers clear benefits
Deloitte’s performance management solutions can help your organization by:

• Focusing on strategic execution
• Developing streamlined and strategically aligned budgets and forecasts
• Improving capital allocation decisions
• Aligning plans and performance measurement with shareholder value
• Improving visibility of key business drivers with dashboards and benchmarks
• Streamlining management reports to create a unified view
• Improving the transparency, reliability and timeliness of your data
• Helping motivate and retain employees with rewards linked to strategic goals

A sustainable, value-driven performance framework 
With Deloitte’s proven methodologies, our proprietary value creation toolset and extensive cross-industry experience, we can help you implement a performance management framework that will not only improve performance, but make it measureable, sustainable and visible to investors and other key stakeholders.

Shareholder value

Shareholder value: it’s what business is all about, it’s the bottom line. But creating, maintaining and communicating shareholder value is an increasingly complex process. In a post-financial crisis economy with markets in flux and investors still tentative, creating shareholder value is a bigger challenge than it’s ever been. And as companies compete for available dollars, it’s difficult to identify an opportunity and know how to take advantage of it.

Beyond building value, companies often neglect to communicate value – the processes that drive it and the metrics that define it – to shareholders or to the enterprise at large. If value isn’t both fixed in corporate culture and disseminated clearly to shareholders, confidence and future investments can be imperilled and growth initiatives put at risk.

The cost of failure in today’s market is high. To stay ahead of the competition, you need the tools and methodologies that make shareholder value understandable, achievable, and demonstrable as a key driver of financial performance.

These capabilities allow you to integrate data capture, processing, analysis and information with key finance process requirements.

Make sure you’re working with the right tools
No matter how in-tune your executives are with the overall goals of the business, they may have difficulty understanding, measuring, forecasting or communicating the effects of their strategies on shareholder value. Deloitte provides a suite of tools designed to disseminate value creation throughout the organization as a principle and an outcome, from high-level decision-making, to investor behaviour, to day-to-day operations. Our range of value creation services, from benchmarking to resource allocation to investor-focused analysis, helps you increase financial performance and build investor confidence.

• Enterprise Value Map™ (EVM) provides a visual framework for linking your strategies, initiatives and operations to shareholder value. The EVM is based on four key drivers of value: revenue growth, operating margin, asset efficiency and expectations, with each driver broken down into specific levers you can use to improve your operations and increase shareholder value.

• ValueAnalytics™ analyzes your company’s operational and financial performance history to determine whether your business is creating or eroding value. In addition to quickly generating a customized and detailed analysis of your company’s internal performance, ValueAnalytics™ offers a point-by-point comparison to your peers.

• ValuePrint™ helps you measure the business value of investments and to develop rigorous business cases. In addition to defining the scope and goals of a business case, ValuePrint™ provides a financial cost/benefit analysis the proposed investment to help you select among the various investment alternatives.
• Portfolio value optimization helps you see beyond the costs and benefits of individual projects to better understand and manage your entire project portfolio and its effect on business performance. It’s designed to align your project portfolio with overall business objectives, support resource-allocation decisions and help stakeholders understand how each project contributes to the value creation process.

Our value creation services provide real benefits

• Translate financial metrics into tangible, consistent, organization-wide activities
• Develop and communicate a clear vision for creating shareholder value
• Align your portfolio of initiatives with objectives and strategies
• Link performance management to concrete metrics
• Align business planning and budget allocation with the initiatives most likely to create shareholder value
• Communicate key value information across your enterprise in clear, common language
• Track project performance and objectively measure ongoing benefits
• Enhance investor confidence and attract financing

Drive value and performance across the enterprise
To create and protect value over time, you must make value creation a vital part of enterprise life. Deloitte value creation services provide a consistent framework for evaluating projects, aligning them with strategic goals and making end results understandable to, and actionable for, all stakeholders.

Strategic cost management

All organizations face cost challenges: some are predictable and some unanticipated. Ironically, success can exacerbate these problems and growing organizations face a range of potential issues. For example, expanded offerings and successful product lines can create unforeseen expenses. Sales, promotional and distribution costs may have to be adjusted to accommodate an increasingly diverse customer base. And many companies’ cost models don’t provide enough insight into which enterprise activities actually drive costs: they’re simply not sophisticated enough to account for those variables.

The responsibility for meeting these challenges typically falls on the finance department and the CFO. But if you don’t have the right cost structure for managing unforeseen costs, for aligning cost management with strategic priorities, or for cutting costs without endangering compliance and diminishing performance, it can be an uphill battle.

Our approach to cost management identifies hidden business costs and provides an organizational structure to effectively manage and where possible reduce costs – all without diminishing value.

Cut costs, protect value and drive strategy

• Strategic cost management  
  The goal of strategic cost management is to build a structured approach to sustaining value over time. This means creating a cost model that clearly identifies your critical cost drivers. Deloitte’s highly experienced cost management professionals have refined this process, as well as developed a suite of methodologies, tools and resources, that have been used on numerous global projects across all industries. For example, we can help you understand how to build a strategic business case by conducting a short pilot project focused on a specific cost challenge. With our approach to strategic cost management, you can build your cost model into your organizational structure, informing strategic decisions at every level and in every department and function.
  
•  Enterprise cost reduction  
  Once your cost model is in place and you identify critical cost drivers, you can undertake cost-cutting measures that support your business objectives and preserve existing value. By determining which activities contribute the most to long-term shareholder value, you can identify areas that provide the best opportunities for strategic cost reduction.

This methodology can be applied to virtually every aspect of your organization, including your business configuration, processes, organizational models, approach to governance and tax structure. Beyond that, we can help you streamline your technology, human resources and sourcing processes to free up resources you can re-apply to strategic priorities.

Strategic cost management yields benefits others may overlook
Deloitte’s strategic cost management solutions can help your organization:

• Identify process activities by leveraging our Industry Prints™ solution, proprietary process maps that provide a comprehensive list of activities for every operation and function
• Pinpoint key cost drivers and quantify their effects on processes and activities
• Develop immediate cost reduction strategies that don’t hamper your ability to create long-term value
• Streamline your cost management processes with proven, customizable methodologies, tools, cost models and data collection templates
• Make informed pricing decisions based on true profit margins
• Increase efficiencies to generate long-term savings for your organization
• Create a realistic roadmap and resource plan to raise organizational cost awareness
• Determine the costs and efficiencies of distribution channels
• Realize cost savings across multiple business units
• Implement cost reduction and profitability improvement strategies that take your entire company into consideration
• Enjoy immediate short-term cash flow improvements followed by long-term structural cost reduction

Cost management pressures mount, but solutions are at hand
CFOs are under enormous pressure to provide organizations with balanced, strategic financial guidance and cost controls, all the while fulfilling performance, compliance and investor mandates. Deloitte can help you build a cost model that identifies your true cost drivers and helps you manage them with strategic insight, sustainable results and organization-wide transparency.