In a previous post, we explored the concept of Enterprise Performance Management (EPM) - sometimes referred to as Corporate Performance Management (CPM) or Business Performance Management (BPM). It is often equated with Financial Planning & Analysis (FP&A), but generally has a broader scope. I am not too concerned about specific labels or definitions, but I am interested in the role that all of these types of software fulfil in the modern corporation. Viewed from a distance, all of these terms seem to describe broadly the same thing, although they may have slightly different emphases and characteristics.
The key purpose of software described by all of these terms seems to be to provide strategic planning and analysis in a way that integrates the various departments and functions of the business. The key requirements are embodied in that sentence:
In the post, I identified 6 characteristics that need to be present in order to deliver this functionality effectively. These flow directly from the three key requirements outlined above. Let us now explore the extent to which Compas meets these criteria, and therefore the extent to which it can be described as EPM software.
EPM tools exist to allow strategic planning and analysis that links the operations of an organisation directly with their financial impact. The characteristics outlined above identify what is needed to do this effectively, and Compas delivers these in spades. It was not originally conceived as 'an EPM tool' - indeed, the term didn't really exist when the forerunner systems of Compas were first being built - but it has always operated in an integrated fashion to help businesses to plan strategically, improve operations and analyse financial return on investment. Equally, it could be considered as a tool for Financial Planning & Analysis (FP&A), and we have users who view it as just that.
One of its earliest iterations was for the planning and evaluation of trade promotions in an FMCG environment. Users could plan the expected uplift from baseline as an absolute or percentage amount, enter a profile and associated costs, and the system would build a phased forecast of incremental sales volume, as well as a promotion-level P&L. The incremental sales volumes were aggregated and exported to the factory, and the individual promotion-level P&Ls could be aggregated and analysed at a higher level. Once actual sales started arriving, the system could adjust the future sales forecast based on what had already happened, and everything would be updated to keep them consistent. When the promotion was complete, analytical tools permitted the evaluation, both of the promotion individually, and of all past promotions at a higher level, to build learnings that fed into a process of continuous improvement. This, along with the fact that multiple scenarios for each promotion could be planned, illustrates quite well the six key characteristics above.
I am not qualified to comment in detail on the strengths and weaknesses of all of the other offerings in this particular space. However, I can comment in some detail on what Compas can do.
My main observation is that EPM tools face a difficult challenge in anyone's book. Whereas reporting on historic data is a relatively straightforward problem, building a planning solution that covers the enormous diversity of organisations is an almost impossible task. This is true of ERP solutions too, and in that case, a compromise (happy or otherwise) is typically found between what the business would ideally like, and what the ERP tool can easily provide. This may be one of the reasons why EPM tools tend to focus on the financial side of things - despite the operational complexities of different businesses, the financials, at least, tend to bring everything back to a common basis.
The approach that we have taken with Compas is to recognise the scale of this challenge, and to keep the basic platform as lightweight as possible. Rather than trying to build a comprehensive system that can be configured to meet the diverse needs of many different organisations, we have built a powerful platform with a huge range of capabilities that we can easily tailor to the specific needs of each client. The basic 'out of the box' framework provides much in the way of planning and analytical capabilities, and may well meet the needs of many organisations, such as e-commerce, direct-to-consumer (DTC) and multi-channel retailers, and other organisations that deal directly with consumers (e.g. charities). However, the real strength of the platform is the ease with which it can be turned to any business need, without being burdened with a deadweight of functionality that is not needed. This means that it can be used for niche, or specialist applications that are simply not possible - or at least, not straightforward - with more generalist solutions. The result is that the client gets what is essentially a bespoke application, perfectly tailored to their needs, rather than a general planning tool, which has been configured to meet their requirements.
This difference manifests itself in several ways:
Whereas most of the solutions currently in the marketplace seem to focus on 'enterprise-level' implementations, the primary focus of Compas is on the mid-market. That is not to say that it cannot be used by larger businesses, and indeed has been used in the past by one of the largest companies in Europe. However, slightly smaller businesses that are still wrestling with a largely spreadsheet-based approach, or a disconnected set of legacy tools, really benefit from the end-to-end handholding and tailored approach provided by Compas. Smaller businesses can rarely spare the staff to oversee a big software implementation, and the lightweight, cloud-based solution offered by Compas can be deployed with minimal disruption. The tailored approach means that existing business practices can be followed and familiar terminology used, allowing users to get up to speed as quickly as possible. However, our experienced consultants will be able to provide an independent pair of eyes to examine current practices to see whether they can be improved - there is no point simply transferring an outdated or inefficient business practice to a new platform.
A second consequence is that Compas is ideally suited to somewhat niche or difficult problems. The care and attention applied to each implementation, and the ability to incorporate completely bespoke models and screens means that it can be much easier and more satisfactory to deploy a Compas-based solution, than to pay some consultants a huge amount to tailor one of the more 'generalist' EPM/planning tools to meet a somewhat unusual set of needs. A good example of this is a deployment that we made for Stonegate, a large producer and packer of free-range and organic eggs in the UK. There, the main focus was on predicting the supply of eggs - and then matching that with forecast demand. For this, we really needed to understand the market, as well as details of production and packing, and then incorporate that into the system to make what, to all intents and purposes, was a bespoke tool for them.
Finally, whilst Compas does have full Finance capabilities, and can build tailored Profit and Loss accounts, it does not have the same primary focus on Finance that some other systems do. That makes it particularly suited to use by departments such as Sales, Marketing, Supply chain, Business Planning, as well as Finance. Some of our most prolific users are in fact in Marketing, particularly in Direct-To-Consumer (DTC) businesses, who use Compas to plan, monitor, reforecast and ultimately evaluate their marketing campaigns, at the same time generating financial forecasts for Finance and demand forecasts for Merchandising, Customer Service and Operations.
In summary, Compas provides a powerful, lightweight and relatively inexpensive planning and analysis solution to organisations ranging from small to large, with a focus on the mid-market. Companies benefit from close support and a bespoke approach, and can typically be up and running in a small number of weeks. In particular, companies with slightly unusual or difficult planning needs should contact us to see how we can help.
This explainer video provides an entertaining overview of Compas and how it fits in to an organisation's software landscape.
NB: We will shortly be making a simple demo of Compas available through the website, to allow users to explore its functionality for themselves. In the meantime, if you would like a no-obligation demo, tailored to your requirements, please contact us directly.