The Challenge: When Scotiabank Group merged its corporate-banking and capital-markets groups in the late 1990s, the challenge became how to stay on top of the global juggernaut's performance in multiple countries.
Managing mergers is never easy at the best of times, but Mike Krupanszky, assistant general manager of performance measurement at Scotia Capital, says he saw an opportunity to introduce cutting-edge corporate-performance-management (CPM) technology that would help business managers better understand their operations.
The bank was undergoing reorganization, merging its corporate-banking and investment-banking groups into one division (Scotia Capital) following a number of acquisitions. "We were bringing together two very disparate processes and trying to form one cohesive back-office group supporting a business line," says Krupanszky.
The problem, he says, was forecasting, planning and reporting based on operations that were using different technologies.
"Some were using Excel. Some were using Lotus. No one was using an overall system for planing and reporting," says Krupanszky. "It was all done on a spreadsheet."
While that worked for the individual units, it didn't allow for an integrated approach to measure performance across the organization. "The first thing we wanted to do was put in a standard planning system so that it felt like one company, one business, not a hodgepodge," he says.
Krupanszky says Scotia Capital looked at six or seven systems and even considered building its own before settling on a system from INEA Corporation, whose technology grew out of the banking industry. "It was everything we needed."
Analysts say more and more organizations are expected to follow suit and join Scotia Capital in adopting CPM technology.
Lee Geishecker, vice president and research area lead for cross-enterprise operations at Stamford, Conn.-based Gartner, says two years ago there were "very few deployments" of CPM systems.
However, financial-services firms, she says, have been the early adopters. She estimates CPM is a $350 to $500 million market and expects that to grow at a 10 to 15 percent clip till it hits $1 billion.
Mark Ruddock, CEO at INEA, says, "CPM is an emerging term, not just in the capital markets, but across the entire spectrum of potential clients. The CPM marketplace is now a magnet for technology firms."
CPM, Geishecker says, "recognizes the metrics, methodologies and processes that help an enterprise manage and monitor performance of the business."
While companies like Oracle, SAP and PeopleSoft have large enterprise systems that include components of forecasting, planning and performance measurement, there are a number of smaller firms that specialize in developing such technology.
Geishecker says that includes firms like INEA, Hyperion Solutions Corp. of Sunnyvale, Calif., Cognos Corporation of Ottawa, SRC Software of Portland, Ore. and Longview Solutions of Toronto.
Erin Lavelle, vice president of planning and analysis at Mesirow Financial, a Chicago-based private equity firm with more than $5 billion under management, uses a budgeting and reporting suite of software from SRC. That allows her to "control the consolidation and access to data during the budget process."
She's now eyeing SRC's performance-management module, which will allow her to forecast, scorecard and develop more strategic plans. "A lot of firms today are doing forecasting and scorecarding off line." CPM, technology, she says, allows online access to a broad range of data and allows managers to stay on top of their operations.
Krupanszky says the INEA system allows Scotia Capital to "look at our members in a consistent fashion across all businesses and pull information together in a consolidated unit in a relatively short period of time." They can then use that information for forecasting and "to model off that."
One of the benefits, adds Krupanszky, is the information is more current and Scotia Capital can chart its performance throughout the year to ensure it remains on track. If needed, he explains, managers can simply "tweak this or tweak that."
Forecasting via spreadsheet, says Krupanszky, is a bottoms-up process where information is fed in through various levels. That presents challenges if there's last minute changes. As well, if someone wants to hone in on specific data, that's not always possible, as the information might be aggregated and "people forget" where it came from or why an adjustment was made.
Now, he says, managers isolate information according to business lines and drill down to individual departments. Krupanszky estimates the system has eliminated 70 to 80 percent of the questions that normally arise during the budget and forecasting process because information is now available at the planners' fingertips.
He says the firm used to start its yearly planning process in mid-June based on second-quarter figures and it was a six-month process. Now, Krupanszky says, the firm starts planning in mid-August with actual third-quarter information.
He says the firm has about 250 users on the system, and the implementation costs, including equipment, were in the $250,000 to $300,000 range. It took a team of three to four people about three months to roll it out.
Krupanszky says as more firms look at adding such technology to their operations, there's two important things they need to do. "The first thing they need to do is have commitment from their superiors. The project can get off the rails really fast if you don't have that support."
The second, he says, is making sure "you understand what your processes are before you build or automate anything." Krupanszky actually went through a complete rebuild after realizing the initial model wasn't the "best way to do it." The department has since "streamlined things and made things more efficient."