The other day we came across the following inspiring article CFOs Frustrated with Return on FP&A Investments.
This reminded us of the wise saying that coinvention – independent people inventing the same thing at the same time – is a sign for the maturity of an idea. Some three years ago we came to the conclusion that new technology advancements such as in-memory columnar databases, robust statistics and cloud computing give way for a new approach to solve “unsolvable” corporate finance problems as alluded to in this article.
That said we developed an application solution which enables sensitivity analyses leveraging vital financial ratios with respect to operational efficiency and complexity (portfolio and process) of medium to large enterprises. For this we calculate ad-hoc arbitrary operational and financial KPIs from every detailed business transaction and correlate them in order to determine opportunity and risk spans as well as automatically detecting virtually all corrective action opportunities. Key for this is our proprietary business performance score TPI (True Performance Index) which relates operational with financial performance by leveraging robust statistical simulation methodologies.
On the one hand our customers benefit from our customer-specific sustainable free cash optimization recommendations (instead of just tinkering with the symptoms of too high working capital). On the other hand they benefit from our customer-specific pricing optimization recommendations (assessing their price elasticity patterns). And now we have introduced profitability into the picture (focusing on the real profit rather than an allocation game).
The results so far are amazing. Truly a new dimension of business controlling and corporate finance.
P.S. By the way; did we already mention that our customers went live in less than one week?