Enhancing Efficiency in Performance Management: Strategies for CFOs in a Volatile World

Authors of this issue: Dr. Daniel Reuschenbach and Patrick Liegert

Dear Controlling Community,

the role of CFO functions has become increasingly complex.

• How can we balance efficiency and flexibility in performance management?
• What are the key areas for improvement, and how can technology and AI drive these changes?

This newsletter explores the essential levers for enhancing efficiency in performance management, focusing on organization, technology, and content. It provides insights into streamlining reporting, planning, and forecasting processes, and highlights the importance of a holistic approach to achieve significant cost reductions and improved decision-making.

Join us as we delve into the strategies that can help finance lead by example and support other business functions in building resilience and long-term competitiveness.

Enjoy reading.

Gaining efficiency in performance management should address the relevant levers

When aiming to enhance efficiency in performance management, companies often focus on few dedicated measures or technical tools but regularly lack a holistic approach to leverage efficiency measures across domains. Thus, we recommend considering the core management processes of performance management from different angles and assess relevant measures based on the following levers: organization, technology and content. These dimensions serve as focal points for driving efficiency across core managerial processes – namely steering, reporting, and planning & forecasting.

Realizing efficiencies requires initial efforts but can also offer significant benefits, such as:

• Reduced costs & unleashed resources bound in, for example, creation of unnecessary reports, overly complex planning processes, non-automated manual solutions or inefficient organizational set-ups with non-optimized cost structures
• Meaningful reporting with real-time response to support decision-making in an efficient manner
• Increased stakeholder trust in reports and data
• More effective and purposeful collaboration fostered by well-defined roles and responsibilities

For each lever, a variety of measures to increase efficiency in performance management can be considered, which will be explained in more detail below.

Improve efficiency by adjusting processes and contents

Content and process-related levers should be considered when aiming to increase efficiency in performance management. By rethinking reporting and planning processes and critically assessing content and scope, organizations can reduce unnecessary complexity and enhance decision-making.

In reporting, efficiency gains can be achieved through streamlining the existing reporting landscape. This includes eliminating redundant reports, consolidating insights, and ensuring that only value-adding information is provided to decision-makers. The establishment of a central reporting & insights unit further enhances efficiency by standardizing data processing, reducing inconsistencies, and fostering a more strategic approach to business intelligence. Additionally, limiting the number of created reports prevents information overload, allowing stakeholders to focus on the most relevant data.

For planning and forecasting (P&F), content-wise, efficiency can be realized by using top-down targets instead of a detailed budgeting and ensuring that planning processes align with strategic objectives rather than becoming overly detailed and cumbersome. Centralizing planning governance and reducing complexity makes planning and forecasting more agile and actionable. Furthermore, accelerating the planning process by reducing unnecessary iterations and bureaucracy improves responsiveness to market changes.

By critically assessing content across reporting and P&F, organizations can eliminate inefficiencies, enhance clarity, and improve overall performance management effectiveness.

Use technological and (Gen)AI levers

A core enabler for realizing efficiencies is the effective use of technology to drive the progression of digital performance management. Often, it is assumed that technological efficiencies can be achieved simply via the introduction of certain tools or AI-based solutions. However, the importance of a structured and aligned BI landscape and harmonized data structures as prerequisite for enabling digital performance management and AI support is regularly overlooked.

Especially in the context of (Gen)AI, anticipated efficiency gains are often not realized due to missing foundational elements. Thus, a well-structured BI landscape is essential to provide a trustworthy database and utilize data across the organization. This enhances efficiency and accuracy in data analysis and performance management and enables meaningful and relevant AI use cases.

If an aligned BI landscape is established, technological levers can be realized. With the rise of AI, apart from e.g., dashboard solutions, the following levers should be considered:

• Predictive forecasting allows faster predictions due to higher automation level and, potentially, even improved accuracy through assurance of objectivity
• AI-supported commenting can be enabled via usage of GPT functionalities to generate proposal-driven insights and root-cause analyses and increase efficiency of the often-cumbersome commenting process
• AI-based business driver analysis with consideration of markets and business models can help to optimize decision-making by quantifying the impact of each driver on performance
• A business radar provides comprehensive & customized analyses of relevant news and market developments by browsing (publicly) available data and providing enhanced insights on external developments in a structured approach, e.g., via sentiment analyses and global topic tracking.

A role-oriented BI & analytics center offers a streamlined performance management

For full utilization of technical and AI capabilities, organizational prerequisites must be created. From our experience, the most effective organizational set-up is role-based with the following four key roles, which should be ideally established on a global scale:

• A global governance function should ensure standardization of processes and data and maintain methods and guidelines
• Business services aim at the efficient execution of transactional processes
• Data science/ analytics experts focus on analyzing data to improve business decisions utilizing their dedicated competencies
• Business partners support management in steering and optimizing corporate success as trusted consultants and form the interface between business units, data scientists/ CoE and services

Prioritization of efficiency levers

Apart from the ones described above, further measures can be considered. When approaching an efficiency improvement initiative, it is recommended to cluster potential measures based on their implementation effort and their expected efficiency impact into the following categories:

• Efficiency boosters, which provide significant efficiency gains with limited implementation effort
• Quick wins which can be realized w/o much effort but also limited effects
• Strategic long-term initiatives which provide strong efficiency improvements but require either high technical effort or affect organizational structures
• Optional low priorities comprise measures offering some efficiency gains but with potentially non-justifiable effort
• Efficiency boosters, which provide significant efficiency gains with limited implementation effort
• Quick wins which can be realized w/o much effort but also limited effects
• Strategic long-term initiatives which provide strong efficiency improvements but require either high technical effort or affect organizational structures
• Optional low priorities comprise measures offering some efficiency gains but with potentially non-justifiable effort

The classification of measures depends strongly on the organizational set-up, technical prerequisites and maturity of performance management processes at the organization. Thus, the following illustration can be regarded exemplary, but provides an indicative overview of potential measures and their classification: ?

Summary

The analysis shows that efficiency improvements in performance management are readily achievable. Depending on the level of ambition, efficiency gains of up to 36% can be realized. However, it is important to understand that this happens as part of a holistic transformation, where content, organizational structure, and the use of technology play a crucial role.

A common challenge in this process is accepting that work behaviors must change – things cannot continue as before. This transformation requires clear consequences, such as the implementation of a standardized reporting tool, unified layouts, and more streamlined planning processes and content etc. However, for these changes to be successful, the organization must be actively involved in the transition.

Event Highlights 2025

March 25th: Intelligente Optimierung des Abschlussprozesses – Voraussetzungen und Potentiale von KI im Abschluss/ Zurich, Switzerland (free of charge, held in German)

March 27th: Finance & Controlling Process Excellence Experts/ Stuttgart, Germany (held in German)

April 3rd: Horváth AI & Data Convention/ Düsseldorf, Germany (held in English)

April 3rd-4th: CFO Forum - Die neuen Spielregeln der Weltwirtschaft/ Stegersbach, Austria (held in German)

May 21st-22nd: Fachkonferenz Reporting & Konsolidierung/ Hamburg, Germany (held in German)

May 25th-27th: TECH by Handelsblatt/ Heilbronn, Germany (held in English)

What′s next on issue #09?

In the next newsletter edition, which will be published April 24th, we will discuss intercompany settlement. Netting has a long history in many companies. Will this concept stay or are inhouse bank structures the way forward?

Netting: Here to stay?

Stay tuned.