Finance can make topside adjustments that cascade proportionally through lower-level detail

Description

In Corporate Performance Management (CPM) software, the top-level ability to make financial adjustments that proportionally affect lower-level detail, is a pivotal feature in planning and budgeting. This functionality allows finance teams to implement strategic changes across various levels, potentially affecting thousands of individual data points simultaneously.

Example Use Case

Scenario: A multinational corporation produces a variety of consumer electronics. During an important fiscal review, the finance department decides to cut spending across all business units by 10% due to economic headwinds.

Solution: Using their CPM software, the finance team makes a topside adjustment reducing the overall budget by 10%. This change is then proportionally cascaded through each lower level of the budgeting structure, reducing individual unit budgets while maintaining their relative proportions. This ensures a streamlined adjustment process while upholding fiscal coherence and integrity.

Considerations

This feature is fantastic when producing what-if scenarios, as it greatly accelerates the process and does not require lower-level contributors to log back in to produce it. Cascading the topside adjustment proportionally is the simplest and most straightforward method. There are other methods that may be useful such as priority-based allocation of those adjustment - meaning high priority areas may be ignored, with more weight hitting other departments. Other methods are performance based, where high performing products will not experience a hit, while low performing products get cut deeply.

Topside adjustment does not have to mean the absolute top level. It can mean groupings, subgroupings, etc. For example, what if you wanted to reduce the marketing budget for just Health and Beauty in the Mountain region by 15%, but leave everything else the same? That adjustment would factor in two dimensions - product and location. Anything below that would take the hit.

Questions to Ask a Vendor

• Topside Adjustment Capability: What level of detail can we initiate a topside adjustment? Is it all the way at the top, or do we have to back down to a lower level of detail to make it work?
• Fixing Mistakes: What if we make an adjustment to a group of dimensions by mistake? How do we back out potentially thousands of adjustments?
• Cascading Calculations: Outside of proportional adjustments, do you support other mathematical functions to push changes through to the bottom level via a topside adjustment?