An enterprise performance management system can be apowerful tool in helping credit unions achieve better financialperformance, mitigate risk, achieve profitability and rewardemployees. An EPM system should be a credit union's centralreporting and analytics tool for financial and operationalperformance, as it can culminate data across the entire institution(including data surrounding loans, deposits, employees, payroll,etc.) versus just a GAAP income statement. As such, an EPM systemis not a large data warehouse, but rather a single source offinancial truth that a credit union can leverage to evaluate andreport on the institution's performance.

Credit unions of all sizes are implementing EPM systems toreport and forecast results and profitability, and with today'stechnology, it is easy to develop a system that will dissect aninstitution by segment, branch product, officer and member.However, the challenges that many credit unions often face is acase of information overload when it comes to evaluating its dataand reporting needs and how to manage the implementationprocess.

Before getting started, credit unions should carefully considerwhat data and reporting is truly necessary and how theywant to measure results for more effective performancemeasurements, budgeting, forecasting, margin management andprofitability – otherwise they run the risk of collecting,processing and storing data they simply do not need. To counterthis, credit unions must ask themselves questions such as:

What are the short and long term goals of the creditunion?

What metrics do we need to manage the institutioneffectively?

What potential reporting and analytics should we considerthat we aren't currently producing?

What data does our institution already produce to supportthe above?

Where can we get any ancillary data that we don't currentlyaccess?

What data do we produce that we do not necessarilyneed?

The responses will vary by institution, as each credit union hasits own unique data and reporting needs based on the institution'sprimary business objectives. But these questions should not just beanswered by the credit union's finance department. Finance shouldtake a 360-degree approach and solicit input from its entiremanagement team – from the CEO to the line of business managers –to determine the level of information they actually need. It iscritical to ensure that the data and reporting the credit uniongenerates is useful and insightful to stakeholders, as opposed toproviding information just because it is available. Otherwise,credit unions run the risk of underutilizing the EPM system andreplicating useless data and reporting that the credit union isalready generating.

Prior to and during implementation, the credit union's financedepartment should work closely with its data warehouse or dataanalyst departments and communicate the data requirements soeveryone on the team is aware and fully understands the desiredresults. By including data analysts as part of the team anddiscussing the requirements, instead of just handing them arequirement list, credit unions can save significantly onimplementation resources.

To help make the implementation process go as smooth aspossible, alleviate delays and rework and make the most out of anEPM system, credit unions should formulate a long-term strategythat implements the various processes – i.e. budgeting,profitability, incentive compensation – in stages.

A Case and Point: Westerra Credit Union

The Denver-based, $1.3 billion Westerra Credit Union sought anEPM system that would help improve its planning and managementreporting processes, as well as its monthly closing process.Additionally, the credit union's long-term strategy encompassedimplementing segment, product and member profitability measurementand reporting.

The credit union decided to initially focus its EPM systemimplementation on improving the monthly management and financialreporting and their close processes. After completing this firststage, Westerra eliminated multiple manual steps in the closingprocess which increased its efficiency.

During the next phase, the credit union focused on replacing itsExcel-based budgeting and planning system with a solution thatembraces Excel to provide users with a familiar interface, whileeliminating Excel's shortcomings (such as the need to upload,download, reconcile, cut, paste and email one-off spreadsheets).This stage of implementation was completed in three months due tothe sound foundation the credit union built during the reportingphase. Once the budget phase was completed, the team began todesign and build its profitability solution for segment and memberprofitability.

Westerra included a data analyst with an IT background in allphases of the process to ensure the analyst would not onlyunderstand what was needed, but also how it was used. Thiseliminated the re-work that often occurs due to miscommunicationabout data elements and resulting reports. When implementedcorrectly and thoughtfully, a robust reporting solution has thepower to transform an institution's data into insightfulinformation. To truly achieve this, credit unions must find a wayto overcome the patchwork of disparate data sources and cumbersomespreadsheets that are making it difficult for them to access,consolidate and manipulate the numbers.

From Implementation to Digestible Results

Once implemented, credit unions must find an effective way topresent the results generated by their EPM systems. One provenmethod is the use of dashboards, which have the ability to condensecritical information that managers need to see in a singleview.

Credit unions should ensure their EPM systems can present, at aquick glance, how their institutions are performing using charts,graphs, gauges, etc. Using data visualization, credit unions gainthe organizational insight that would otherwise be impossible toachieve with just a grid of numbers. Often times an institution hasthe performance data it needs, but it does not present the rightdata to decision makers. Dashboards enable users to quickly drillinto the institution's data, providing deeper analytics and theability to perform “what if” scenarios.

Because dashboards require a sound foundation of data andresults, they should be implemented after the completion of aphase. But to have a sound foundation of data, credit unions musthave a vision of the information they need to present, and how theywish to present it, prior to implementation. To maximize theirsystems' dashboards, credit unions should create story boards thatillustrate the design of the dashboards and the interactivity ofeach data element prior to the implementation of an EPM system.

As market conditions continue to evolve, credit unions mustnavigate a dynamic landscape laden with pressures on margins andloan credit quality, restrictions on capital and directives toreduce expenses. Putting extra, up front effort into EPM systemimplementation will result in a tool that has the power to becomean institution's most trusted advisor.

Paul Panther is a senior consultant for Axiom EPM. He can bereached at 815-986-6980 or [email protected].