The increasing complexity and the dynamics of the markets require more and more often an immediate reaction to new complex issues. To ensure long-term corporate success, companies must not just react: Controlling should – or rather must – be aware of the possible effects of upcoming events today in order to define and control measures for tomorrow in an agile manner.
The term controlling includes economic processes of analysis, control, planning, management and coordination of a company. The characteristics of the respective subarea and the focus of controlling are individual and different for each company. Controlling is therefore a comprehensive term that involves various business management measures.

Corporate management – core task of controlling

Corporate management, also known as corporate enterprise or enterprise performance management, is central to the functioning of a company – this is where all the number-driven management threads come together. It is a central instrument and the core task of controlling. In the context of corporate management, target achievement is tracked in relation to financial indicators and possible measures are derived for this purpose. The aim is to efficiently optimize operational measures in order to meet the company’s objectives. This involves thinking across disciplines; ideally, all areas of the company should be included in the management processes. Whether production, logistics, human resources or sales – all departments are taken into account when planning and controlling a company.

Enterprise performance management takes place in a wide variety of business management processes. It comprises corporate planning, which includes operational, tactical and strategic planning. In the face of an increasingly uncertain and complex market environment that demands speed and flexibility, these subsectors rely on new methods and tools to achieve success and evolve. Logistics controlling, personnel controlling, financial controlling, IT controlling or investment controlling are just a few examples of the areas in which planning and coordination are of great importance and for which new approaches and software solutions can lead to increasing efficiency. Sustainability controlling, also known as green controlling, is also becoming increasingly important. Not least as a result of increasing social and consequently political pressure, sustainability is becoming more relevant in all areas of the company and is increasingly being adopted as a central component of strategy. Approaches to control are already advanced, but the focus is on reporting. In the future, it will be important to integrate sustainability management even more closely into overall financial management. Finance and Controlling will play a leading role here.

New requirements for enterprise performance management

In addition to the demand for sustainability, there are many other factors that medium-sized companies and large corporations must take into account in today’s world in order to position themselves for the future. In the much-cited VUCA world, companies are subject to great fluctuations. The acronym VUCA stands for Volatility, Uncertainty, Complexity and Ambiguity. The term describes the complex market environment to which companies must adapt at the current time. Events such as the Covid-19 pandemic and ongoing climate change demonstrate the volatility of the world and justify the importance of being able to respond to unexpected events. Growth is not as linear as it used to be. Digitalization leads to uncertainty and pressure to change. In short, complex decisions have to be made, increasingly on an ad hoc basis. This must also be reflected in controlling in order to ensure the long-term success of the company.

Agile corporate management as a response to the new VUCA world

How can enterprise performance management meet the complex requirements of the VUCA world? Quite simply: by becoming agile. Agility is a term that sounds promising in theory and whose implementation requires new thinking. Agility can be achieved through flexibility and adaptability of planning and control. Lengthy and static planning is no longer required in agile enterprise performance management and dynamic and strategic planning is further developed and increasingly used.
Strategic planning has an increasingly controlling character and can react more flexibly to situations that arise at short notice. The example of a call center shows what agile enterprise performance management can look like.  explained. In agile enterprise performance management, moreover, existing data is used to update future processes and not, as is so often the case, only noted down and analyzed. The use of data can therefore be designed innovatively.

Business forecasts are also optimized in order to make appropriate statements about future events and thus flexibly adjust strategic planning and control. In order to meet these requirements, there are a number of new tools and methods in controlling that address precisely these needs and thus help to optimize corporate controlling processes. How digital control can look in volatile times is comprehensively explained in our MHP interview and DeepDive.

Methods and tools of agile business management

Speed, flexibility and agility – three key strengths that agile enterprise management brings to the table to ensure greater future security. Medium-term or long-term planning, for example for one, five or several years, are still very relevant. Short-term planning is often replaced by operational control in current controlling, since decisions can be made quickly and flexibly, short-term reactions are possible and thus fewer planning processes are needed. Essential for agile planning is the principle of top-down planning, which replaces button-up planning. Planning is no longer managed from the cost centers, but happens across companies and departments. In this way, the coordination of budgets does not get lost in details, but creates a general strategy through which less effort is required and the quality of strategic planning still remains. For more information on new budgeting processes, see our Beyond Budgeting article.

Make assumptions about the future at the push of a button

In order to be able to make predictions in companies better, faster and more reliably, the ad hoc simulation of different future scenarios is of central importance. The ability to map specific scenarios in a matter of seconds means that financial scenarios, for example, can be flexibly run through, making it easier to make decisions.
Value driver models are formed to perform simulations, which include the most important drivers for the respective company. Based on these driver models, assumptions are made and individual financial scenarios are simulated. Driver-based simulation can efficiently help implement business strategy and make key decisions, directly in campus planning sessions or management meetings when needed.
The time-consuming writing of page-long reports can be put in the background by focusing more on the possibilities of operational control. Thalia Bücher, Commerzbank AG   and Volkswagen Nutzfahrzeuge are exciting company examples that show the extent to which new methods and tools of agile corporate management can optimize central processes.

New roles for controllers – from pushing numbers to strategic consulting?

The role of controlling in companies has evolved – it must become more flexible and active. Controlling no longer means the static collection, review and analysis of key financial figures, but has developed into an active operational and action-guiding area in the corporate structure. In line with the growing demands on controlling, the traditional job description of controllers has also evolved. In earlier times, the controlling role model was characterized by complex and small-scale analysis and planning, which was mostly carried out with the help of Excel lists. Compiling data from different business areas often took an enormous amount of time, making spontaneous intervention in strategic and operational planning and control almost impossible.
In the current times, however, adaptability is more important than ever – controlling methods have been developed that make the endless and time-consuming pushing of numbers in Excel obsolete. Innovative technologies, such as machine learning or artificial intelligence, make it possible to evaluate large amounts of data quickly and reliably. The controllers are therefore no longer only responsible for providing figures. Their function in the company and their role model have expanded: In the current era, controllers often take on an advisory role and act as business partners for management. In order to support strategic decisions, controllers are also increasingly becoming data scientists – the analysis and use of existing data are of great importance for agile corporate management. Accordingly, controllers of the future will have greater responsibility, a broader scope of action, and thus a more important role for the entire company.

What does the future of enterprise performance management look like?

Modern, agile corporate management has to accomplish a lot and covers a wide range of tasks. It no longer comprises only the classic analysis tasks, but is broader and thus more relevant. In order to meet these challenges, the structures and processes of corporate management have also evolved. Agile corporate management means a flexible and holistic interaction of analysis, control, planning, steering and coordination and the assumption of an expert role in the form of consulting activities for management. The complexity of a company is to be grasped in its entirety and thus taken into account. In this way, individual goals and action plans can be worked out for the respective companies, which form the collective basis for decisions for the entire company.
Static and detailed planning is to take a back seat in agile business management and dynamic strategic planning is increasingly used. In addition, it is important to constantly review and update planned objectives to ensure that they are feasible. Short-term planning for individual months or quarters can increasingly be taken over by automated systems and carried out digitally. Agility and flexibility are important pillars here, which can be implemented using new and modern methods. A change in thinking must take place in the future of modern corporate management in order to make analysis, planning and coordination processes agile and to actively change them – in this way, the aforementioned processes can be optimized and corporate success can be increased.