Enterprise Performance Management What Is Enterprise Performance Management? A Comprehensive Guide By Ritinder Kaur Enterprise Performance Management 2 comments August 21, 2024 While enterprise resource planning involves preparing for and managing day-to-day operations, EPM incorporates management insight into ERP. Enterprise performance management is an umbrella term for budgeting, forecasting and financial reporting, including monthly close and consolidation. This last term confuses people into thinking EPM is all about accounting and financial management. But, it’s much more. Compare Top EPM Software Leaders This article includes the below sections: What is EPM? EPM vs. ERP Benefits Key Features Applications The EPM Cycle Next Steps What is EPM? Enterprise performance management involves managing core business operations to boost performance, analytics being a critical component. Data modeling and statistical analysis are ingrained in performance analysis and reporting. Corporate performance management, financial performance management and business performance management are other names for EPM. EPM software includes any application that helps you manage and track your business performance. Tools include financial and accounting solutions, statistical software, project management systems and customer support portals. Budgeting software, accounting solutions, expense report tools and financial management platforms are all EPM systems. Oracle ERP, OneStream, Jedox, Planview and Anaplan are some examples. EPM Then… Early performance management involved getting people together in one room for discussions or using the phone to talk to them. EPM took on a formal identity in the 1970s when businesses started using accounting solutions to generate financial reports and budgets. The 1980s saw extensive use of Excel for EPM, but it had its shortcomings. Manually maintaining the sheets was time-consuming and error-prone, and you could only share reports via email — not the most secure data-sharing method. Plus, there was no provision for data governance and backup. What if the report didn’t show the metrics you expected? The turnaround would take days, and there was no way to collaborate with the report producers to tell them precisely what you wanted to see. …And Now Modern EPM solutions have extensive sharing options like embedding, shareable links and collaboration. Built-in permissions management and access restrictions ensure you can see only the relevant metrics. The sky’s the limit now as EPM solutions are available on the web and in the cloud. EPM solutions in the cloud are popular because of anytime, anywhere data access without infrastructure overheads. Flexibly scalable up and down, cloud-based solutions can be cost-efficient, though integrated suites might cost more. AI-driven machine learning and automation augment EPM to uncover hidden data correlations that give you a fresh perspective on your business. The ability to generate insight with natural language instructions reduces the time to insight. Automation reduces errors and does away with manual labor for repetitive tasks. Instead of data manipulation and reconciliation, your financial teams can focus on data analysis that supports strategy and planning. Is an ERP tool the same as an EPM application? Compare Top EPM Software Leaders EPM vs. ERP Enterprise performance management systems rely on ERP data to link resource usage with performance. EPM solutions’ chief function is financial management which links to your business performance. Additionally, non-finance departments use them for process planning, budgeting and reporting. EPM is more strategy-focused and can work with multiple ERP systems. Enterprise resource planning is about routine workflows, daily operations and resource management. You’re using an ERP solution when you track raw materials from procurement to production and delivery. It overlaps EPM’s financial planning and analysis functionality, including actual vs. budget reporting, but that’s about it. Primary Benefits With pandemic-induced cross-border travel restrictions and social distancing norms, governments are changing how they function and adopting EPM is a step in that direction. Let’s see how. Reduce Costs An EPM suite can be costly, but considering all the data it brings together from various departments in real time, its value is immense. Using modular solutions with an open architecture gives you the same functionality, with the option to integrate desired applications. You can view the per-project budget allocation by connecting your budgeting and accounting systems with project management software. Upscaling is easier with a single solution to learn. And automation drives efficient workflows, saving resources, money and time. Accelerates Data Analysis A centralized interface gives access to unique, accurate and reliable data with no risk of data duplication. Faster information retrieval translates to speedier data analysis. Collaboration is possible through shared real-time visualizations, team chats and comments. Having the latest data results at hand gives you confidence in your decisions. Data science techniques like artificial intelligence and natural language processing help identify patterns in multi-departmental data. Knowing what’s working and what’s not can impact strategy restructuring and budgeting. Improve Reporting and Planning EPM software is an all-in-one budgeting, accounting and financial reporting system. It has built-in standard reports like income and cash flow statements that help you hit the ground running without IT help. Financial accounting software allows you to track expenses and earnings, oversee payroll management and keep tabs on goals and investments. When you know your business inside out, you can pinpoint how to improve it. Business intelligence is still a part of most EPM offerings. Corporate planning is easier with a clear picture of your core operations with their strengths and weaknesses. Boost Efficiency Automating data aggregation saves time, letting you focus on performance analysis and planning. Cloud-based software allows you to stay informed and perform tasks remotely from any device. Create scripts to perform various tasks and automate their execution using a scheduler. Besides scheduled uploads, administrators can automate reconciliation, profitability and cost management, and financial close and consolidation workflows. Others include data management, user provisioning and audit reporting. Enhance Customer Service Designed for your core operations, EPM provides robust back-end support to customer-facing processes. Companies perform better with seamless supply chain, inventory, and workforce management behind the scenes. EPM highlights improvement areas and top-performing KPIs, bringing to the fore your marketing, sales and customer processes for review and analysis. Take Control of the Process with the Decision Platform Key Features Markets and Markets predicts the global enterprise performance management market to grow to $7.7 billion by 2026. Factors contributing to this growth include an increased business focus on optimizing capital investments by extending the life span of proprietary assets. A performance management tool for your company’s operations has a trickle-down effect on your customer service, so it’s a win-win for you. Here’s a list of standard EPM features you may want to add to your list. Modular Architecture Vendors sell accounting, expense reporting, budgeting and project management systems as EPM solutions, but they are often a part of the complete picture. You can purchase the various software you need or go for a suite of integrated products. A solid EPM that’s modular enough to scale and reliable enough to manage complex modeling and forecasting is a must-have for enterprises. As cloud platforms and applications increase, more focus will be on API-based architectures that give you the freedom to build custom applications. Scalability Keeping scalability on your requirements checklist can save you heartburn later when you want to expand your business. A scalable EPM solution flexibly accommodates your company’s growth, allowing you to focus on other business areas. Public cloud platforms — Amazon Web Services, Google Cloud Platform and Microsoft Azure — provide greater security, speed and performance scalability. Check if potential EPM vendors have a public cloud strategy and actively test their applications on it. Compare the vendor’s single-tenant and multi-tenant deployment strategies, including cost. Verify if they benchmark the tool’s cloud performance given the databases and data sets used daily in the EPM apps. Reporting People usually mention reporting when they mean analysis and vice-versa. Reporting covers the last mile of analytics between the data and the user, conveying key metrics in an understandable format. Reporting tools for performance management are BI tools with EPM-centric visualizations and dashboards. Depending on roles and responsibilities, access restrictions might vary for teams and individuals. Advanced EPM tools provide live team collaboration through in-dashboard chats and comments. Accounting Financial management modules in EPM tools have essential accounting functions like general ledgers, accounts payable and accounts receivable. Advanced features include contract and performance obligations, payment management and project integration. You can create reports and budgets by visualizing live account balances. Routine financial tasks like data loading and reconciliation are automated with pre and post-load data validation to resolve issues and close faster. 24/7 Insight Access Leading EPM tool vendors offer mobile apps to give you on-the-go access to information for faster decision-making and enhanced process flow. You can manage on-the-go budget reviews and approvals across planning and budgeting, tax provisioning and financial management software. Mobile data access enables you to perform period-end financial close activities on your laptops, tablets and phones. Proven Usability and Customization Each industry’s requirements are different, so assessing how customizations of your potential software perform is a great way to evaluate any EPM. Ask your shortlisted vendors if they offer proof-of-concept product demos. Not sure how to approach the EPM solutions selection process? Reach out to us to receive advice from the experts. Compare Top EPM Software Leaders Applications Business teams can increase the efficacy of existing funnels with automatically generated sales figures. Forecasting capabilities let you set targets and then monitor and adjust them as key metrics change with market trends. If sales are up, you might need to hire more people, something the HR team can gauge with an efficient EPM tool. Adapt your campaigns according to market trends and buyer preferences with an integrated view of your marketing activities. Procurement teams can manage goods details and cost structures and react faster when suppliers raise product prices. Here are some ways to apply EPM to these various activities. Financial Planning and Analysis (FP&A) With enterprise performance management, you get a clear view of how operational efficiency aligns with corporate goals. EPM tools help you calculate total asset turnover — the return on investment (ROI) before tax, depreciation and amortization. An income statement trend over 12 months. Transaction matching Matching transaction data from multiple touchpoints for specific users can help you map the user journey to fine tune your marketing and sales strategies. Matching point-of-sale, credit, cash, checks and bank payments with financial systems is a Herculean task that EPM tools perform well. Some fields EPM systems track daily, weekly and monthly are the transaction date, customer ID, merchant ID, amount paid and location. Accounting systems find this information helpful in spotting patterns and tweaking the workflows to fix any exceptions. 4-5-4 and 13 Period Planning Depending on your company’s sales campaign, you might want to include 4-5-4 or period 13 durations to account for footfall variations over weekends and holidays. Understanding this fluctuation is essential to assess performance correctly. Period 13 calendars treat each period as a 4-week duration, instead of Gregorian calendar months which have a varying number of days. EPM tools offer 13 Periods as a calendar option for planning and forecasting. Source Profitability Analysis Understanding what drives profit will help you make decisions accordingly. The success of brick-and-mortar stores depends on target customers, location, product availability and the customer experience. Online retail success relies on multiple touchpoints and devices, SSO, website design, ease of payment, customer support, etc. Product sales vary with channels, marketing strategies and seasonality – factors you can incorporate in EPM tools during performance analysis. You will need to integrate the EPM cycle into your business strategy first. Compare Top EPM Software Leaders The EPM Cycle The EPM cycle starts way before you acquire such a tool. Let’s take a look at the steps. Identify the key stakeholders, including the business owner and the executive sponsors. Bring in people who know the organization’s internal processes, roles and responsibilities. Assess if you’ll need to bring in external expertise for this step. Decide on business objectives through executive workshops and brainstorming sessions. Define roles and responsibilities, such as who will have the authority to approve strategy restructuring, resource allocation, etc. Create a master deployment plan, establishing milestones through measurable metrics. Perform an inventory of existing processes. Which ones will still work after the deployment? Which ones will need redesigning? Align team responsibilities with the newly defined processes. Design the processes’ workflow and share the draft with all stakeholders for approval. Evaluate the various EPM tools in the market according to your requirements – get your ready-to-use template here. Compare the top products with our handy comparison report. Reach out to vendors for details, including demos, if possible. Select and buy. Create system design documents with a development instance of the tool so you can verify the design criteria. Design and deploy business-specific standards like calendars, naming conventions, resource hierarchies, document management and project templates, etc. Apply the process design to your selected EPM tool. Define dashboarding and reporting workflows, custom codes, EPM tool training, etc. Review with the stakeholders. Install and configure the software and migrate the pilot project to the newly configured system. Train the pilot personnel to use the system properly. Launch the pilot instance and run it with the system design you put into place. Once the pilot is complete, assess the lessons learned and the objectives achieved. Make necessary tweaks to the processes. Go live. Review the master deployment plan and adapt it according to the implementation results. Repeat steps 3 through 9. Compare Top EPM Software Leaders Wrapping Up Enterprise performance management is evolving with the times, with cloud platforms and their benefits proving to be catalysts for growth. Mobile device support makes dashboards and scorecards available 24/7 from anywhere with internet access. Additionally, support for greater customization and focused data integration strategies are changing this market. What do you see happening in the enterprise performance management field? Let us know in the comments section below! Ritinder KaurWhat Is Enterprise Performance Management? A Comprehensive Guide08.21.2024