Enterprise performance management (EPM), not to be confused with employee performance management, is increasingly popular thanks to technological advancements. The solution provides powerful functionalities with real-time data consolidation, predictive analytics, cloud-based applications, and better yet, ease of use.
In many cases, today’s enterprises are sitting on different versions of the truth that are not connected to each other. As a CFO, how do you cope with the influx of information from various systems? How can you link business decision-making to risk assessment?
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Enterprise Performance Management (EPM) is a suite of applications designed to help organisations plan, budget, forecast, and report business performance.
Unlike legacy systems, an EPM system consolidates data from various sources, such as your ERP system, front/back-office applications, external data sources, and the entire organisation regularly. The solution then analyses these data and turns them into actionable insights.
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EPM was designed to help organisation link their strategies to their plan and execution. A typical EPM system includes the following management process:
EPM provides decision-makers with real-time, up-to-the-minute relevant information, predictive analytics capabilities, and intuitive, visualised interfaces to ensure the organisation achieves its goals and objectives and reflects them in its budgets and plans.
The EPM process also includes monitoring and managing key performance indicators (KPIs), which notifies managers about unexpected changes and thus allows them to respond quickly.
Nevertheless, EPM needs frequent revision to align with the organisation’s general visions.
Data presented in a visually engaging format through an EPM dashboard
Given the list of EPM functionalities mentioned above, some may be confused about the differences between EPM and a standard financial management system.
The functionalities of these two processes might intertwine, but the key differentiation is EPM’s capability to provide a forward-looking vision to the C-suite, allowing forecasting and budgeting up to 5 years in advance or more.
Equipped with predictive analysis, you can pinpoint trends and produce quick and accurate decisions using data accumulated from different departments. EPM allows you to perceive a single version of the truth, real-time data, and easy-to-read information at your fingertips.
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More and more EPM vendors leverage technological advancements to improve their offerings. EPM products nowadays are even more user-friendly, with graphic visualisations on dashboards, extending data access outside the finance department.
In short, EPM is a tool that supports financial management. While EPM helps automate and streamline financial planning processes, financial management encompasses the broader strategy and activities related to managing an organisation's financial resources.
Both are related but distinct concepts within the financial management realm.
EPM focuses on planning, budgeting, forecasting, and reporting. It helps organisations set financial goals, allocate resources, and track performance against those goals. EPM is a process-oriented approach with tools to streamline these activities. Financial data used for planning and forecasting in EPM can come from BI analyses of historical performance.
BI focuses on analysing historical data to gain insights and inform business decisions. BI tools help gather, analyse, and visualise data from various sources to identify trends, patterns, and potential opportunities.
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Having said that, BI plays an important role in EPM because it offers analysis and reporting functions that aid the decision-making process. Gaining access to a pool of data and drawing out only the most relevant one is not easy. As we have discussed before, data in today's business world is enormous and chaotic, and the ability to handle such sheer volume quickly and effectively can give your organisation a better head start.
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Solutions today, like Infor EPM, have built-in BI to address complex issues, from multi-dimensional analysis through data mining to sophisticated predictive analysis via an Excel-feel, web-based interface.
EPM and ERP are both crucial software solutions for businesses, but they address different aspects of company operations.
EPM helps organisations plan for the future, track performance against goals, and make informed financial decisions.
ERP focuses on day-to-day business operations. It integrates various functionalities like inventory management, customer relationship management (CRM), human resources (HR), and manufacturing. ERP streamlines core processes and provides a centralised platform for managing various departments.
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Financial data from ERP systems can be used for budgeting, forecasting, and reporting in EPM. Some ERPs might have basic EPM features. However, dedicated EPM solutions offer more advanced functionalities for financial planning and analysis.
Think of ERP as the central nervous system of a business. It connects various departments and functions, ensuring smooth operation and data flow. EPM is like the business' financial brain, analysing information from different parts of the body (ERP data) to make informed financial decisions and plan for future growth.
It would make sense for businesses to invest in an all-in-one system that can do basic accounting. EPM can be a great addition to your current ERP system as it pulls transactional data from an ERP system and utilises them in performance management.
Image credit: Syntellise
EPM can bring many business benefits but it cannot do anything without the data from external sources to support its key processes. The usual spreadsheet might be the normal way to keep track of your organisation’s financial situation. However, a web-based front end empowers you to take control of the data and when BI is added, you earn yourself a competitive advantage.
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EPM system provides a centralised platform that boosts efficiency, eliminates errors due to editing spreadsheets, helps drive accountability across the entire organisation by aligning strategic goals to financial objectives, and provides actionable insights for operations.
Cloud-based EPM has all the functionalities of the traditional system but is deployed in the cloud thereby significantly reducing the cost of ownership, increasing speed and agility, and most important of all, enhancing cross-departmental collaboration.
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These are just a few examples, and the specific applications of EPM will vary depending on the unique needs of your business and industry. However, EPM's core functionalities of planning, budgeting, forecasting, and reporting can be valuable tools for improving financial performance and achieving strategic objectives across various business sectors.
To learn more about EPM and its capabilities in full, visit the TRG website or request a free demo today!