In hyper-competitive market segments, businesses must be agile and adapt to evolving market conditions and consumer preferences. To usher in such a work environment, management often forms elaborate strategies and incorporates digital transformation processes.
When it comes to execution, the desired benefits are never fully realized. To bridge this gap between strategy and execution, Enterprise Performance Management (EPM) emerged as a popular strategy.
EPM involves ongoing monitoring of performance across the company through data analysis and integration from various sources. EPM aims to offer a well-defined framework for decision-making, resource allocation, risk mitigation and actionable insights.
By implementing a comprehensive Enterprise Performance Management software, companies can ensure the precise execution of enterprise-wide plans formulated by decision-makers.
What is Enterprise Performance Management software?
Enterprise Performance Management software is designed to help analyze, understand, and report on the operations of the business, integrating with existing enterprise resource planning (ERP) systems.
This adds a management layer over the standard transactional ERP modules. ERP software offers support for practices that align operations and finance to facilitate integrated business planning and create a foundation for enterprise-level connected planning.
Enterprise Performance Management software is widely used by CFOs and finance teams. Financial Planning and Analysis (FP&A) teams leverage the functionality of EPM software to ascertain any gaps in performance. This helps the FP&A teams to determine the root causes of the gaps and then collaborate with other departments to timely plan, analyze, execute, and report the performance of financial plans.
EPM software solutions are also used by other departments, such as sales, HR, IT, and marketing, for essential tasks like planning, budgeting, and reporting on operations.
Need for Enterprise Performance Management Software
When staying ahead of the competition, businesses need every department to operate at the optimal level. This is where enterprise performance management software offers some incredible benefits to organizations, including:
Better Resource Management
It is the responsibility of the HR department to identify new requirements and plan for these needs in advance. Many HR teams use EPM software to ensure better headcount planning. EPM software further helps with determining long-term goals and their comparison with the present data availability. EPM also helps with essential tasks like budget planning, salary distribution, and much more.
Optimizing Sales Funnel
EPM software can help execute sales planning based on the data collected from various sources. As such, sales teams are able to either optimize or restructure an existing sales funnel. Modern EPM software comes equipped with forecasting possibilities which help determine, monitor and adjust targets in real time.
Control Supply Network
Purchase teams are in a better position to exercise control over the supply network with EPM software. These platforms enable decision-makers to better manage crucial data related to the quality and performance of the required goods with an efficient overview. Sourcing personnel are better informed regarding the latest data and react promptly to any sudden price changes to save money and enhance productivity.
Monitor Campaign Performance
Marketing teams use EPM software to actively monitor the performance of an ongoing campaign. EPM platforms offer a comprehensive view of the marketing campaigns, thereby enabling the marketing teams to make decisions faster when changes are required in marketing plans. EMP software consolidates the reporting process and eliminates the need for a manual compilation of data across multiple data sources. As a result, ongoing campaigns can be adjusted quickly and easily.
EPM Software in Action
Cloud-ready enterprise performance management software has emerged as a potent solution for performance management across the entire organization. Some of the essential tasks for which EPM software is used are:
EPM software is equipped with built-in modelling features that allow teams to create multiple forecast models based on multiple what-if scenarios. This feature enables the business to stay ahead in rapidly evolving business environments. With scenario planning, teams can determine upcoming developments like a need for new employees or the latest growth projections. Comprehensive EPM platforms help connect operational and financial processes with financial planning, thereby delivering actionable insights.
When it comes to creating rolling forecasts, EPM software is extremely useful. Herein, teams can plan for future events by making predictions over time by changing the periods accordingly. This enables management to predict performance across different departments. Rolling forecasts are regularly used for supply chain optimization, financial planning, and project management over a given period.
Single Source of Truth
EPM software helps the organization create a single source of truth wherein all departments get access to real-time data from the platform. This platform connects common data and processes across departments and offers accurate, updated, and comprehensive data. Moreover, EPM also reduces the need for several reporting systems. Teams have access to centralized data sources and comprehensive data dashboards that ensure accuracy while reporting.
EPM software allows the users to focus more on strategy and spend less time on manual processes. Many EPM software solutions come equipped with ready-to-use templates that enable the teams to leverage the prescribed frameworks. Users can also create customized templates based on their specific requirements. As a result, management is able to create an efficient workforce growth plan and streamline operations based on accurate data.
EPM vs ERP
In addition to EPM software, many companies also use Enterprise Resource Planning (ERP) software to simplify complex business operations. This goal is achieved through the management and automation of multiple business operations from an enhanced and feature-rich platform.
ERP systems feature a comprehensive dashboard and built-in analytics to assist company leadership in managing various operations efficiently. Through an interactive database management system, ERP helps optimize crucial operations like manufacturing, inventory management, production and several others. 49% of companies have reported improvements in their performance with ERP implementation.
ERP systems were originally created for manufacturing companies but have since forayed into the service sector as well. ERP systems for different industries must be customized for optimal results. 80% of companies have required some level of customization for their ERP systems.
- When compared with EPM software, ERP platforms have slightly different functionality. EPM software enables the consolidation of data from across departments, while an ERP solution allows the processing of transactions and tracking of business resources. As a result, companies are always up to date with their financial performance.
- Another major difference between these two platforms is that ERP takes a much longer time, in years, for its full implementation. The project must go through the defined steps with the detailed analysis required at every step. On the other hand, EPM is much simpler to implement, with the time duration being in months.
- In a sense, ERP can be integrated as a part of EPM, which enables management to create forecasts and manage budgets by integrating data from ERP as well as other platforms, including HRIS and CRMs. As a result, EPM software helps create a single source of truth wherein all business data is consolidated in one location. This helps eliminate oversights and errors while creating financial forecasts and reports.
EPM vs CPM
Two concepts that have gained popularity in performance management, Corporate Performance Management (CPM) and Enterprise Performance Management (EPM) have a few underlying differences:
EPM is focused more on the aspects of performance management in the company through EPM software. EPM has its focus on multiple operational aspects like finance, marketing, sales, supply chain, manufacturing, and several others.
On the other hand, CPM oversees the corporate aspects of the implementation of various processes related to performance management. CPM software is used by teams to align corporate goals and strategies with planning and execution processes to better control organizational success. CPM is also regarded as a subset of business intelligence that helps manage corporate performance per specified KPIs.
Top EPM Trends: Road to Future
As an organizational function, performance management has assumed considerable importance. Many interesting developments are taking place in the sector, promising a great future. Some of the crucial trends that indicate the future direction of EPM are:
- The EPM market is slated to register an impressive CAGR of 7% to reach a valuation of $8.3 billion by 2027. This is a marked growth from a $6.0 billion valuation in 2022 and $3.9 billion in 2019.
- With a sizable number of employees preferring to work from home in the post-COVID period, organizations will need a comprehensive EPM platform in place.
- One of the most critical EPM trends in the coming years will be the integration of process automation tools to enable employees to focus more on core operations.
EPM is one of the most crucial organizational processes and is expected to emerge as the key differentiator in the marketplace. Growth-oriented companies must invest in integrating EPM solutions with their existing systems to leverage the available benefits and drive growth in future.