Businesses are reevaluating their operations, processes, and software to remain competitive and keep up with modern technology, including EPM software.
As a financial analyst, you already know that operational performance directly affects financial performance. Your company needs to align its workplace needs with updated operational processes.
With that in mind, investing in an effective performance management system should be a top priority.
A proper performance management system is integral to a business’s survival. These systems perform performance appraisals, and businesses use the information they collect to make effective decisions.
This is where an Enterprise Performance Management (EPM) system comes into play.
Good EPM software effectively monitors and predicts business performance, sets goals, and ensures your company thrives.
It’s one of the most powerful tools for finance professionals, and this article will explain why.
Let’s get started.
What is Enterprise Performance Management?
EPM is a computer system designed to assist companies and businesses in linking strategies to their planning and execution.
It applies the concept of performance management across all aspects of an enterprise. This includes sales, marketing, finance, manufacturing, and any other line-of-business operations.
EPM automates an enterprise’s three most essential functions:
- Budgeting
- Strategy
- Financial planning
It maintains these critical processes by helping managers control revenue and distribute scarce resources.
Although EPM is primarily a financial tool, its functionality benefits all organizational departments, as it can integrate with other business solutions.
Advantages of EPM Software
To highlight why EPM software can be such a powerful asset for a business, consider some of the advantages of using it:
- It automates tasks and tools and enables value-added business processes by gathering and consolidating data automatically and in real time. This eliminates the time-consuming tasks accountants previously managed.
- EPM helps improve financial planning and analysis, reducing cost and risk and driving profitability with facts-based decisions.
- It can coordinate resources, activities, and tasks across multiple departments and teams by managing existing workflows to support enterprise performance.
- Its automated processes, such as embedded calculations and data aggregation, create more time to simulate what-if scenarios and identify and capitalize on growth opportunities.
However, your EPM software needs to be best-in-class to make the most of these advantages.
What Characterizes the Best EPM Software?
A good EPM software should have features that help your organization run seamlessly and at full speed. It should also provide the necessary tools to help you make critical decisions about your business’s future.
To top it off, it should reduce your time on planning, reporting, forecasting, and budgeting.
Careful consideration is required when choosing your EPM solution; it’s not a decision to make lightly.
Characteristics of the Best EPM Software
Worried you lack the technical aptitude required to make an ideal choice?
Here are a few guidelines:
1. Should Have Robust Modeling Capabilities
An effective EPM software should rely on Excel for modeling and include driver-based modeling and scenario analysis. This allows you to build on and rely on highly accurate rolling forecasts.
A business model determines its viability, so you need the relevant information readily available for scenario analysis.
A cloud-based EPM system ensures data is available in one cohesive place, making modeling faster and more straightforward.
EPM also allows you to link financial and operations models to see the impact of the business’s decisions on your forecasts and plans.
2. Capacity for Integration
Technology is a complex beast. However, its complexities should not hinder system integrations.
Integrations can supercharge an organization to maximize profits while effectively utilizing the available resources and workforce.
Ideal EPM software should allow the user to integrate with other core systems, such as e-commerce and supply chain management.
Cloud-based EPM systems are ideal for quick and easy integration because they support on-premise solutions and work well with other cloud applications.
The software should also allow integration with Excel, enabling users to use existing formulas for easy transition and adoption.
3. Should Be Complete and Scalable
While choosing an EPM system, consider your immediate and future needs to land on an option that supports future growth. It should grow with your business requirements as the need arises.
You may decide to go with a system with a few features and build upon it when needed. However, a complete EPM system is ideal as it already has all the essential features installed.
This can save money in the long run on upgrades for incomplete systems.
4. Should Allow Flexible and Comprehensive Reporting
Extensive reporting today includes the use of multidimensional and transactional databases.
A flexible feature on your EPM software means users can easily access various reports from different departments on the interactive dashboard. The data is easy to understand.
Since an EPM system is typically a financial tool, the non-financial team members can also benefit from the system’s flexible and comprehensive reporting feature.
Key Features of Enterprise Performance Management
A good cloud-based EPM software is quickly becoming the go-to solution for performance management.
As such, there are essential features to look for when exploring EPM system options.
These should include:
1. Forecasting
EPM software creates rolling forecasts, a process of predicting the future by adding and dropping periods over a set period. Rolling forecasts provide predictions and performance for different areas in the enterprise.
These forecasts are often used in financial planning, supply chain management, and project management. A rolling forecast has a first-in/first-out (FIFO) feature, which ensures that it always covers the same amount of time.
2. Modeling
EPM has an in-built scenario modeling feature that enables users to create long-range forecast models in fast-changing business dynamics.
The scenario planning and financial modeling feature in EPM helps users anticipate changes and needs that may arise.
For example:
- New hires
- Growth projections
- New regulatory restrictions
An effective EPM system can link financial and operational processes with financial plans and forecasts, giving users valuable insights so that they can plan accordingly.
3. Planning
EPM allows users to spend less time on processes and focus on strategy. Most of these platforms offer pre-built templates, and you can leverage set frameworks.
They can also allow you to create custom templates to fit the company’s requirements. This streamlines operations by enabling more effective workforce growth with accurate data.
4. Interactive Dashboard and Visualization
Enterprise Performance Management (EPM) software has an interactive dashboard that displays critical information about the business’s performance.
Visualization via the interactive financial dashboard helps users quickly access certain system features and make changes.
The dashboard also gathers information across the entire organization. It helps create financial reports that provide a reliable assessment of the organization’s performance.
These reports are based on information that drives actions to maximize overall corporate performance.
5. Comprehensive Reporting Platform
The EPM software eliminates the need for multiple reporting systems. It provides current, complete, and accurate data by connecting the data, metadata, and processes that the different departments share.
An effective EPM solution provides team members with centralized data resources, enabling them to view data dashboards and reports securely and access self-service reporting.
6. Collaboration and Integration
Users can access processes and workflows through mobile devices and move between on-site and cloud data sources.
Most EPM software has built-in cloud servers that store a company’s sensitive data, allowing users to choose who they want to share the data with.
EPMs’ capability to integrate multiple business systems gives its users access to consolidated data, which makes for easier and more manageable operational processes.
This collaboration provides secure and seamless integration and functionality of vital workflows and processes.
Is There a Difference Between EPM, CPM, and BPM?
To answer this question, we must first understand what these acronyms mean.
CPM stands for Corporate Performance Management, while BPM stands for Business Performance Management. They are all performance management software designed to help organizations achieve their financial goals and objectives.
Financial Performance Management (FPM) and Business Intelligence (BI) are other terms usually associated with performance management. FPM refers to the practices and processes used to determine an organization’s financial health.
At the same time, BI describes the various software solutions used to analyze an organization’s raw data.
These performance management systems may have the same ultimate goal, but their application in the organization has slight, subtle differences.
EPM Versus CPM
CPM combines aspects of FPM and EPM with the analytical capabilities of Business Intelligence tools to highlight the corporate applications of performance management processes driven by the financial organization.
EPM, on the other hand, applies performance management across all aspects of an enterprise, including sales, manufacturing, and other line-of-business operations.
It can be easily applied outside the corporate world in governmental and non-governmental agencies and educational institutions.
EPM Versus BPM
The primary purpose of BPM is to understand the outcomes across an entire organization.
The goal is to improve the desired results by streamlining the operational processes. BPM measures performance results against a predefined goal.
EPM and BPM are the same, with the concept of BPM being embraced in 2003 and later morphing into the modern EPM. So, there is not much that differentiates between the two terms.
A slight difference would probably be the addition of extra features in EPM that were not previously available in BPM.
The Relationship and Difference Between ERP And EPM
Enterprise Resource Planning (ERP) and EPM are used in tandem to simplify business processes by enabling the automation and management of different business tasks from a single, consolidated software application.
An ERP system has a dashboard and built-in analytics in its single interactive database management system to help with managing the whole business cycle, including inventory management, manufacturing, production, and more.
Initially designed for manufacturing industries, ERP systems have since expanded their services to the hospitality industry, educational institutions, healthcare, and government.
However, each industry has its own ERP peculiarities, and a system from one industry may not be compatible with another.
While an EPM system allows you to consolidate data from all departments, an ERP system helps you process all transactions and track all company or business resources.
It offers an efficient and organized method to keep you updated with your business finances.
One key difference between ERP and EPM is that EPM takes a relatively shorter time to fully implement.
EPM can be implemented in months, while an ERP system can take up to a year or two to implement fully. This is because ERP processes a project step by step, carefully and thoroughly analyzing each step.
The time required to implement the system will depend on the number of users, the size of the company, and the complexity of the software chosen.
Typically, the bigger the organization, the higher the number of users; the more complex the software, the longer it takes to implement it.
EPM software can integrate ERP data and data from other platforms, such as CRM and HCM, to manage budget allocations and create forecasts.
In doing so, EPM enables you to have all business resources and finance data in one single platform, eliminating errors and oversights when generating financial reports and forecasts.
EPM Trends and Facts
According to a 2021 remote work survey by PwC, around 90% of employees are expected to continue working remotely in the post-COVID era. And in 2024, many employees still work remotely even as circumstances have normalized.
According to a study from the Pew Research Center, 33% of respondents work remotely, and 33% work in a hybrid work environment.
While this is certainly not 90%, it still marks a significant increase from pre-pandemic remote work statistics when only about 6% of Americans worked from home.
Organizations continue to need to rethink and upgrade their core employee activities to accommodate this trend. The need for effective performance management systems is also on the rise.
The growth rate of the EPM market is expected to grow at a Compound Annual Growth Rate (CAGR) of 7% by 2027, along with software and services. The demand for cloud-based EPM software and the rising need to improve business performance
Data published by Statista reported the size of the enterprise performance management (EPM) software market worldwide from 2019 to 2024.
In 2019, the EPM software market was valued at 3.9 billion U.S. dollars and was projected to rise to 4.4 billion U.S. dollars.
Five years later, the market is now projected to reach 5.31 billion U.S. dollars this year and 6.60 billion U.S. dollars by 2029.
Cloud-Based EPM solution
With cloud computing quickly becoming the norm in modern business, it’s only natural that businesses and industries prefer cloud-based EPM solutions.
This EPM software is provided as a service or a utility, such as electricity, with subscription pricing, where you only pay for the features you need.
The software allows you to operate it over the Internet, so you are not required to invest in computing infrastructure in-house.
Benefits of Cloud-Based EPM Solution
- One huge benefit of cloud-based EPM software is its scalability, which allows you to pay for what you need when you need it without investing in additional hardware.
- Allows easy and universal access. Cloud-based EPM software can allow remotely located employees to access the system from mobile devices such as smartphones, laptops, and tablets.
- Data is not lost due to unavoidable disasters such as power outages. Cloud-based computing allows you to back up, recover, and access your data through the Internet.
- It saves time and money by reducing finance’s reliance on manual processes and spreadsheets. The finance department is more productive and efficient when it does not spend most of its time collecting data and tracking errors.
- Provides security for your sensitive data. The biggest selling point of cloud-based EPM software is its ability to provide a safe and secure storage system for the company’s data. Only authorized users can access the data, ensuring an outsider cannot.
With good cloud-based EPM software, you can have your company off the ground and up and running in a matter of weeks.
It streamlines your key processes, improving the accuracy of your reports and plans and making your finances more productive and efficient.
Reap the Rewards of EPM Software
An effective Enterprise Performance Management system helps you build a stronger business while retaining your most valuable assets: skilled workers, time, and money.
EPM software allows organizations to develop key insights and strategies to run efficiently.
Investing in EPM software should be a no-brainer for FP&A professionals who want to improve the accuracy of their financial processes. Its perks are clear, and its only drawback may be its high cost.
But with proper use, it can give you real value for money within no time.
About Datarails EPM Software
Datarails is an FP&A solution that connects and centralizes all organizational financial data from various systems (ERP, GL, CRM) alongside Excel spreadsheets and operational data.
It also creates automated reports (P&L, cash flow, budgets, etc.) and thoroughly analyzes consolidated data to create business and financial insights.
Datarails also offers business performance management software built with finance professionals in mind.
Datarails’ business performance management software automates the collection of your data sources, regardless of shapes and forms.
This includes GL, TB, Budget, Forecast, Sales, or any other data generated by any system within the organization or that lives on any spreadsheet.
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