Imagine getting hired at a fast-growing company as a senior manager or a CXO. One of the first set of tasks you need to handle is to review the strategy for your department and rewrite or update it. But, first, you will need to understand the company in a better way, including its overall strategy and how they are currently performing.
You ask around and schedule a few meetings with the heads of various departments; they all seem to have answers for their own department and results for the previous business year. But no one has a consolidated view of the performance of the company in this current year.
This lack of synchronized information is a major challenge for companies and prevents them from having better control over their performance management. The solution to this problem is enterprise performance management.
Enterprise performance management software is essential for the success of an organization. Managing an enterprise can be a complex task. Most enterprises have numerous departments that have a certain level of autonomy. It is great for overall productivity, but when it comes to measuring performance, it can get quite tricky.
Ideally, decision-makers should be able to look at the collated information from all their departments and understand what is going right and what isn’t. That is where enterprise performance management tools come in.
What is enterprise performance management (EPM)?
Enterprise performance management or EPM is a process that, with the assistance of a software product, enables a company to measure its overall performance. The process and the software enable the company to act as a central location for all the data being generated across the company. This information is then presented in a way that the team and the management have good visibility of the progress they are making together towards the goals and strategy of the company.
Evolution of EPM
Enterprise performance management systems have been around for quite some time. The early seventies saw accounting tools repurposed to generate various types of reports. In essence, these are examples of the first EPM tools.
Moreover, advanced technology and the rapid acceleration of technology have enabled almost entirely automated systems that generate real-time reports and allow in-depth insights into every process across an enterprise. This means that decision-makers can quickly and accurately guide their organizations toward success. Reliable enterprise management systems have become essential in an increasingly competitive global business environment.
EPM tools have evolved. They now not only analyze, diagnose and pinpoint the exact issue, but these enterprise performance management tools also run analytics to predict what could happen, how it would happen, and when it is likely to happen. This has become a crucially useful feature for strategists. Furthermore, EPM software nowadays also offers suggestions or prescriptive actions to resolve potential issues.
With cloud-based advanced solutions becoming more affordable, there is also a wider adoption of performance management software. It isn’t just enterprises that rely on these tools now.
Future trends of EPM
EPM tools are constantly evolving; at the current pace, we can expect to see numerous advancements in the technology used in EPMs and broader deployment of enterprise performance management tools.
Enterprises will no longer be able to compete effectively without an EPM tool that is accurate and reliable. Businesses need 360° insights to ensure that their strategies are carried out effectively.
More businesses are likely to rely on preemptive strategies presented by enterprise performance management tools through predictive and prescriptive analyses to ensure they stay ahead of the curve.
More focus is likely to be put on budgeting, liquidity forecasts, and talent strategy. These have been instrumental in pulling businesses through the pandemic and are likely to remain integral as global economic conditions may remain unstable in the near future.
There will likely be a lot more investment in automated EPM solutions and related technologies, as track records show how they have been instrumental for businesses in recent years, both in cutting costs and improving efficiency.
As EPMs become more commonly used, the need for non-technical personnel to understand and be able to use EPMs also increases. EPMs are becoming more user-friendly, allowing more access to varying types of users.
EPM Cycle
The EPM cycle refers to the various activities that you can expect from an enterprise performance management tool in a set period. At the very least, it should do the following:
Strategy:
This is where goals are set, and clear definitions of how each of the goals will be achieved are outlined. Generally, EPM cycles are short, medium, and long-term.
Budget:
This is where a clear understanding of where you are going to spend your money is put together.
Analytics:
All the information from various business processes is analyzed to compare how well your strategy has worked out.
Reporting:
This is where you understand how well you have achieved your targets through your set KPIs. An essential part of what EPMs offer.
Information from the analytics and reporting phase is essential to improve your strategy and approach for the next cycle.
Core EPM domains
The EPM system usually comprises multiple tools which feed into the central EPM system, showcasing all the data in an understandable way to the key stakeholders. These tools are defined primarily by their focus on various business domains, as well as their role in setting performance management strategies. The core domains of the EPM system are:
- Creating a strategy
- Business planning and forecasting
- Financial management
- Supply chain effectiveness
Let’s explore each of the domains in a little more detail.
1. Creating a strategy
Every business has a mission and vision along with a strategy that they use as a north star to guide the business towards success. Hence, the business needs to keep an eye on the strategy and regularly ensure that they are going in the right direction. The creation of a strategy also enables the business to course correct whenever the management feels that the business is going in another direction.
2. Business planning and forecasting
Once the business strategy is in place, it is time for the business to start planning and putting a forecast together. Setting up a business plan is essential to start thinking about how the business strategy can be turned into reality.
The business plan needs to have operational details in terms of how, when, and who should execute various activities to achieve the business strategy goals. Along with that, it is important to put some forecasting together to think about how future business activities will be conducted and what kind of potential results they will generate.
3. Financial management
The financial management domain manages all the financial processes, ensuring all the information from across the business is available for the finance team to crunch through and arrive at the financial results. At the end of the day, all business activities, strategies, and efforts should lead to the final financial result that is calculated at the end of the financial period. This will help in either tweaking or continuing on the selected course of action for the business.
4. Supply chain effectiveness
The supply chain domain focuses on understanding and measuring the effectiveness of the supply chain. The business will use this domain to understand the potential demand and sales pipeline for their product or service and ensure that there is enough supply either from within the business or from external sources like vendors to satisfy that demand.
Benefits of enterprise performance management
The overall importance of enterprise performance management is that it gives the business, the management, and the team a great view of the progress they are making towards achieving their strategies and targets.
Here are a few reasons why enterprise performance management is important:
1. Automation of tasks and tools
One of the key benefits of using enterprise performance management tools is that it provides a lot of business intelligence which can help the business prioritise their daily tasks.
2. Improved financial planning
The EPM software enables the finance teams to see the ongoing trends and progress of the business. This helps the finance team to improve the accuracy of their planning process.
3. Better strategy execution
The EPM software enables businesses to execute their business strategy better. The ability to map the activities and track the performances enables the teams to immediately identify any challenges and take corrective action to put themselves back on track to achieve their strategic goals.
What is the difference between ERP and EPM?
The key difference between ERP and EPM tools is that the ERP systems are built to focus on tracking the operational processes of the business. In contrast, EPM systems are built to focus on tracking the management processes of the business.
ERP focuses on the daily operations surrounding planning, managing, and executing the necessary activities to run the business. EPM provides a more holistic view of the performance of the company.
What are the EPM products presently available?
Although we have said that more businesses are looking for end-to-end solutions, we also have to understand that your business will likely need some specific features and may not need others. Here are a few available products:
Hyperion:
A well-known EPM tool is Hyperion from Oracle. The suite consists of quite a few different tools:
· Hyperion Financial Management (HFM)
· Hyperion Planning
· Hyperion Financial Data Quality Management Enterprise Edition (FDMEE)
· Hyperion Financial Close Management (HFCM)
This tool is based on-site.
EPM Cloud:
This solution from Oracle Hyperion works without major investments in hardware infrastructure. It is a SaaS product. This cloud-based application is ideal for various businesses, including those looking for more affordable solutions.
EPM Cloud from oracle is relatively easy to integrate into existing infrastructure. This software suite comprises the following:
· Planning and Budgeting Cloud Services
· Financial Consolidation and Close Service
· Account Reconciliation Cloud Services
There are two variants of this product suite, the enterprise version and Standard Cloud, which is less expensive and less intensive in terms of impact on systems.
Anaplan:
Anaplan offers an autonomous solution that leverages connected planning, meaning that the tool allows continuous changes and improvement. Anaplan offers real-time analysis and reports.
Their enterprise-class solutions are broken down into the following:
· Enterprise Scale
· Extensibility
· Planning and Modeling
· Intelligence
· User Experience
· Security
There are a host of other EPM products out there, such as:
· Jedox
· Workday
· Infor d/EPM
· Ares Prism
· One Stream FX
· EPM Live by Ignite Tech
· Planview Enterprise One
Enterprise performance management solutions
There are a few performance management solutions out there in the market for businesses to explore. However, when choosing an EPM for your business, it is important to first understand what business data you are currently tracking and what results you want to achieve by using the new tool. Once you identify that, it is important to also look at how user-friendly the tool is and how well it will integrate into your existing business systems.
Closing the gap between EPM and people management
All the tools, strategies, and systems can only work well if the business has the right people in the right places with access to the right tools. This is why businesses need to ensure they have a great people management process and tools in place.
Wish to improve the performance management of your company? There’s a platform for that. Learn how to choose the best performance management system.
Conclusion:
Enterprise Performance Management tools are essential for decision-makers. They enable effective, accurate, and quick decision-making and solid strategizing. While EPM tools are becoming increasingly automated, integration, support, and strategizing must become pillars of EPM implementation. You need to have a reliable and experienced expert to recommend you the best solutions.
As technology evolves, so will the EPM solutions available. With the cloud providing a plethora of advantages to businesses and the fact that we live in an increasingly connected world, customizable solutions that fit every business’s unique needs are the way forward.
Businesses should not merely rely on technology but use them to drive competitive advantage and stay ahead of the competition.
