What Is Enterprise Performance Management Software And What Are Its Core Components?
As a finance director, you may be aware of the gap that sometimes appears between financial planning and performance measurement results. Addressing this disconnect can be very complex, especially so in large companies. This challenge highlights the need for next-generation enterprise management software solutions. In this article we explore enterprise performance management software and its key components.
What Is Enterprise Performance Management?
Enterprise Performance Management (EPM) is a business process that aims to bridge the gap between strategy planning, execution, and measurement.
Having a defined process helps obtain a global understanding of the different aspects involved in financial and operational planning, so that decision makers can anticipate performance gaps, consolidate processes and improve efficiencies.
What’s The Difference Between EPM and ERP?
EPM is a step above ERP (Enterprise Resource Planning), which has a primarily transactional and procurement focus. In some organisations, ERP is the primary performance management tool, and it’s complemented by spreadsheets that fulfil functions not covered by the ERP, like forecasting, budgeting, and financial reporting.
However, as organisations grow, so do their financial and performance requirements and ERP tools are sometimes no longer sufficient on their own. In medium and larger business, integrating EPM and ERP is a highly effective way of moving towards continuous performance optimisation and better levels of automation.
Enterprise Performance Management Software
Software tools can help implement the EPM process by supporting and streamlining planning, reporting, and business intelligence operations.
There are 2 parts to EPM software:
1) Planning, budgeting, forecasting and reporting software
With these tools, you can create responsive business models that are essential to account for the interaction between different aspects of enterprise finances, like sales, margins, overheads, apportionments, P&L, Balance Sheet, Cash Flow, CapEx, KPIs, etc. With this software, you gain insights into how these factors relate to each other in practical terms, and can also model different scenarios to consolidate processes accordingly.
2) Business analytics software
This part of EPM software provides analytics tools so you can perform multi-dimensional analysis on different data sets, be they ‘actuals’ from the ERP system, or scenarios, from forecasts from the planning, budgeting and forecasting system.
Both parts of EPM software need to be capable of integrating between themselves, as well as integrating with the existing finance and ERP systems. For optimal results, EPM software should feature the following core components:
Planning, Budgeting and Forecasting
These features address a common problem in enterprise performance management. Unexpected changes affect outcome predictability, and not having dedicated tools means you’ll have very little leeway to adjust.
By contrast, advanced software solutions have extensive planning, budgeting, and forecasting functions so you can choose the best response to changing circumstances and still meet operational and strategic goals.
Financial software often yields large volumes of data, which in and of itself is rarely well structured enough to make decisions. This is where the reporting component of EPM software comes in handy, since it presents data in an insightful way that facilitates high-level performance analysis.
Moreover, EPM tools with real, or near-real-time reporting mean that you’re less likely to make inaccurate evaluations based on stale data.
Profitability and cost analysis
With EPM software, you can model costs and determine profitability and cash flow under different scenarios. With the resulting data, you can make an informed allocation of resources for optimal financial results.
These are only some of the features you’ll get with Corporate Planner, a multi-function business platform created to super-charge EPM processes. Get in touch with Account-Ability to learn more.
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