Understanding EPM, CPM, and Connected Planning for finance

Enterprise performance management (EPM) is defined as a process supported through planning, reporting, and business intelligence software that enables an organization to connect its strategy with planning and execution. 

The modern EPM approach came to fruition in the 1990s and incorporated past, present, and forward-looking information — in addition to business drivers — for a more comprehensive method of financial and operational planning. Some of the key components of EPM systems include planning, budgeting, and forecasting capabilities and the ability to monitor KPIs, provide analysis, and manage reporting.

EPM software is designed to integrate with enterprise resource planning (ERP) systems to provide a management layer on top of the transactional ERP modules. EPM systems can support practices that align finance with operations for integrated business planning and establish the foundation for aspirational, enterprise-wide Connected Planning (more on that below).

Successful use of EPM software allows financial planning and analysis (FP&A) teams to anticipate performance gaps and drill down into root causes, collaborate strategically with the business, and execute timely and reliable planning, analysis, and reporting.

See how Forrester has redefined EPM in its “Follow the Money” report.

The top three enterprise performance management trends

1. Deployment models remain a challenge. When rolling out an entirely new EPM solution with different deployment models (cloud vs. on-premises) at a global operation, it can mean replacing some large legacy systems and processes. This effort is no small feat and can result in one to three-year on-prem implementation times (or longer). Fortunately, solutions such as Anaplan can be implemented in a fraction of the time it typically takes to get an on-premises solution up and running.
2. All innovation is not created equal. In addition to the move toward cloud solutions, EPM innovation is evolving along four vectors: user-experience simplicity, social collaboration, advanced analytics, and integration with other business applications. However, these four are often not equal in importance, and many Anaplan customers indicate a preference for the following order:
3. Integration. Robust and straightforward data and metadata integration are critical.
4. Experience simplicity. Users have experienced many technology rollouts, and adoption increases when technology aids their work and drives efficiencies.
5. Advanced analytics. In today’s fast-paced world, organizational leaders need insight and flexibility in their planning platform to evaluate scenarios and best courses of action quickly.
6. Social collaboration. When planning doesn’t include the right people at the right time, decision-making is delayed and misinformed.
7. Flexible EPM modeling is vital. As SaaS solutions have become prevalent in EPM, widely acknowledged differentiators provide competitive advantages, such as the robustness and flexibility of modeling, reduction in IT dependence, and management reporting capabilities. 
   

The transition from EPM to CPM

The acronyms may be changing, but the concepts remain the same as corporate performance management (CPM) supersedes EPM. Gartner defines CPM as “the methodologies, metrics, processes, and systems used to monitor and manage the business performance of an enterprise.”

EPM, a suite of methodologies that ranges from strategy maps, planning, activity-based cost, and financial reporting has morphed into CPM as the favored term, and vendors that support the practice of CPM strive to bring all its methodologies into a single platform. This shift has resulted in many improvements to the CPM space, such as:

• Users have access to all the CPM methodologies they need in a single workspace.

• Users can quickly customize and deploy applications for finance, sales, operations, and human resources. Now the traditionally finance-centric CPM can extend out into all areas of the business, and it is easier for finance teams to provide support for decision-makers across the enterprise.

• With a central repository to reconcile and synchronize various sources of data, users leverage a single source of truth for all their CPM needs, something that was far from easy in the past.

Relaxing the “suite is best” strategy

By relaxing the suite ideal, your organization is free to choose which solution is optimal for each purpose or use case. The cloud has been the great enabler of this best-of-breed approach. The need to spin spreadsheets to fill gaps between platforms is fading as this “post-modern” FP&A approach leverages cloud-born apps as the equalizer for finance.

You can also relax the notion of the software stack as the integration between ERP and EPM/CPM components are, for the most part, equal. Moving away from a central suite frees the business units from reliance on corporate finance to generate their analysis and reports. Anaplan meets the needs of both corporate finance and the business units, bringing both together on a common platform yields Connected Planning. 

Five highlights of a Connected Planning solution

Today’s modern enterprise planning platform needs to be cloud-based with advanced yet user-friendly modeling that can support an array of cross-functional and complex business use cases. The move to achieve this criterion aligns with Connected Planning — a next-gen approach to enterprise planning.

Here are five distinct signs reflecting what organizations have implemented for a successful Connected Planning management approach:

1. It’s integrated. All areas of the business execute against plans. There is a wide variety of use cases across the enterprise, with opportunities to connect workforce planning, sales compensation, marketing campaigns, project planning, IT costs, and more. Adopting a true Connected Planning platform brings about this benefit. 
2. It’s continuous. Financial plans are living and breathing things that can be refreshed with real-time information. With technology moving to the cloud, we now have better data integration tools. What was historically executed as a batch process is now continuous. 
3. It’s collaborative. Real-time information is shared across the enterprise. Access to shared technology and data can help eliminate spreadsheet errors and inefficiencies. Moving collaboration within a planning platform also allows users to refine their assumptions and act on outcomes more quickly. 
   
4. It’s predictive. Your team isn’t doing all the hard work anymore. Traditionally, people performed all the work manually. Today’s planning and forecasting processes are enhanced with real-time insights and predictive analytics. Progressive technology can do more of the work with its predictive algorithms and simulations, giving teams more time to focus on value-added work 
   
5. It’s strategic. Executive stakeholders can focus on growth opportunities. For many organizations, there is extreme pressure to deliver results that may be at direct odds with what is needed to improve the customer experience. With EPM, CPM, and Connected Planning technology, bottom-up initiatives connect with top-down strategies to ensure business alignment. 
    

Connected Planning provides a means to leverage past ERP, EPM, and CPM initiatives with a modern, cloud-born solution that orchestrates the entire enterprise on a common platform for all your planning needs.