What is Enterprise Performance Management (EPM)?
Enterprise performance management (EPM) software encompasses both integrated business planning and the larger connected planning enterprise model. It incorporates past, present, and future business elements and drivers for a more holistic method of financial planning. Successful use of EPM software allows that today’s 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.
Along these lines, allow me to introduce you an equation: OC = FE. For each operation cause (OC) there is a corresponding and measurable financial effect (FE). Cause and effect is a universal law; how does your finance and operations platform account for this fundamental principle? This is what enterprise performance management helps solve.
The common hurdles tackled by implementing an Enterprise Performance Management strategy
Organizations have long acknowledged a need for a more adaptive financial planning process. A recent Harvard Business Review survey revealed that 75 percent of organizations need to plan more frequently, and 85 percent responded that they need to plan faster. Yet, of those survey participants, just 5 percent believe their organization is effective at ongoing course corrections.
So, what gives—what is holding finance back?
According to Tony, finance teams still continue to hold on to outdated batch-oriented business processes and legacy tools, which weren’t designed to manage business performance in the face of increasing volatility, uncertainty, and risk.
While spreadsheets are a suitable productivity tool, they simply don’t have the capabilities of enterprise applications, and most notably lack data management, workflow management, and multi-dimensional modeling analysis capabilities. Paul expanded on this even further by calling out some of the specific pain points that an EPM approach can help resolve for an organization, which include:
- Lack of planning accuracy and outcome predictability. Plans are often not agile enough to adapt to changing business conditions. With better analytics insights and modeling techniques provided through technology, organizations can drive more valuable performance outcomes.
- Stale business information. Batch interfaces and a lengthy close-the-books process can result in delayed reporting and analysis. With EPM technology, real-time information is integrated into planning for up-to-date, faster, and reliable business insights.
- Intermittent collaboration. With email and spreadsheets, collaboration can feel like a challenge for developing plans and forecasts. With accessible technology and appropriate workflows, stakeholders are connected with not only one another, but the intel they need to achieve short- and long-term business objectives.
- Lack of strategic focus. With more traditional tools, organizations could fall short on achieving long-term strategic goals. This is because planning and performance measures customarily focused on controlling costs—rather than aligning with strategic growth imperatives.
- Lack of insight into revenue and operations. Numerical reports and presentations can provide murky insight into trends and performance indicators, in addition to difficulty in correlating financial, sales, and operational results. EPM technology eliminates this kind of data density by providing transparent business insights.
5 signs of an effective enterprise performance management system
Technological advancements in multi-dimensional databases, web-based visualization, and cloud technology have become top of mind for today’s finance leaders. However, how do you know if your organization is leveraging these features effectively? Here are five distinct signs, as highlighted by Paul, that reflect organizations have implemented a successful enterprise performance management approach:
- It’s integrated. Do 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. This is also an exclusive benefit of adopting a true connected planning platform.
- It’s continuous. Are your financial plans static or 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 becoming continuous. This is encouraging organizations to move away from annual budgets to highly iterative processes.
- It’s collaborative. Is real-time information 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.
- It’s predictive. Is your team still doing all of the hard work? Traditionally, people performed all of the work manually. However, today, 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 back in the day to focus on value-added work.
- It’s strategic. Can executive stakeholders 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 and connected planning technology, bottom-up initiatives connect with top-down strategies to ensure business alignment.
The journey to financial transformation can be both exciting and scary—and it often requires organizations to reimagine how they’ve traditionally approached financial planning. By successfully implementing the principles of EPM and adopting modern technology, organizations can begin expanding into connected planning for more refined plans and informed decisions, and driving more effective planning processes across the entire enterprise.
For the full scoop on how advancements in technology is paving the way for EPM, tune into the full on-demand webinar. In search of a quick read? Here are five client testimonials on how Anaplan’s connected planning platform transformed their businesses.
3 Trends in EPM software
Deployment models remain a challenge
When you’re talking about rolling out an entirely new EPM solution in a different model (cloud vs. on-premises) at the largest companies, that means replacing some huge systems and processes—the Oracles, the SAPs, the Hyperions, the IBMs of the world—and I can tell you from experience that that’s still no mean feat. We’ve all heard of two- and three-year on-premises implementation times (or longer), and the implementation failed anyway. Luckily, systems like Anaplan can be implemented in a fraction of the time it typically takes to get an on-premises solution up and running.
All innovation is not created equal
On top of the move to SaaS, Forrester says EPM innovation is evolving along four vectors: user experience simplicity, social collaboration, advanced analytics, and integration with other business applications. Maybe so, but from our customers’ points of view, these four are not equal in importance. I’d order them as follows: (1)integration (2) experience simplicity (3) advanced analytics (4) social collaboration.
Flexible modeling is king
One of Forrester’s key takeaways is this: “With SaaS becoming more prevalent in EPM, differentiation is evident in the robustness and flexibility of modeling as well as management reporting capabilities.”
What you want from enterprise performance management software today
While Enterprise Performance Management (EMP) involves a suite of methodologies–strategy maps, planning, activity-based costing, financial reporting, etc.–it is perhaps time for the analyst team at Gartner to remove the word “suite” from the title of their CPM Magic Quadrant report next time out. Now that vendors, such as Anaplan, provide all of the methodologies in a single solution, the word is no longer needed.
You might think I am quibbling, but having a single platform, such as Anaplan, for all of the methodologies brings important benefits that have changed enterpris performance management for the better:
- Users have all the CPM methodologies they need in a single workspace.
- Users can quickly customize and deploy applications for finance, sales, operations, and human resources. This is important as it means that for once the traditionally finance-centric CPM can extend out into all areas of the business and makes it easier for finance teams to provide support for decision-makers right across the enterprise.
- With a central repository to reconcile and synchronize various sources of data, users are leveraging a single source of truth for all their CPM needs – something that was far from easy in the past.
- With a software-as-a-service platform, deployment is quick and precludes having to install and maintain four or five different lots of software on premise.
Accelerate your finance transformation with cloud-based EPM