EPM is the term used to describe the procedures created to assist organizations with planning, budgeting, forecasting, reporting on business performance, and consolidating and concluding financial outcomes (often referred to as “close the books”). Businesses can coordinate company strategy and execution with EPM tools.
The technology makes use of feedback derived from information produced by systems, processes, and operations throughout the enterprise. The analytics that arise from this identification of business drivers and other information Companies are better able to evaluate new prospects, increase existing business profitability, and react to unanticipated change and disruption with greater agility.
Hash Core ERP has the perfect solution about EPM and ERP in business. Hash Core ERP provides various benefits to business owners. The benefits are increasing efficiency, streamlined business process workflows, and many others. Including the main benefits; business process automation, easy data access, tailored to enterprise’s needs, and make accurate decisions for your business.
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What is the Meaning of EPM?
Enterprise Performance Management (EPM) is a technique and software system that intends to assist organizations (i.e., businesses, governmental bodies, academic institutions, and nonprofits) in connecting their strategy to their plans and execution. Software for enterprise performance management (EPM) aids in the analysis, comprehension, and reporting of your company’s operations.
Enterprise Performance Management (EPM) is also known as; Corporate Performance Management (CPM), Business Performance Management (BPM), and Financial Planning & Analysis (FP&A). E-commerce platforms, front- and back-office software, data warehouses, and external data sources are just a few of the sources that EPM tools can combine and analyze data from. Numerous performance approaches, such as the balanced scorecard, can be supported by advanced EPM tools.
The Cycle of EPM
Enterprise resource planning (ERP) systems are frequently associated with EPM tools. Why? Because it adds managerial insights on top of operational data to ERP. By connecting financial and operational indicators to insights and eventually guiding strategies, plans, and execution, EPM tools are now seen as essential for managing all sorts of enterprises.
Through the use of analytics to identify significant trends and forecast outcomes, managers may use EPM tools to improve performance across the business by tracking financial and operational results against goals and projections. It describes methods and solutions that enterprise management requires and including the following management processes:
- Budgeting, planning, forecasting
Create forecast models and ad hoc simulations across several dimensions using EPM data analytics. Make data-driven decisions to improve performance, profitability, and strategic plan alignment. Also, develop flexible budgets by collaborating across company lines to crowdsource proposals. Use automated workflows to create a tidy and effective process.
- Modeling the value creation of a company
Every successful corporate entity strives to provide value for its clients. Because, by doing so makes it easier to sell goods and services. In the same vein, increasing dividends and stock prices for shareholders ensures the availability of investment funds to finance ongoing operations. This is one of the key elements or process of EPM
- Consolidation of the results
A firm displays a combined financial performance for all of its businesses when, in addition to its own principal operations, it has stakes in additional businesses (subsidiaries, associates, and joint ventures). The public know this as consolidation of results.
- Performance analysis
Compare profitability and performance to the strategic plan. Find new opportunities, address underperformance areas, and use the intelligence to guide the upcoming cycle of strategic planning.
The EPM process includes the monitoring and managing of key performance indicators (KPIs). They let managers in various departments and divisions of an organization understand key market and business trends on a regular basis.
History of EPM
EPM procedures were initially controlled by hand, on paper, in meetings, and through presentations and discussion. The collecting of budgets and financial data for reporting reasons was first supported by accounting packages in the 1970s. How? As commercial software applications started to gain traction in many enterprises. In the 1980s, accounting and finance teams were able to automate the production of budgets, reports, and worksheets.
The advent of email in the 1990s, which facilitated the sharing of spreadsheets and supported departmental collaboration in the gathering and dissemination of budgeting and reporting data, furthered this improvement. Executive information systems (EIS), which were created to offer graphical reports and KPIs to senior executives via their personal computers, also came into existence in the 1980s.
Later, this idea developed into software-based. What does it mean? Visual scorecards and dashboards that can offer KPIs and metrics to leaders as well as managers throughout the firm. Since the 1980s, the platforms for EPM tools have changed from mainframe systems to client/server Windows systems. And then to internet-capable, web-based applications. Software as a service (SaaS), often known as cloud-based software, is becoming more and more popular nowadays. Especially since it enables Finance to take charge, install the solution fast, and obtain automatic, affordable upgrades.
Future of EPM
What are the next version of EPM? It definitely includes brand-new features that take advantage of cutting-edge technology like artificial intelligence and machine learning. These technologies bridge the gap between analysis and action, making them effective decision-making aids. By finding hidden patterns and insights in historical data, they assist finance managers and executives in making better decisions. Wide-ranging effects on decision-making include tactical effects (which vendor to pay first), operational effects (budget reallocations), and strategic effects (mergers and acquisitions).
EPM Tools for Business
By eliminating or augmenting spreadsheets and enhancing planning and reporting processes through centralized databases, workflow, and process control, packaged EPM tools aid firms in becoming more efficient. By bringing together strategic, financial, and operational goals, expanding the budgeting participants, and providing managers with more up-to-date information, this promotes accountability across the organization. Here are some examples of EPM role in business:
Insurance: It is more difficult to achieve profitability goals for these firms because they must constantly modify their business models in response to a variety of factors. Such as environmental, governmental, and market upheavals. EPM offers insurance firms effective cost management and thorough profitability evaluations. It enables the more intricate and in-depth calculations necessary to ascertain future profitability.
Retail: This industry has seen tremendous transformation as a result of many consumers switching to a digital buying model, having access to a new and expanding store of valuable consumer data. EPM enables merchants to compute and model profitability at the transactional level. Also, uncovering new revenue streams and customer segments to support business expansion.
Manufacturing: The industrial industry has suffered as a result of supply chain disruptions on a worldwide scale. EPM gives manufacturers precise cost and profitability insights so they may choose whether to “build or buy.” Manufacturing companies are able to safeguard margins and guarantee profitability by using insights based on real-time data.
EPM and ERP
A relational database management system (RDBMS) is used to build and install the majority of ERP systems. The general ledger module of an ERP system often contains a summary of the data. ERP solutions also provide some fundamental financial and management reporting in addition to managing operational reporting on transactional data. This contains the balance sheet, income statement, and statement of cash flows, among other fundamental financial documents. Management reports, such as actual vs. budget deviation reports by cost center and department, are another advantage of ERP.
An EPM system’s planning module is made to manage the gathering and compilation of budget and forecast data, with workflow and process support that takes into account the iterative nature of the process. Although line managers might occasionally violate business rules and calculations that have been established by Finance, budget data entry templates can be built and tailored to the requirements of different departments. Additionally, the outcomes of managers entering their budget data and pressing enter are immediately enter into a central database for compilation. Organizations can speed up the budgeting process while enhancing data accuracy thanks to these capabilities. Knowing the history of the two software systems allows us to conclude that they weren’t really created to function as an alliance because their goals were distinct.
EPM tries to make management procedures more efficient while ERP focuses on operational operations. An EPM platform’s strength is in its ability to gather and combine data from various sources to enable crucial EPM operations. Including modeling, forecasting, financial reporting, and budgeting. While EPM systems concentrate on automating management operations, ERP systems concentrate on automating transactional procedures. One of the key distinctions between these two software programs is that ERP takes about a year to fully implement. Whereas EPM systems can be set up in a matter of months.
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EPM is a crucial aspect for a business to have because of all the explanations we have seen above. It monitors and manages the key performance indicators (KPIs) that let managers in various departments and divisions of an organization understand key market and business trends on a regular basis. EPM also works very well with ERP because they complete each other. EPM systems concentrate on automating management operations and ERP systems concentrate on automating transactional procedures.
Which is why Hash Core ERP is the key solution about this EPM matter for your business. Hash Core ERP is the most comprehensive cloud-based ERP system with a wide selection of solutions such as accounting, CRM, HRM, procurement, inventory, warehouse to manufacturing systems all in one platform. Try the free demo and you will find the benefits of using Hash Core ERP for your business. Get free demo now!