What Is Enterprise Performance Management (EPM)? How to Outperform in Any Market Condition

Enterprise Performance Management (EPM) becomes essential as a business grows and operations become more complex. With more staff, products, and costs, managing everything can be challenging without a clear overview of your business's performance.

An effective overview helps you identify areas needing improvement and track overall performance. If you're overwhelmed by trying to manage too many aspects at once, EPM might be your solution.

If you're new to Enterprise Performance Management, we're here to guide you through everything you need to know.

Table of Contents

• What Is EPM?
• What Is the Difference Between EPM and ERP?
• What Are the Key Elements of the EPM Process?
• Benefits of an EPM IT System
• EPM Examples in Finance Sectors
• Evolution of Enterprise Performance Management
• What Is the Future of EPM?
• What Is EPM Software?
• How to Choose the Right EPM Solution For You: Best Practices and Tips
• Embrace Enterprise Performance Management in the Cloud With Reliable
• Centralized Software
• FAQs About Enterprise Performance Management

What Is EPM?

EPM is a way of simplifying a complicated situation. Enterprise performance management (EPM) is a combination of several different processes, tools, and practices that allow you to evaluate present and historical performance and make informed decisions when it comes to planning for the future.

You’ll have clear strategic goals that you want to achieve. EPM lets you see how well you’ve progressed up to the present point in time and how to improve plans for achieving it in the future. It can help you with several processes that include:

• Analysis of Performance: This gives an insight into how the business has been performing, including KPIs related to your ROI, operating costs, overheads, etc.
• Budgeting: This helps you plan future budgeting better, including budgeting in every area, from product development to marketing.
• Planning and Forecasting: What products/services will do well in the future? EPM assists with forecasting so that your plans are more efficient.
• Value Creation: By ensuring your offerings meet and exceed customers' expectations, you can boost CX (customer experience) and customer retention rates.

One thing to note is that you may see different terms for EPM that include Business Performance Management (BPM), Corporate Performance Management (CPM), and Financial Planning and Analysis (FP&A).

What Is the Difference Between EPM and ERP?

One other term you may come across is enterprise resource planning (ERP). While they sound similar, there are distinct differences between the two that should be noted. Take a look at our table of comparison.

What Are the Key Elements of the EPM Process?

Now that you have an idea of what EPM is, let’s analyze its key elements.

1. Access Data Across All Business Units

You may have multiple locations or multiple departments/teams within one location (or both). EPM lets you access and unify all the data from across your organization, as well as your website and any other platforms you utilize. This not only gives you a rounded overview but also means that all the different teams can access it.

For example, your marketing team could access the financial analytics of your sales team so that they can see which campaigns and tactics are most effective. When they know which campaigns give the best ROI, they can better plan future campaigns or tweak existing ones.

2. Create a Strategic Plan

EPM systems, such as the one offered by OneStream, use AI and ML to provide you with predictive analytics. In turn, this helps you look at potential future trends (and challenges) so you can develop an effective strategic plan.

Rather than reacting to changes and data, your strategic plan looks at these potential trends, which means you can plan ahead and make informed decisions.

Your EPM process might predict that one product will do very well next year, while another will struggle. This allows you to allocate resources, such as a marketing budget, to the product that’s predicted to do well.

3. Budget

Budget and resource allocation are crucial to the success of a business. By analyzing extensive data sets, your EPM system can generate financial reports that aid you when it comes to allocation planning.

You can see if any department needs additional funds or even if the budget needs to be cut in others.

Businesses need good insights into their financial health. An EPM can provide those insights, both in terms of historical data and prediction of future performance.

4. Track and Report

You may have set your budget and your strategic goals. However, how well are you progressing with those things? An EPM will track relevant metrics in real time and measure them against the budget you’ve set, as well as historical performance data.

This gives you insight into how well your tactics are working, and you can make adjustments where needed.

For example, you may have launched a new email marketing campaign for one of your services. However, your EPM reports that the CTR (click-through rate) is lower than predicted.

You can then reassess the campaign, carry out A/B testing on different elements, or even change the CTA (call to action) to improve things.

5. Assess and Analyze

Data-driven decisions are informed decisions, and an EPM provides you with a wealth of data that enables those decisions.

It assesses different aspects of performance and offers you an in-depth analysis of the data so that you can make any decisions needed to improve it.

For example, the EPM report shows that one of your products is performing poorly. You can analyze the relevant data to try and identify why it’s not performing as expected. This allows you to pinpoint factors such as pricing, features, or your marketing tactics.

Benefits of an EPM IT Solution

The advantages of an EPM IT System are many. It can help align operations with strategic goals, enabling more efficient resource management and greater organizational agility. Here are some of the top benefits.

1. Profitability

Which areas of your business are costing you money and which are making you money? By integrating and analyzing financial data from the different areas of your business, you can easily answer those questions.

Are overstocked items costing you money through warehousing costs? If so, it may be time to look at offloading that stock.

Your EPM system will lead to better cash flow management, which means you can redirect resources to profitable (and potentially profitable) areas instead of ones that are costing you money.

2. Integrated Business Strategy

Long-term strategic goals need to align with your daily operations. By centralizing all your data (including KPIs), your teams can better see how they fit into the bigger picture and how they contribute to those goals. An EPM system provides that bigger picture and can help achieve that crucial alignment.

3. Modern, Automated Financial Processes

Manual data entry can be prone to human error, which results in mistakes being made. With an EPM system, you remove the need for that manual entry by switching to automated processes instead.

Using an EPM finance system streamlines your whole financial process and ensures that budgeting and forecasting are more accurate.

4. Regulatory Oversight

Tax regulations (and other regulatory frameworks) are constantly changing and evolving. Your EPM system can ensure that your organization is complying with any financial regulations and predict the effects of changes or new regulations on your future finances.

5. Faster Reconciliation of Accounts

Rather than having to manually reconcile multiple accounts, EPM automatically compares all your transaction records from all your sources. If it identifies any issues, such as outliers, it alerts you that action is required.

EPM’s automation abilities make the reconciliation process faster while vastly reducing the likelihood of human error. This means that any financial statements you generate will be more compliant and accurate.

EPM Examples in Finance Sectors

Here are some examples of how financial institutions use EPM systems to optimize budgeting, forecasting, and financial reporting.

• Insurance: An EPM system can help insurance companies, such as AAA life insurance company, manage their costs and analyze the factors that lead to higher profitability. As complex factors and calculations can be involved, EPM can be an invaluable tool.
• Retail: The forecasting abilities of an EPM system help retail businesses identify the best way forward strategically. As things may change regularly in this sector, the analytics, reports, and forecast models it provides can help the organization make a better strategic plan.
• Manufacturing: If you have a manufacturing business, like AFL, you know how crucial it is to have your operations as streamlined as possible. EPM helps connect different processes and ensure they work seamlessly, improving productivity and resource allocation.

Evolution of Enterprise Performance Management

EPM systems are older than you may think. In fact, they have their origins in the 1970s with VisiCorp’s VisiCalc computer spreadsheet program.

Next came Lotus 1-2-3 in 1983, which automated important business tasks such as budgeting and reporting- a big step away from manual data entry.

Email was the next significant progress as it meant data could be shared between disparate locations. This progress was built on in the 2000s when EPMs moved from local servers to web-based platforms that sped up data transfer and made collaboration easier.

Jump forward to today, and most EPMs are either cloud-based or come as SaaS (software as a service) solutions. The algorithms have also evolved to optimize all your financial processes and improve productivity.

They offer advanced data analytics, complex financial planning, budget and forecasting tools, as well as collaborative project management tools.

What Is the Future of EPM?

EPM systems have come a long way in the last 50 years or so. But what does the future hold for EPM? What current trends point to how it will continue to evolve?

Top 8 Enterprise Performance Management Trends

• Deployment: Models remain challenging. Businesses have to choose between a cloud enterprise performance management system and an on-premises one. However, if your organization is still using a legacy system (or processes), this can mean the implementation timeline may be as long as three years.
• Innovation: There are four distinct areas of innovation in EPMs (see the next four points), and they’re not necessarily equal in importance or need.
• Integration: With more and more data being generated every day, it’s essential that you see better (and simpler) integration of data and metadata.
• Simplicity: Even though EPMs are becoming more complex, there’s a need for things to be simpler when it comes to the usability of EPMs. UIs must be intuitive and user-friendly; any innovations must be proven to improve efficiency and assist users.
• Analytics: As data increases, analytics need to improve so that business leaders and C-suite executives can have better insights to make more informed decisions, often in real time.
• Collaboration: Decisions and planning are rarely made in a vacuum. EPMs need to offer a high degree of collaboration between all relevant contributors so that decisions are informed and timely.
• Modeling: EPMs need flexible modeling options. The different EPM solutions, especially SaaS ones, provide various options and features that can offer competitive advantages.
• Changes: It may seem strange to talk about the next generation, but there will be a gradual move from EPM to corporate performance management (CPM).

Gartner defines CPM as “... an umbrella term that describes the methodologies, metrics, processes, and systems used to monitor and manage the business performance of an enterprise.”

The idea behind CPM is to bring all the methodologies onto one platform. This can mean that businesses can access everything in a single workspace.

It also means that organizations can customize applications to assist in areas other than finance, such as HR or sales. And with all data centralized, reporting and decisions become easier.

What Is EPM Software?

The whole idea of EPM software is to turn data into usable information. It helps you manage and monitor the data from every area of your business so that it can be analyzed and provides reports that allow for strategic planning and information-driven decisions.

It also allows wider transparency as to how your business is performing, both in terms of finances and operations, but it can also be useful in terms of XP&A use.

By integrating the different data, it helps you identify (and forecast) relevant trends and patterns. It can also lead to better-informed decisions and more effective strategic planning.

EPM Products

As with anything, there are many different choices when it comes to EPM systems. Here are three of the systems available:

OneStream

• Comprehensive: Offers a platform for all your consolidation needs, including budgeting, planning, forecasting, and reporting.
• Details: It has an Extensible Dimensionality™ feature that means your divisions can both report and plan at a more detailed level.
• Expansion: You can add extra solutions, such as lease reporting, without increasing the complexity of the system.

Oracle Hyperion

• Fragmented Architecture: This means that deployment, maintenance, and upgrades are complex and costly.
• Modules: Additional modules are needed for specific financial processes.
• Complexity: Users can encounter difficulties in moving data between Hyperion modules.
• Integration and Compliance: The system often has difficulty integrating data and/or meeting regulatory compliance.

Oracle EPM cloud

• Fragmented Architecture: Despite Oracle’s move to a cloud-based system, the architecture remains fragmented and problematic.
• Applications: You need multiple applications to handle all processes.
• Manual: Integrating your data between applications is still a manual process.
• Functionality: If you’re moving from Hyperion to EPM cloud, functionality is compromised.
• Data Quality: The system has risks when it comes to the quality of your data.

How Much Does EPM Cost?

EPM software costs vary depending on several factors, including the provider, deployment model (cloud or on-premise), and the specific features needed. Pricing can range from a few thousand dollars annually for small businesses to hundreds of thousands for larger enterprises.

Cloud-based EPM solutions usually offer subscription-based pricing, often starting at around $25 to $150 per user per month. For more complex implementations with advanced features, costs can be significantly higher. Some providers may charge additional fees for implementation, customization, and ongoing support.

It's important to get a quote based on your specific needs and the size of your organization.

How to Choose the Right EPM Solution For You: Best Practices and Tips

With so many solutions available, how do you decide which system is best for your business? Here are some useful tips and best practices.

1. Security: You want your information to be secure, so ensure your choice has robust security.
2. Integration: Look for a solution that integrates well with existing systems and that will minimize disruption to your infrastructure.
3. User-Friendly: You want a system that’s simple to implement and that you can configure to your needs.
4. Support: Ideally, you want efficient support from your solution provider. That includes any updates to the software and patches for bugs.
5. Scalable: Your chosen solution should be scalable in terms of your business size and changes in cybersecurity needs.
6. Cost-Effective: The EPM solution has to fit with your budgetary parameters and provide a good ROI.
7. Reporting: Your solution should be able to comprehensively report and audit so you can track and monitor all relevant information.

Embrace Enterprise Performance Management in the Cloud With Reliable Centralized Software

An EPM can be crucial in today’s fast-moving business environment. Why is OneStream the ideal choice as an EPM solution for your business?

• It offers you a unified platform that streamlines your financial processes, including reporting, planning, and financial consolidation.
• As a unified platform, there’s no need for multiple tools, and this means all your financial process management is more efficient.
• It ensures that your data is more accurate and of higher quality, giving you real-time insights that lead to more informed decision-making.
• OneStream is scalable and can quickly adapt to the changing needs of your business, and you can integrate new processes without the fear of disruption.

The right solution can make a real difference to your business. Why not request a demo to see how OneStream can help you?

If you’d like to know more about how OneStream can help take your business to the next level, why not sign up for our weekly live demo webinar? This takes place every Friday and it’s completely free to participate. Check out our resources library, too.

FAQs About Enterprise Performance Management

What Are the Basics of EPM?

Your EPM helps you set goals and track progress when it comes to performance. By automating many processes, it streamlines your work and automatically sends reviews when needed. The analytics it provides transforms data into information and generates easily-readable reports.

How Is an EPM System Deployed?

Once you’ve audited your needs and chosen a solution, you can move to deployment. Larger organizations will look to an enterprise performance management cloud solution, while SMEs may opt for a SaaS version.

How Does EPM Work With Existing Databases and Systems?

Your EPM solution draws data from many sources, including your ERP, data warehouses, front-office and back-office systems, and any relevant external sources. The system will integrate with any existing solutions you use, such as planning or account reconciliation tools.

How Does EPM Support Compliance With Corporate, Regulatory, and Tax Laws?

EPM software monitors all relevant processes, from financial transactions to master data so that you have oversight when it comes to all regulatory requirements.