How Can Enterprise Performance Management Take Your Business to The Next Level?

Enterprise Performance Management (also called EPM) is a term used to define one of a company’s primary management activities. Today, we will look into the key points, benefits, and drawbacks of enterprise performance management software. 

What is the Enterprise Performance Management Model?

EPM is in the process of monitoring and improving business performance across the enterprise. Data from diverse sources, including e-commerce platforms, front-office, and back-office applications, data warehouses, and external data sources, are integrated and analyzed by an enterprise performance management system. Advanced EPM systems can accommodate many performance approaches, such as the balanced scorecard.

Enterprise performance management describes enterprise management approaches and solutions and encompasses the following management processes:

• Budgeting, planning, and forecasting
• Creating a model for a company’s value generation
• The results have been consolidated
• Performance analysis

Key Performance Indicators (KPIs) such as sales, overhead, and operational costs, as well as the return on investment (ROI), are commonly utilized for performance planning, measurement, and analysis.

Enterprise Performance Management (EPM) is also known as:

• Corporate Performance Management (CPM),
• Business Performance Management (BPM), and 
• Financial Planning & Analysis (FP&A).

Enterprise Performance Management is commonly associated with finance or control. However, as EPM solutions enable faster and easier adoption of automated planning and forecasting processes, they are becoming increasingly beneficial for other departments. 

EPM software can be quite beneficial in terms of increasing accuracy and efficiency in sales, human resources, marketing, and procurement.

Financial Planning & Analysis (FP & A) can therefore be transformed into XP & A, where the variable “X” represents all conceivable departments across enterprises where understanding data is critical to their process and planning, and analysis is critical to their success.

EPM Helps (Sales Teams) Optimize the Sales Funnel

Plans can be derived from the figures generated automatically by every current sales instrument. 

This will help you and your team reorganize the sales funnel or make the existing funnel more successful. With the forecasting capabilities of a modern EPM software or solution, you can set targets that are continuously monitored and altered in real-time by your team. 

Sales teams plan and control various changes to the sales funnel in a more data-driven, collaborative, and dynamic manner.

Manage Employee Development Effectively with EPM software

How does it work, and how can it help you? The HR team has discovered new requirements and needs to incorporate them into planning as soon as possible. 

For example, defining goals and regularly comparing them to the current data stream supplied by sales tools. 

With a few clicks, the distribution of variable incomes is always displayed in an up-to-date format. You can also use enterprise performance management software to forecast budget planning.

Why Do Marketing Teams Use EPM to Track Campaign Performance?

Gain an integrated perspective on the performance of your marketing operations and be able to decide more quickly which initiatives the marketing team should pursue, improve, or discontinue. The benefit is that reporting is aggregated and is not manually produced from multiple data points. This enables existing campaigns to be modified more quickly and easily.

With EPM, procurement teams can better control the supplier network.

Manage crucial figures about the capacity and quality of the demanded commodities in an EPM solution for a clear picture. Optimize your organization’s procurement cost structure and transparency. Your team can be better informed and respond sooner to supplier price hikes, saving money and increasing productivity.

EPM’s Objective

Enterprise Performance Management and the resulting transparency and goal focus aspire to create a cooperative system between employees and management. The emphasis is on the development of individual employees’ potential. This is accomplished through focused motivation and the gradual removal of performance roadblocks.

Enterprise Performance Management Software

EPM is a broad term related to enterprise planning that uses data feedback to improve the financial performance and efficiency of your business. 

This can comprise all of an organization’s systems, processes, actions, and reports predicated on utilizing data to plan future decisions.

Some firms continue to rely significantly on Microsoft Excel for data gathering, validation, budgeting, forecasting, and reporting. 

These processes are exceedingly time-consuming and error-prone, keeping staff continually reactive and spending the majority of their time satisfying only the organization’s fundamental demands. There is no time for value-added operations like monthly predictions, what-if modeling scenarios, or forming strategic alliances.

Software-supported Enterprise Performance Management is a critical link to the next stage of value development. It looks ahead, with the ability to generate forecasts based on actual analysis. 

Initially, only finance departments employed EPM. It has subsequently grown greatly and is intended for usage across a wide range of organizational operations, and can be successfully applied within the context of integrated planning.

Best Enterprise Performance Management Software

1. Workday Adaptive Planning – versioning and scenario analysis
2. Anaplan – EPM software for supply and demand planning
3. Oracle EPM Cloud – for financial close solutions
4. Planview – enterprise PPM
5. OneStream XF – EPM software for manufacturing operations
6. ARES PRISM – EPM software for executives
7. Epicor – EPM software for retail analytics
8. EPM Live  – for Microsoft SharePoint integration
9. Infor d/EPM – user-friendly tool
10. Axiom EPM – EPM software for cost management

Enterprise Performance Management Applications

Modern EPM software provides organizational functionalities and can also be utilized as an extension tool to boost the capacity of business intelligence systems. EPM software enables planning, budgeting, and forecasting by displaying critical organizational data on dashboards.

Enterprise Performance Management Functionality

Through centralized databases, workflow, and process management, EPM software assists businesses in increasing efficiency by eliminating or extending spreadsheets and enhancing planning and reporting processes. This also helps to promote responsibility across the enterprise by matching strategic, financial, and operational goals, extending budgeting participation, and making the most up-to-date data available to stakeholders with a few clicks.

Strategy development

The operations of an organization that decides the direction of its agenda are referred to as strategy formulation. This is typically made up of an organization’s mission, vision, and strategic goals and objectives. Once the direction has been determined, an organization evaluates its progress against those activities and takes corrective steps to achieve a certain goal state.

While execution is critical to any operational goal, the strategic formulation surrounding why execution should occur and the context in which it should occur is equally critical. In recent years, corporations have used formal risk management procedures to address market possibilities that they pursue. 

Strategy is aligned, performance is predictable, and leaders can make better business decisions as a result.

Executives work in a financially driven environment where operational processes are usually used to organize resources inside the organization and its value chain, and employees are the actors responsible for carrying those processes out. 

The strategy gap identified by certain industry watchdogs is genuine and expanding. Innovative technologies are one strategy for closing this gap and fully realizing business strategic outcomes and risk management initiatives.

The first two steps of the EPM process model entail defining the strategy and then translating it into specific actions that the business may execute. In a subset of the strategy formulation, strategy development articulates the major components of the strategy: 

• mission, 
• vision, 
• strategic goals, and 
• strategic objectives. 

There are numerous techniques for strategy development that can be taken into account. 

However, this may occur if the organization’s executive leadership approves the strategy, which is normally reviewed every 3–5 years over a 10–20 year horizon. Some companies and cultures may adopt a longer-term strategy horizon.

The strategic translation process then explores how to make the frequently ambiguous direction and statements defined in the first step actionable. These are aspirational targets with a 3–5 year time frame when it comes to strategic goals. Strategic objectives are then used to identify particular progress toward targets over a given time period. 

Planning and forecasting in business

Business planning and forecasting refer to the activities that are planned against the strategy and what forecasted activities or results of the organization might arise from operational execution during a specific time period. The third and sixth steps of the EPM process model correspond to this discipline. Financial predictions are projections of how a company’s finances will perform over the next year, for example.

Forecasting will assist a company in determining its expected sales revenue, costs, external funding requirements, and profitability. Financial predictions are required when a company has to raise funds from a third party, such as a bank. 

However, they also enable organizations to analyze performance on a monthly basis, for example and therefore exercise good financial control—arguably the second most important management function in running a corporation.

What is the difference between ERP and EPM?

The difference between Enterprise Resource Planning (ERP) and Enterprise Performance Management (EPM) is that ERP focuses on the day-to-day business processes, while EPM focuses on the performance metrics of the business. 

With ERP, you are able to track your inventory levels, customer orders, and production schedules. You can also see how much materials are costing you. With EPM, you are able to see the big picture of what is going on in your business. 

For example, you might analyze your total revenue, cost of goods sold, gross margins, profitability ratios, and many other things. While ERP tells you what’s happening with your business, EPM tells you why it’s happening.

An important benefit of an EPM system is that it provides insight into where your company stands financially. It does this by integrating all of your data to get a complete view of where your company stands financially. This means that if there are any problems with any part of your company, they will be detected sooner rather than later.

Another benefit is cost savings from early detection of problems in the business process and improved productivity from better use of resources across all departments.

What are the benefits of EPM?

EPM offers many benefits for businesses. It can help improve marketing campaign efficiency, optimize supply chain performance, analyze customer behavior, and more. Here are some of the benefits of EPM:

• Optimizing your marketing campaign efficiency 
• Improving supply chain performance
• Analyzing customer behavior
• Providing a faster reporting capability
• Facilitating decision support
• Gaining insight into financial data

Performance Management Tools

Businesses may become more successful and stay ahead of the market by implementing performance management tools. It entails measuring, reporting, and controlling progress in order to enhance performance at both the individual and corporate levels. Numerous performance management tools are available to make the process simpler and more successful.

Effective performance management necessitates effort, but there are a variety of tools available to assist you with performance management at the individual, team, and organizational levels.

What is the cost of performance management tools?

Pricing is determined by the tool, although most tools use a pay-per-user, pay-per-employee, or pay-per-appraisal pricing model. The cost per employee or user can range between $3 and $10, with implementation expenses ranging between $800 and $2,000.

What exactly is a performance appraisal?

An employee performance evaluation is a type of performance management process that evaluates an employee’s productivity and effectiveness for administrative and development objectives. You can provide comments and discover areas for improvement using this type of performance review method.

What is the functionality of performance management tools?

Performance management tools are a sort of human resource software that assists firms in tracking employee performance consistently and quantitatively. This ensures that cross-functional departments work together to achieve the same goals effectively and collaboratively. Having a performance management platform in place expedites the performance process, allowing you to deliver reports more quickly.

How to Build a Performance Management Program?

You can’t just hire people and expect them to do their jobs. They require direction, oversight, and periodic assessments to ensure that they know what is expected of them and that they produce their best performance. Effective performance management programs increase productivity, identify top performers, and motivate staff to work harder. They may also guarantee that their strategic business goals and hiring and talent development plans are in sync.

However, firms may only reap these benefits if they see performance management as a continuous process rather than a one-time event.
Following these four phases is one method for developing an effective performance management program:

Begin by establishing role-based competencies and behaviors for each employee so that everyone is on the same page. These competencies should comprise five or six attributes that determine success for each organization member and job-specific abilities and duties for each individual. This process should begin as soon as a person is hired and is repeated on a yearly basis.

If you intend to do a single formal yearly review with all employees, consider scheduling it simultaneously as the leadership team completes the annual business plan. Employee development goals can then be matched with the year’s strategic business goals.

Once you’ve decided when and how frequently you’ll conduct assessments, hold managers accountable for completing them by a deadline and make achieving that deadline part of their own performance evaluation.

Managers should examine their teams prior to the assessment. Use a grading system, such as a 1-to-5 scale (with 5 being the highest score), to evaluate employees for each goal, competency, and success that they set at the start of the year.

Conclusion

Staying competitive in a competitive market Environment often changes quickly, but companies must adapt to stay competitive. With an EPM system, you’ll be able to optimize your business for optimal performance. Even in a global economy, you’ll identify gaps in your business and quickly launch new marketing initiatives to fill them. Achieving overall improvement thanks to deep analysis of the data that EPM provides.

With an EPM system, you will be able to intelligently analyze every area of your business. You’ll be able to see what’s happening at any given time and identify opportunities to improve your business. And with a single source of data, you’ll have a complete view of your entire company. 

Every company that looks into getting a performance management program should consider not only the costs accosted with having a performance management program but also the risks, the human resource required and how the new data will impact your business.

Last Updated on April 2, 2024