EPM: Definition, Benefits and Contextual Factors
With data volumes surging and the global economy becoming increasingly volatile and uncertain, organisations need tools to help them manage their performance with agility and precision. This is where Enterprise Performance Management (known as EPM) becomes a strategic asset. But what exactly does it refer to? And why has this solution become an essential tool for all businesses of any size and sector? What is EPM and what are its benefits? Mathieu Daboudet, EPM Board Practice Director at VISEO, tells you everything you need to know.
What Is EPM?
EPM—or Enterprise Performance Management—is a set of processes, methodologies and technologies designed to help organisations plan, budget, analyse and report on business performance. Unlike ERP (Enterprise Resource Planning) software, which helps to manage day-to-day operations like purchasing, sales, logistics and production, an EPM system consolidates business data from various sources and provides organisations with strategic insights to inform decision-making.
In essence, the purpose of EPM is to:
- assess the health of a business,
- simulate scenarios,
- anticipate risks, and
- drive alignment with strategic plans.
Why Are Businesses Turning to EPM Solutions?
Today, businesses are more concerned about choosing the right set of tools than just acquiring new tools. There are a number of key trends that are driving this growing interest from businesses in the adoption of EPM solutions.
First, the growing number of data sources poses a major challenge. From sales, accounting, HR and supply chain data to external data on market trends and regulatory developments, volumes of collected information continue to rise, often at astronomical rates. Without a well-defined framework, businesses can struggle to extract and transform data into actionable, coherent insights.
Secondly, businesses are navigating through uncertain and volatile economic times. The shock from Covid-19, geopolitical changes, pressure on raw materials and the effects of climate change on certain sectors (e.g. insurance, farming and energy) are some of the main drivers behind this economic uncertainty. In this context, agile decision-making turns out to be a key competitive advantage. EPM solutions enable businesses to:
- model scenarios,
- anticipate potential impacts, and
- respond swiftly to market changes.
Lastly, compliance and regulatory requirements are always evolving. It becomes essential for finance departments to:
- ensure accurate reporting,
- guarantee the traceability of data, and
- provide consolidated performance metrics in real time.
What Drives the Adoption of EPM Software?
Beyond the current economic challenges, there are a number of internal factors driving the need for EPM solutions. First of all, EPM software can help businesses streamline business management processes and improve efficiency. Today, organisations are looking to minimise the use of Excel files and break down information silos. An EPM system not only gives businesses access to a unified, collaborative platform, it enables them to standardise management processes at company level, by integrating data from local business units or business functions. As a result, Enterprise Performance Management fosters better collaboration across departments, enhances team empowerment and ensures strategic objectives are clearly communicated.
Supporting business growth is another factor driving the adoption of EPM solutions. All businesses need a solution that can provide a clear view and keep track of their performance to support their growth.
What Are the Benefits of EPM for Businesses?
Enterprise Performance Management offers a number of different benefits.
1. Greater operational efficiency
By automating reports, ensuring the reliability of data and reducing low-value-added tasks, EPM software allows finance and management control teams to focus on analysing data and supporting decision-making. Processes are streamlined, more reliable and less prone to human error.
2. Better decision-making
Company executives can easily access consolidated, up-to-date information based on reliable data that they can use to support business-critical decisions. Businesses can also simulate scenarios (growth, decrease in sales, cost changes, etc.) and assess their impact on future performance.
3. Greater agility and responsiveness
In these times of economic uncertainty, companies with an EPM solution can make timely budget adjustments, review their assumptions and adjust their allocation of resources. Enterprise Performance Management becomes an enabler of organisational resilience.
4. A driver for talent engagement and retention
Providing employees with modern, easy-to-use and efficient tools increases job satisfaction. Business functions such as finance or management control can have high turnover rates. So implementing an effective EPM system can go a long way.
Far from being restricted to large corporations or big finance departments, EPM software is a cross-functional, accessible and flexible solution for any type of organisation. It is implemented to address strategic challenges, allowing businesses to better manage, anticipate and make informed decisions. At VISEO, we can help you implement an efficient and reliable solution tailored to the needs of your organisation and business functions.