Over the past 2+ years, the business world has experienced a massive shift toward remote work environments and cloud-based operations. These two trends have presented a dual scenario: on one hand, companies now manage more complex IT infrastructures. On the other hand, they are able to operate more innovatively and with greater levels of agility and adaptability.
Success depends largely on how well they handle the many moving parts behind the scenes. To do it, they need an enterprise performance management (EPM) strategy that connects the financial, operational, and other strategic aspects of running their business for optimal planning and performance reporting. More specifically, they need a modern EPM solution that drives these capabilities.
Read on to learn more about why enterprise performance management is such a critical business capability in 2022, the benefits of modern EPM, and steps for implementing an EPM strategy at your own organization.
- Companies with mature enterprise performance management capabilities earned 1.4X the revenue of their less-prepared counterparts over three years.
- Important benefits of EPM include strategic alignment, centralized data, higher visibility, and advanced analytics.
- First steps to implementing a new EPM strategy should include auditing your current processes and technologies as well as involving all stakeholders.
- Clearly-defined KPIs and business objectives makes EPM reporting more relevant and valuable to your organization.
What is Enterprise Performance Management (EPM)?
Enterprise performance management is the process of monitoring performance across the entire enterprise using an integrated, data-driven approach.
By this definition, EPM has existed for decades, first in the form of cross-departmental meetings and memos, then through rudimentary software programs, spreadsheets, and emails. Today, EPM has matured into cloud-based software solutions that automate processes, enable remote collaboration, integrate systems, and provide sophisticated data insights that drive decisions.
It’s important to note that enterprise performance management is not interchangeable with enterprise resource planning (ERP). The two are related, however — EPM leverages ERP data to connect operational output and resource usage to performance. Most EPM solutions integrate directly with a company’s ERP system(s).
Modern EPM solutions provide a centralized and holistic view of enterprise performance by integrating data from all corners of the enterprise — finance, operations, revenue management, and other strategic functions — into a single, shared source of truth.
A KPMG survey of 545 executives found that enterprises with mature EPM capabilities have seen a 20% increase in revenue over the previous three years (1.4X that of less prepared counterparts). Of these top performers, 94% had significantly automated reporting processes and 70% reported using driver-based (i.e. AI and machine learning) calculations.
The takeaway: organizations with the best EPM strategies in place are operating faster, smarter, and more analytically than their competitors.
The Benefits of EPM
One of the core principles of traditional EPM and a major benefit it still offers today is strategic alignment across departments. Specifically, financial and operational teams have a shared understanding of the current financial state of the organization, and they work together to plan accordingly. This results in cost savings, greater efficiencies, and better overall planning.
Central Data Repository
Enterprise performance management solutions eliminate silos by serving as a centralized data repository for the entire organization. With an EPM system in place, financial and operational teams view the same data in the same system, using it for more informed and aligned planning.
Visibility is one of the main drivers of successful data-driven strategies across industries. EPM solutions offer it at several levels — users can see an overarching view of enterprise performance and drill down to specific departments, teams, processes, and even individuals to analyze contributing factors.
This ability to see at both holistic and granular levels makes EPM systems a powerful tool for both long-term strategic planning and day-to-day decision making.
Reliable Performance Reporting
The ultimate goal of any EPM strategy is to understand business performance. Automated and AI-driven data processes executed by modern EPM systems provide this insight in real time, meaning users can be confident they’re looking at an accurate, up-to-date snapshot of company performance any time they access the data.
Shared interfaces provided by EPM platforms make it easy for contributors in different areas of the business to work together to achieve goals. In-platform communication and multi-user editing functionality are just a few of the ways this occurs.
Adaptive forecasting and other AI-driven data capabilities are more important than ever as companies strive to stay agile amidst unpredictable market conditions. Financial forecasting and reporting capabilities in modern EPM platforms allows users to account for multiple potential scenarios and take a wide array of variables into consideration when analyzing data.
How to Implement an EPM Strategy
Map Your Current Landscape
To launch a new EPM strategy or modernize the one you have, first take stock of where you are. What current systems do you already have in place that contribute to enterprise performance management? What’s working and what isn’t? What potential new tools may you need to invest in to upgrade your strategy?
Consult with All Relevant Stakeholders
Next, invite all relevant stakeholders to be part of the process. This means leaders in finance, accounting, sales, revenue management, supply chain, resource planning (and more, depending on your organization). Discuss your current EPM landscape and give stakeholders a chance to share feedback and insight.
Define Goals and KPIs
Together, define the goals and KPIs you’ll use to measure the success of your new EPM strategy as well as those you’ll use to monitor ongoing business performance. Some will be department specific while others will be organization-wide objectives.
Document Your Execution Plan
It’s always best practice to document your plan for execution. Specifically for an undertaking that involves multiple functions and has such a significant impact, it’s essential to clearly define roles and responsibilities as well as deadlines to keep your EPM strategy on track.
Measure and Report Results
Put defined processes in place for measuring and reporting on results. A new EPM system will automate much of this for you. Still, it’s important to set aside time to discuss what performance reports mean for your organization and how you can leverage them for actual planning and other strategic initiatives.
Over to You
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