On our latest episode of the ERP Advisor Conference Call Series, we discussed how to fully utilize your ERP software by implementing an Enterprise Performance Management tool and why these tools are so valuable. To get the most out of ERP software applications, businesses should utilize as much of the software as possible. That is where Enterprise Performance Management tools, or EPMs, come into play. What we often see with our clients and in the marketplace is ongoing confusion around EPMs and how they relate back to ERP solutions. If you’d like to know what EPMs can do for your business, listen to the entire call above or read a summary below.
Business Blind Spots
A majority of the companies and executives that we work with look to ERP software applications because they need more information about the business that they are in but their existing tools don’t fulfill that need. The need for more information comes from growth and expansion within the company. As an increasing number of employees and managers get involved in different processes, executives lose operational control. We call these business blind spots: where activities are happening and the key people who need to know what’s going on, don’t. These blind spots are a substantial problem and one that needs to be fixed before complications overwhelm operations.
The Value of ERP Tools
ERP software can help businesses and companies that are experiencing blind spots gain valuable insight into their employee onboarding system, manufacturing line, inventory, budget, or whatever other processes they may require. ERP tools can help automate processes and solve common problems executives experience. The key to finding the right software for an organization is to truly understand exactly what their needs are and exactly what problems they’re trying to solve.
ERP software applications are really made for transaction processing. Most of the time, they include ways to track time correctly, bill customers, and ensure deliverables. These systems manage transactions and ensure that from beginning to end, transactional processes are automated as much as possible so that all the work necessary is accomplished efficiently.
ERP systems are very effective at automating manual processes that need to be automated. However, there is something that ERP systems typically lack: Analytics and Reporting.
Enterprise Performance Management (EPM)
ERP software applications typically come with “canned” or standard analytics and reporting tools. These give you the ability to produce simple reports such as accounts receivable or vendor bills which haven’t been paid. They also give you the ability to run analytics on items to answer questions such as: who are we selling the most to, who are our top-selling customers, and other relevant data. However, the analytic and reporting tools are quite basic and do not allow for certain customizations. As companies and executives begin to leverage these tools, they realize how much more they can do.
Enter Enterprise Performance Management or Corporate Performance Management. When an organization no longer wants to just understand what transactions took place but wants to understand the entire performance of the company, an Enterprise Performance Management tool can help an organization leverage this data. An EPM helps companies understand overall profitability, how much revenue was sold or incurred by a specific customer, location, department, or any other variable. It is one of the best ERP tools because it allows you to perform complex logic and allocation methods in order to get information that is useful, valuable and interesting to the company.
The EPM Marketplace
Like many other applications, you can dissect the EPM market into several categories that are more specific: Enterprise-class solutions, entry point solutions, and mid-sized solutions.
Enterprise-class solutions - These EPM tools are for very large organizations with large amounts of data, large implementations, lots of different tools and customizations, and overall higher complexity. Examples of these include Oracle’s Hyperion, IBM’s Cognos, and a handful of others where implementations are very expensive and very complex but work extremely well for enterprise-scale companies.
Mid-sized solutions - Just as the category suggests, this type of EPM solution works great for mid-sized organizations. Many times, they are software-as-a-service applications so you don’t have to worry with the infrastructure surrounding them. They can also come with pre-built integrations into specific ERP solutions like SAP By Design or Netsuite. Examples of mid-sized EPM solutions include Adaptive Insights, Host Analytics, or Oracle’s Financial Planning for the Cloud.
Entry Point Solutions - These EPM solutions are very lightweight with not as many capabilities. However, they are still strong applications and can get you started in the right direction at a cost-effective rate. These are most commonly used by companies that may just need some lightweight financial planning and analysis or lightweight forecasting tools. There is not a whole lot of options in this area of the market, and usually includes all the applications you have never heard of. We recommend looking at Capterra for some different options in this arena.
Knowing what is available in the marketplace will introduce you to the different price points, and help you understand the price ranges of EPMs. But if you are beginning to look at different EPM options for your organization, we would love to point you in the right direction.
Final Thoughts on EPM’s
The crucial point in understanding Enterprise Performance Management tools is that you MUST get all of the transaction processes organized and automated as much as possible. Businesses should codify and understand their automation process before stacking an EPM on top which is critical to the success of both your ERP and your EPM. At ERP Advisors, we can help develop a strategy and roadmap for your organization on selecting and implementing the right solutions for you and your business. If you are looking at implementing an ERP or EPM solution, we would be happy to help guide you through the process.