For a business to run seamlessly, it requires the heavy-lifting of the Finance department within your organization. With the current software market saturated with FP&A tools and solutions, how do you know which systems your organization should plan to have for 2022 or the near future, and what requirements do you need to examine when shopping for software?
It takes a talented Finance team to ensure the following objectives above are achievable and that your organization is operating at an optimal level within the requirements set each year. To recognize these goals, successful organizations and CFOs will deploy FP&A software in order to support the finance team’s day-to-day tasks such as budgeting, planning, financial close, allocations, consolidations and more. In this case, two of the most common systems being utilized are Enterprise Resource Planning (ERP) and Enterprise Performance Management (also known as Corporate Performance Management).
ERP and EPM systems feature similar elements and functionalities, however, they each serve a different purpose in the FP&A ecosystem. Let’s begin by defining what each system offers.
Understanding Enterprise Resource Planning
Enterprise Resource Planning or ERP is a system designed to manage your organization’s day-to-day business activities which includes Human Resources, Manufacturing, Supply Chain, Compliance, Procurement, and more. ERP software can help monitor the resources across the organization and determines the best method to utilize the given resources each day. In a way, ERP focuses on tracking your company’s transactions and resources while simultaneously monitoring the business changes.
Understanding Enterprise Performance Management
Enterprise Performance Management (EPM or CPM) is a suite of applications that helps streamline and optimize management processes such as financial planning, scenario modelling, consolidation, reporting with advanced analytics. The EPM system supports the CFO and Finance team of your organization. It contains a set of tools that allow for the timely collection of data and results to help create goals, coordinate plans, and execute strategies for effective decision-making.
What is the difference between an ERP and an EPM System?
ERP systems are best fit for transaction processing such as purchasing, Accounts Payable, Order processing/billing, Accounts Receivable, Fixed Asset Management, or General Ledger Accounting. It is common for most organizations to begin implementing an Accounting or ERP system to manage day-to-day transactions. ERP handles reporting on transactional data, but ERP systems alone fall short on some processes that EPM systems offer:
The best EPM software systems are optimized for Management Processes and are complementary to ERP systems. As the enterprise expands, you will outgrow your spreadsheets which you will need to consider implementing EPM solutions for your multiple ERP integrations.
Why Some Businesses are Afraid to Embrace ERP and EPM
Which software is more popular at the moment and can I afford a major overhaul?
I already have ERP in place, is it necessary to implement EPM into my FP&A solution?
I don't want to lose the systems in place, how do I know if it will continue to deliver value?
Why ERP and EPM are Critical for Your Business?
In the early stages, spreadsheets-related tasks are manageable for finance teams to develop budgets and basic reporting and analysis. As your organization grows in complexity with revenue and expenses, overtime manual tasks can become unmanageable as errors and inaccuracies emerge. Automating your finance processes with EPM can easily replace your error-prone spreadsheet tasks.
As technology updates, you will begin to notice that your current systems may not be functioning well together. Incompatibility may become an issue shortly, forcing you to find a temporary fix as you connect systems with each new software update.
Using Cloud EPM solutions, stitch together all your existing systems such as ERP, GL, HR, Sales, or Marketing to synchronize all your data into one intuitive platform. Provide your end-users with a consistent and stable interface to help improve the management of financial processes, performance, and analytics. Altogether, the combination of ERP, a transactional system and EPM, an iterative and comprehensive management system will offer more robust financial planning for your organization.
Conclusion: EPM and ERP is Better Together
Perhaps you are satisfied with your current system, but you do not want to limit your market expansion and ability to grow and scale without an ERP and EPM system. No matter what size, ERP and EPM solutions are customizable and scalable with growth and expansion.
If there’s resistance to transitioning into a new system, one of the ways to prevent resistance is to schedule a demo so your team can see what’s out there. Then, everyone feels included in the decision-making process and makes implementation much smoother and effortless.
To learn more about ProLytics’ Enterprise Performance Management Consulting or Projects, get in touch with our EPM consultants and discover the right solution for your business. For more details on deciding which EPM software/vendor to use, read more about our Vendor Evaluation Service and connect with us to learn about our Evaluation Process.
ProLytics Consulting Group is a business and technology consulting firm that specializes in areas of Enterprise Performance Management and Financial Business Intelligence and Analytics. With decades of successful implementation experience, ProLytics understand and value that each company is unique. We are committed to working closely with each customer to to deliver value added technology solutions that solves their one-of-a-kind challenges.