EPM System Design Requirements and Best Practices
High performance enterprises need to identify their 'Pain Points' when designing and implementing what is known as an Enterprise Performance Management (EPM) system.
Setting Our Terms of Reference
While we're talking about Enterprise Performance Management Systems (EPMs), there has been an evolution to referring to them as Corporate Performance Management Systems (CPMs) and Financial Performance Management Systems (FPMs).
Corporate Performance Management
Corporate performance management is an umbrella term that describes the methodologies, metrics, processes, and systems used to monitor and manage the business performance of an enterprise. This includes financial management, supply chain management and human resources management.
Business Performance Management Systems (BPMs)
Other related terms include Business Performance Management Systems (BPMs), and different software vendors, such as SAP, Oracle and Anaplan, may include different functional capabilities within their EPM Software offering, thus, this is a software agnostic 'Point of View' blog.
Critical Role of Data Warehouses
Regardless of what your EPM system is called, it will rely to one degree or another, on an Enterprise Data Warehouse. This means that all of your business processes, which generate a tremendous amount of data, can take advantage of capabilities such as predictive analytics, which can be 'baked in' to your system's.
Predictive analytics is a powerful tool in Enterprise Performance Systems that utilizes data from the data warehouse to make accurate predictions and forecasts. By analyzing historical data and using statistical algorithms, predictive analytics can identify patterns, trends, and relationships in the data to make predictions about future outcomes. These predictions can help businesses make informed decisions, optimize performance, and mitigate risks. The output of predictive analytics is incorporated into Enterprise Performance Systems to provide valuable insights and recommendations for improving business performance. This integration allows organizations to leverage the power of predictive analytics to drive strategic planning, resource allocation, and performance optimization. By harnessing the capabilities of predictive analytics, businesses can gain a competitive advantage and achieve their performance goals.
Performing An Enterprise EPM Diagnosis
You should ask yourself whether your enterprise is suffering some or all of the following symptoms by asking the following questions when doing an enterprise EPM diagnosis.
- Risk Transparency: Does your organization suffer from a lack of transparency into top enterprise risks and their potential impact on the business results.
For example, what is the impact of costly loss events and incidents?
- Resource Allocation: Is your organization suffering from sub-optimal allocation of scarce corporate resources due to limited ability to adequately identify accountability and top priority initiatives due to systems limitations?
Are you able to identify critical human resources and ensure they're optimal deployed?
Is your Enterprise Resource Planning system capable of modeling and helping your team with managing your organization structure effectively?
- Initiatives and Objectives: What is your ability to associate and track strategic initiatives linked to key objectives to determine if any action is being taken to ensure optimal performance?
Is your business strategy fully supported by strategic initiatives. Can you use your Business Intelligence system to track the achievement of business objectives.
- Strategic Planning Process: How is decision-making being impacted by your inability to incorporate risks into the strategic planning process?
Are you able to proactively incorporate AI (Artificial Intelligence) into your corporate risk identification and risk mitigation plan developments?
- Consistent Measurement Standards: You have an inconsistent set of standard measures and KPI’s for performance reporting resulting in suboptimal decision making.
The most effective EPM solutions are integrated suites that help customers leverage their investments through seamless data and process integration with their core ERP systems. A next-generation EPM cloud suite enables finance leaders to build a future-ready finance organization that can quickly report on KPIs of interest.
- Insight Generation: Suffering loss of valuable insights needed to optimize performance by your inability to integrate unstructured data (e.g., text comments) and structured data (e.g., KPI's and metrics").
Decision makers need access to insights generated via systems that incorporate machine learning. Business planning systems are rapidly evolving to incorporate these capabilities into the strategic planning process.
Executive level digital dashboards need to be developed for the C-Suite that helps surface these insights.
- Business Drivers: No ability to define and report on key success drivers because your business strategies lack clarity, your business drivers are not clearly defined and performance metrics are not clearly linked to operational and financial performance.
- Real-Time Performance Monitoring: Finance leadership team cannot monitor the business and optimize results in real-time due to lack of a cockpit with real-time KPI's (Key Performance Indicators).
EPM systems allow finance departments to monitor, in real-time, accounts receivable, accounts payable, and supports financial forecasting.
- Visible Corporate Strategy: Lower level employees are not clear on your corporate strategy and actions they should be taking because you do not have the ability to cascade strategy down through organizational levels/business units.
This means your corporate strategic direction loses clarity as one moves down through the organization ranks.
- Weighted Measures: Cannot adequately assess performance due to inability to assign weighted measures to objectives.
The strategic plan should have clearly defined performance metrics defined all way down the business hierarchy.
People should be able to continue to use Microsoft Excel to update their particular data, which should roll-up to the level of corporate strategic plan.
- Multi-Dimensional Analysis: Business insight limited by an inability to perform analysis along multiple dimensions and slice and dice data.
Enterprise Performance Management Software should provide both financial planning and financial reporting capabilities, which can be custom tailored your particular business requirements.
Profitability management, all the way to the line-item level of an invoice, requires multiple dimensional analysis capabilities provided by a data warehouse, such as SAP BW.
Sales leaders need the ability to focus on the highest profitability customers, and having this ability as part of the Enterprise Performance Management System (EPMs) is the only way to make this happen at scale.
- Executive Sponsorship: Corporate goals and/or performance measures limited by lack of executive sponsorship. As a consequence, BI(Business Intelligence) effectiveness and adoption limited and ineffective.
SAP EPM Consulting
Senior SAP Strategy Management Consultants can help you address each of these issues. That's where we come in. We have deep expertise in SAP EPM, BI, PaPM and the Balanced Scorecard all focused on customer success. Just click the button to get the conversation started.
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