Enterprise Performance Management (EPM) Solutions: A Comprehensive Evaluation Guide

In the dynamic landscape of modern business, where data-driven decision-making is paramount, Enterprise Performance Management (EPM) solutions emerge as indispensable tools. EPM solutions encompass a suite of integrated processes, methodologies, and technologies designed to streamline performance management, align strategies with objectives, and drive organizational growth.

These solutions empower businesses to accelerate budgeting, improve demand forecasting, align sales territories & incentives, and optimize supply plans while harnessing data insights to make informed decisions across the organization. As organizations navigate complexities and seek operational excellence, EPM solutions stand as guiding beacons, transforming data into actionable insights that propel success in an ever-evolving world.

Introduction to Enterprise Performance Management (EPM) Solutions

Understanding the Importance of EPM in Modern Business

In the dynamic realm of modern business, where competition is fierce, markets are dynamic and decisions must be near real-time, Enterprise Performance Management (EPM) solutions have emerged as essential assets. EPM transcends traditional performance measurement, encompassing a comprehensive approach that aligns strategies with objectives and empowers data-driven decisions.

With the rapid pace of change in today’s market landscape, organizations recognize the need for agility, foresight, and precision in their operations. EPM solutions provide a structured framework to assess, plan, and optimize all aspects of performance, from financial management to sales planning to demand forecasting to workforce planning.

In essence, EPM solutions are the cornerstone of effective decision-making, enabling organizations to navigate uncertainties, seize opportunities, and thrive in the modern business ecosystem.

Key Components of a Robust EPM Solution

A robust EPM solution comprises several interrelated components that collectively drive organizational excellence:

Strategic Planning: EPM starts with aligning strategic goals with performance metrics. This component ensures that every operational aspect contributes to overarching objectives. Organizations execute this through 3-5-year LRPs (Long Range Plans) and/or annual AOPs (Annual Operating Plans).

Budgeting and Forecasting: EPM solutions facilitate accurate budgeting and forecasting, allowing organizations to plan resource allocation, anticipate financial outcomes, and adapt strategies in real time. Organizations identify the drivers of their business and follow a driver-based budgeting and forecasting approach.

E.g. A manufacturing organization may plan its expenses and revenues at a Product-group level, or a services company may plan at a project level. Once the same is agreed upon and set in stone and the year gets underway the budgeting process is followed by the rolling forecast. These forecasts are developed by the finance team in collaboration with the product, sales, or demand teams.

Financial Reporting and Analysis: EPM systems offer advanced reporting capabilities, enabling stakeholders to access precise financial data, analyze trends, and gain insights crucial for sound decision-making. Variance analysis if fundamental to any business analysis.

Comparing Budget vs. Actuals vs. Forecast – at the BU, territory, and product-group level. By comparing the budgets with actuals and forecasts, organizations are able to proactively determine if their execution is delivering the results they had envisioned at the start of the year. And the changes they need to make to the execution to meet the annual business objectives.

Performance Measurement: EPM tracks key performance indicators (KPIs) across departments, providing a holistic view of organizational performance and aiding in the evaluation of strategic initiatives. EPM solutions also help organizations predict future business states.

By leveraging built-in statistical modeling techniques businesses can forecast their business outcomes by taking into account recent trends, seasonality, etc. Scenario Modelling functionality of EPM solutions enables organizations to develop multiple business scenarios (Best-case, Worst-case, Realistic-case) and determine the best way forward by comparing the various scenarios.

Data Integration and Automation: Seamless integration of data sources and automation of processes enhance accuracy, reduce manual effort, and ensure consistent, up-to-date information. In conclusion, a comprehensive EPM solution serves as a navigational compass, guiding organizations toward their desired destinations.

By incorporating strategic planning, precise budgeting, data-driven reporting, and forecasting, EPM solutions empower businesses to thrive amidst challenges, seize opportunities, and orchestrate success in today’s complex business landscape.

Factors to Consider When Evaluating EPM Solutions

Alignment with Business Goals and Strategy

The cornerstone of selecting an Enterprise Performance Management (EPM) solution lies in its alignment with your business goals and strategies. The solution should be tailored to support your organization’s unique objectives, whether it’s enhancing financial reporting accuracy, optimizing resource allocation, or improving sales effectiveness. The EPM solution should seamlessly integrate into your existing processes, fostering a cohesive approach to achieving long-term growth.

Scalability and Flexibility

In a rapidly evolving business landscape, scalability and flexibility are paramount. The EPM solution should be able to accommodate your organization’s growth trajectory, allowing for seamless expansion without compromising performance.

This adaptability extends beyond size; it should encompass changes in business models, markets, and strategies. The ability of a solution scale to meet the future requirements of an organization ensures its longevity and value.

Integration Capabilities with Existing Systems

The effectiveness of an EPM solution often hinges on its integration capabilities. It should seamlessly connect with your existing systems, from enterprise resource planning (ERP) software to customer relationship management (CRM) tools.

A harmonious integration reduces manual data entry, minimizes errors, and provides a holistic view of your organization’s performance. The EPM solution should act as a bridge, enabling the flow of accurate and timely information across departments.

User-Friendly Interface and Accessibility

A user-friendly interface is pivotal for successful EPM adoption. The solution should empower users with varying technical backgrounds to navigate and utilize its features effectively. Intuitive dashboards, interactive visualizations, and easy-to-understand reports enhance user engagement and decision-making.

Accessibility is equally crucial, allowing authorized personnel to access the solution anytime, anywhere, facilitating real-time insights and informed actions.

While spreadsheet friendly look and tight integration with office productivity suites are vital the ability to program the application in an easy-to-understand English-like framework is equally important.

Data Security and Access control

As organizations handle sensitive financial and operational data, data security and privacy are paramount considerations. The chosen EPM solution must adhere to robust security standards, including encryption, user authentication, and data access controls.

In conclusion, evaluating EPM solutions requires a holistic approach that considers their alignment with business goals, scalability, integration capabilities, user-friendliness, and data security. The chosen solution should act as a catalyst for organizational growth, aiding in strategic decision-making while fostering a secure and efficient operational environment.

Step-by-Step Guide to Evaluating EPM Solutions

Defining Your Requirements

The journey to selecting the ideal Enterprise Performance Management (EPM) solution begins with a clear understanding of your organizational needs:

Identifying Business Objectives and KPIs: Define your strategic objectives and key performance indicators (KPIs) that the EPM solution should support. These could range from financial planning to workforce management to sales productivity to supply chain planning. While the overall use cases may be multiple you may want to prioritize them for phase-1.

Determining Reporting and Analysis Needs: Outline the types of reports and analyses you require to facilitate data-driven decision-making at various levels of the organization. Your existing templates can serve as indicative guidelines.

Considering Budget and Resource Constraints: Establish a realistic budget while considering resource limitations for implementation and ongoing management. While discovering pricing might not be straight the best way is to ask your peers or solution providers themselves. You will be surprised, it’s something they are also happy to share.

Researching EPM Solution Providers

Exploring the Landscape of EPM Vendors: Survey the market to identify potential EPM vendors. Consider the range of solutions they offer and how they align with your requirements. Analyst reports can serve as guides e.g. Gartner, Forrester, and IDC.

Reading Customer Reviews and Case Studies: Customer reviews and case studies provide insights into the real-world experiences of businesses similar to yours. This helps gauge the practicality and effectiveness of the solutions. You can find them at vendor, analyst or third-party sites. 

Analyzing Vendor Track Record and Reputation: Investigate the vendor’s history, reputation, and expertise in the EPM domain. A vendor’s track record can be a strong indicator of their reliability and commitment. Talk to your peers who have already implemented EPM.

Feature and Functionality Assessment

Core EPM Features: Evaluate essential features such as budgeting, forecasting, and planning. Ensure these components align with your specific business needs.

  1. Multi-dimensional model: Understand the scalability by asking about the technical prowess, largest model size, number of records processes, number of versions, and concurrent users supported.
  2. Ease of use: Spreadsheet-like use interface, tight integration with office productivity suites, and English-like programming structure.
  3. Self-service reporting and ad-hoc analysis: Drill-down analysis, drag-n-drop report creation, and instant report publishing.
  4. Scenario modeling: the ability to generate and compare various business scenarios using the existing model.

Advanced Features: Consider advanced capabilities like analytics and AI. Does the tool come built-in with statistical algorithms? Does it provide any predictive capabilities? Does the solution provide to map your process, and notify users of their tasks? Assess whether these features offer additional value and align with your future goals.

Customization and Tailoring Options: EPM is a decision-support system. And a decision-support system by its very nature cannot be standardized. Every analysis will lead to a new question that was not programmed before. A solution that can be tailored to your unique requirements ensures its effectiveness and adoption within your organization.

Integration and Compatibility

Evaluating Integration with Existing ERP and CRM Systems: The EPM solution should seamlessly integrate with your existing systems to ensure a unified data environment.

API Support and Third-Party Integrations: APIs and compatibility with third-party tools enable enhanced functionality and flexibility.

Usability and User Experience

User Interface and Navigation: A user-friendly interface facilitates smooth navigation and adoption across the organization and ensures faster adoption. This in-turn results in quicker ROI and acceleration of subsequent use cases. See points above.

Training and Onboarding: Evaluate the vendor’s training and onboarding resources to ensure a seamless transition for your team. Does the vendor provide online training and certification resources? Do they provide Customer Success teams which help the organization get more value from their implementations? Does the solution have a thriving ecosystem? These should be your key considerations, beyond the immediate function-feature analysis and TCO.

Mobile Accessibility: Consider the accessibility of the solution through mobile devices, enabling remote access to critical insights.

Data Security and Compliance

Encryption and Data Protection Measures: Assess the solution’s security measures, including encryption and data protection protocols.

Data Ownership and Access Controls: Clarify data ownership and review the solution’s access controls to ensure compliance with privacy regulations.

Scalability and Performance

Handling Large Data Volumes: Confirm the solution’s capacity to manage large volumes of data without compromising performance. The ability of the multi-dimensional model to accommodate hundreds of computations and formulae, at a detailed level e.g. not just Product level EBIDTA but also PAT, not just summary level costing but multi-level BOM costing, complex allocations, etc.

Performance During Peak Workloads: Evaluate how the solution performs during peak usage periods to ensure consistent functionality. Month and quarter beginnings are peak periods for analysts – closing the books, capturing rolling forecasts, and developing monthly business analyses. Does the system perform within ballpark performance estimates even during peak times with concurrent user access?

Cloud vs. On-Premises Considerations: Consider whether a cloud-based or on-premises solution aligns better with your organization’s infrastructure and future needs. However, if you read the over-arching theme, “cloud” is the undisputed way forward. With its scale-up: scale-down capability, new technical models, and opex nature, all solutions are slowly transitioning to a cloud-first world.

Total Cost of Ownership (TCO)

Licensing and Subscription Fees: Understand the licensing model and subscription fees associated with the solution. User-based, capacity-based, module-based – different software has different subscription types. Understand the differences and select the one that best meets your functional requirements.

Initial Implementation Costs: Evaluate the upfront costs for implementing the solution, including setup and customization. Ensure you are including end-user training and post-go-live support also.

Maintenance, Upgrades, and Support Expenses: If you are still considering on-premise legacy solutions, factor in ongoing expenses related to maintenance, hardware upgrades, and customer support. However, with cloud and SaaS models these are all nil costs and are bundled into the annual subscription cost. So that the upgrades and support are provided to you seamlessly as part of your subscription.

Consider a 3-year TCO adding up all the above points. By methodically assessing each of these dimensions, your organization can confidently select an EPM solution that aligns with your goals, optimizes performance, and positions you for success in the dynamic business landscape.

Comparison Matrix: EPM Solutions at a Glance

Key Features and Functions

When evaluating Enterprise Performance Management (EPM) solutions, understanding their key features and functions is paramount. This includes core aspects such as budgeting, forecasting, planning, financial reporting, and analytics. Take note of the depth and comprehensiveness of these features, as well as any advanced functionalities like predictive analytics, scenario modeling, and what-if analysis.

Grain and Scale – Can they do detail-level planning as well as scale to meet your year-3 workload? The ability to tailor the solution to your specific business needs should also be considered, as it impacts how well the solution aligns with your organization’s unique requirements.

Pricing Ranges and Licensing Models

Pricing is a critical factor in the selection process. Compare the pricing models of different EPM solutions, whether they follow a subscription-based model, per-user pricing, or other structures. Understand the costs involved not only in the initial implementation but also in ongoing licensing fees, maintenance, support, and potential upgrades.

Ensure you are comparing Apples to Apples. When in doubt consider the industry analyst’s view. Factor in your budget constraints and align the pricing with the value the solution offers in terms of features, scalability, and strategic impact.

Integration Capabilities

The seamless integration of EPM solutions with your existing systems is essential for a cohesive operational environment. Evaluate how well each solution integrates with your ERP, CRM, and other relevant tools. Does the solution offer Application Programming Interfaces (APIs) for easy data exchange and compatibility with third-party applications? Integration capabilities determine how well the EPM solution can harmonize data from different sources, reducing manual efforts and ensuring accurate and real-time insights. As you delve into this comparison matrix, keep in mind that these aspects are just the starting point. Beyond these factors, consider aspects like usability, data security, scalability, vendor support, local presence and how well the solution aligns with your long-term business goals. By meticulously assessing each solution’s features, pricing, and integration capabilities, you equip yourself with the insights needed to make an informed decision that will drive your organization’s growth and success.

Real-World Case Studies

Success Stories of Businesses Using EPM Solutions: Here’s how one of the Top-3 Life Sciences company brought down its monthly book closure from weeks to days. See how this IT services company used EPM to improve its FP&A and pricing processes. And this Unicorn used EPM to improve its workforce and FP&A planning.

   Lessons Learned and Best Practices

  • Executive sponsorship and support: Alignment of the project objectives with that of the organization and the sponsor. And secondly on-going executive involvement in steering committees. This ensures that the project receives the necessary resources, budget, and attention from top-level management, increasing the chances of success.
  • Plan for User adoption from day 1: Engage and involve end-users early in the process e.g. during the BR phase itself. Apart from planning user training identify the trainer early so that s/he can structure his learning for the role. Ensure she is one of the core team members. Address any resistance or concerns proactively to encourage user adoption. While deciding upon the analysis and dashboards, maintain an end-user perspective more than anything else. Create a model map that will ensure users understand the model easily. Develop onboarding videos for new users.

Similarly the initial days after go-live are equally crucial in user adoption. Ensure the implementation partner is readily available to hand-hold the users through digital means.

And also point-4

  • Cross-functional collaboration: Even though this scope revolves around one use case (FP&A) planning projects are enterprise in nature – e.g. Forecasting will involve sales teams, Actuals will involve IT support, and product P&L view will go to BU/product heads. Thus – identifying collaborative SPOCs, sharing ongoing project updates, inviting adjacent stakeholders to contribute, sharing red flags quickly, and asking for help early are key practices that the project SPOC can follow. This will foster collaboration and communication among different departments and teams that will be impacted by the implementation. Collaboration is key in aligning goals, obtaining valuable input, and ensuring buy-in throughout the organization.

Tip: Capture Behind The Scenes [BTS] moments and share them within the organization to build excitement.

  • Phase-wise implementation: Divide the projects into phases with each phase delivering a small but complete and usable unit of work. Ensure the accuracy, completeness, and consistency of the data that will be used in the FP&A system. Implement appropriate data governance measures, data validation processes, and data integration strategies to maintain data quality and integrity.
  • Begin with the End-in-Mind: Borrowing from Stephen Covey and Jeff Bezos – Develop a case study or a press release at the beginning of the project and draft the benefits and outcomes you wish to achieve from the project. Outline the key milestones and the struggles

Making Your Decision: Selecting the Right EPM Solution

Weighing the Pros and Cons Based on Your Business Needs

Selecting the right Enterprise Performance Management (EPM) solution demands a meticulous analysis of its pros and cons in the context of your business needs. Evaluate how well each solution aligns with your strategic objectives, considering its features, functionalities, and customization options.

Delve into the benefits it brings, such as streamlined budgeting processes, enhanced decision-making, and improved performance analysis. Equally important is an assessment of potential drawbacks, like integration complexities or a steep learning curve for users. Weighing these factors against your specific needs ensures that the chosen solution resonates with your organizational aspirations.

Conducting Demos and Trials

Empower your decision-making process by experiencing the EPM solutions firsthand. Request demos from vendors to gain insights into their user interfaces, functionalities, and overall user experience. This hands-on approach helps you gauge the solution’s usability and its compatibility with your team’s workflow.

Additionally, consider conducting trials or pilot programs with a limited group of users. This trial phase enables you to identify any challenges, gather user feedback, and assess how well the solution addresses real-world scenarios.

Consulting with Stakeholders and End Users

Involving stakeholders and end users is integral to ensuring the successful adoption of the chosen EPM solution. Engage key stakeholders across departments to gather diverse perspectives and align the solution with their needs. Beyond executives, involve those who will actively use the solution in their daily tasks.

Their insights into usability, functionality, and the impact on their roles are invaluable. This collaborative approach fosters buy-in, addresses potential concerns early, and facilitates a seamless transition when the solution is implemented.

Ultimately, selecting the right EPM solution requires a holistic approach that considers the alignment with your business needs, firsthand experience through demos and trials, and the input of stakeholders and end users. By methodically evaluating these factors, you pave the way for a strategic decision that not only addresses immediate requirements but also positions your organization for long-term growth and excellence.

Implementation and Onboarding

Planning the Implementation Process

Embarking on the implementation of an Enterprise Performance Management (EPM) solution is a pivotal phase that demands meticulous planning. Define a clear roadmap outlining the stages, timelines, and responsibilities involved. Collaborate with the EPM solution provider to design a tailored implementation strategy that aligns with your organization’s unique needs. Identify key milestones, allocate resources, and establish communication channels to ensure a cohesive execution.

Training and Change Management

Effective training and change management play a crucial role in the successful adoption of your EPM solution. As you introduce a new system into your organizational ecosystem, providing comprehensive training is essential. Equip your team with the knowledge and skills needed to navigate the solution effectively.

Beyond technical training, focus on change management. Communicate the benefits of the EPM solution to employees, addressing any apprehensions and highlighting how it streamlines processes and enhances decision-making.

By meticulously planning the implementation process and investing in training and change management, you set the stage for a smooth transition to your chosen EPM solution. This phase is not merely a technical integration but a cultural shift that drives efficiency, empowers users, and positions your organization to harness the full potential of EPM for strategic growth and operational excellence.

Monitoring and Measuring Success

Establishing Key Performance Metrics for EPM Success

As your organization adopts an Enterprise Performance Management (EPM) solution, defining key performance metrics is paramount. These metrics act as compass points, guiding you toward understanding the effectiveness of your

EPM implementation. Identify indicators aligned with your initial goals, whether it’s improved financial forecasting accuracy or enhanced resource allocation. These metrics serve as benchmarks to gauge progress and assess the impact of your EPM solution on operational efficiency and decision-making.

Continuous Improvement Strategies

Success in EPM is not static; it’s a dynamic process that thrives on continuous improvement. Embrace a mindset of perpetual enhancement by instituting strategies that promote ongoing refinement. Regularly evaluate your chosen key performance metrics and compare them with predefined targets.

Identify areas of strength and opportunities for growth. Encourage feedback from users across the organization to gain insights into pain points or potential enhancements. This feedback loop drives iterative improvement, ensuring your EPM solution remains aligned with evolving business needs.

By establishing key performance metrics and adopting continuous improvement strategies, you position your organization to extract maximum value from your EPM solution. Monitoring success through these metrics and fostering a culture of refinement ensures that your investment in EPM contributes not only to current efficiency but also to the sustained growth and resilience of your business in an ever-changing landscape.

Future Trends in EPM

 Predictive Analytics and AI Integration

The future of Enterprise Performance Management (EPM) is illuminated by the integration of predictive analytics and artificial intelligence (AI). As organizations accumulate vast volumes of data, harnessing this information becomes pivotal. Predictive analytics leverages historical data to forecast future trends and scenarios, enabling proactive decision-making.

AI, on the other hand, infuses intelligence into EPM processes, automating routine tasks and offering actionable insights. The convergence of predictive analytics and AI empowers organizations to anticipate market shifts, optimize strategies, and make data-driven choices that are not just reactive but forward-looking.

Cloud-Based EPM Solutions

The trajectory of EPM is firmly set in the cloud. Cloud-based EPM solutions offer unparalleled flexibility, scalability, and accessibility. They unshackle organizations from the constraints of on-premises systems, enabling real-time collaboration, data sharing, and analysis from anywhere.

Cloud solutions also foster cost efficiency, eliminating the need for extensive hardware investments and infrastructure maintenance. As the digital landscape continues to evolve, cloud-based EPM solutions ensure that organizations can seamlessly adapt, scale, and innovate without the encumbrance of physical limitations.

Anticipating the future trends in EPM – predictive analytics and AI integration alongside the proliferation of cloud-based solutions – is essential for staying ahead in a dynamic business environment. Embracing these trends empowers organizations to not only optimize performance management but also to navigate complexities, extract actionable insights, and proactively shape their growth journey.


Recap of Key Considerations in Choosing an EPM Solution

In the voyage of exploring Enterprise Performance Management (EPM), we have traversed the intricate landscape of strategy alignment, solution evaluation, and implementation dynamics. We revisited the importance of aligning EPM with business objectives, considering features, integration, usability, security, scalability, and cost.

Our exploration encompassed the evolution of EPM, from its essential features to cutting-edge trends like predictive analytics and cloud-based solutions. As we conclude, let’s recap the essence of our journey – that EPM is more than a solution; it’s a strategic partner for growth and agility.

Encouragement to Take Action and Begin the EPM Transformation

The culmination of our exploration invites you to seize the reins of transformation. Armed with insights into EPM’s power to optimize performance, enhance decision-making, and foster a culture of data-driven excellence, you stand on the threshold of change.

Let this knowledge fuel your determination to take action, to embark on the journey of EPM implementation. Embrace the challenges and opportunities, for each step brings you closer to unlocking the full potential of your organization. As you envision a future of strategic clarity and operational efficiency, remember that the transformation begins with the decision to harness the transformative capabilities of EPM.

In closing, EPM is a beacon of empowerment in a world driven by data and strategy. It’s the compass that guides you through uncertainties, empowers you with foresight, and positions you for success. Your organization’s journey towards EPM is not just a choice; it’s a commitment to innovation, a pledge to elevate performance, and a testament to the enduring pursuit of excellence. Let this conclusion mark the commencement of your EPM transformation, an odyssey towards a future shaped by strategic insight and operational mastery.


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EPM Consulting

Enterprise Performance Management (EPM) encompasses a set of processes, methodologies, and tools that facilitate strategic planning, monitoring, and optimization of an organization’s performance. EPM integrates various business aspects, such as financial planning, budgeting, forecasting, risk management, and analytics, into a coherent framework. By aligning these activities with an organization’s objectives, EPM helps drive informed decision-making, enhance operational efficiency, and foster overall growth.

Importance of EPM in Modern Business

In the rapidly evolving landscape of modern business, EPM holds profound significance. It offers a structured approach to translating high-level strategies into actionable plans. By providing accurate and real-time insights into financial and operational data, EPM enables companies to make proactive adjustments to their strategies. This proactive agility is crucial for adapting to market fluctuations, emerging trends, and unexpected challenges.

EPM empowers organizations to:

  • Strategic Alignment: EPM ensures that every business unit is working towards the same strategic goals, fostering a sense of cohesion and direction.
  • Informed Decision-making: Access to real-time performance data allows leaders to make informed decisions based on actual facts rather than assumptions.
  • Resource Optimization: EPM aids in optimizing resource allocation by identifying areas of inefficiency and reallocating resources where they are needed most.
  • Performance Evaluation: It provides a holistic view of an organization’s performance, allowing for timely identification of underperforming areas and the implementation of corrective measures.
  • Risk Mitigation: EPM facilitates risk assessment and management by offering insights into potential threats and helping organizations devise contingency plans.

Overview of EPM Consulting and Its Role in the Organization

EPM consulting plays a pivotal role in helping organizations unlock the full potential of their performance management processes. EPM consultants are experts who collaborate with businesses to design, implement, and enhance EPM systems tailored to their specific needs. They bring a deep understanding of industry best practices, technological advancements, and strategic methodologies.

EPM consultants offer the following key contributions:

  • Customized Solutions: Consultants analyze an organization’s structure, goals, and challenges to design EPM solutions that align with its unique requirements.
  • Implementation Expertise: They guide the seamless integration of EPM software and processes, ensuring a smooth transition and maximum adoption.
  • Continuous Improvement: EPM consultants enable organizations to evolve their performance management strategies over time, adapting to changing conditions and staying ahead of the competition.
  • Training and Support: They provide training to teams, ensuring that employees can effectively utilize EPM tools to make data-driven decisions.

In essence, EPM consulting bridges the gap between theoretical potential and practical implementation, enabling organizations to drive growth, efficiency, and competitiveness through well-executed performance management practices.

Scope and Objectives of EPM Consulting

The scope of EPM consulting is broad, covering various aspects of performance management:

Financial Planning and Analysis: Consultants help optimize budgeting, forecasting, and financial reporting processes, enabling accurate decision-making. While this may begin with the AOP, the planning process encompasses other functions as well notably – (a) sales quota, territory, and incentive planning, (b) workforce planning to support the financial objectives, and (c) in case of Manufacturing organizations  Demand and Supply planning.

Strategic Planning: EPM consultants align an organization’s strategic goals with its performance management practices, ensuring cohesive execution.

Data Analytics: They harness data-driven insights to inform strategies, identify trends, and support proactive decision-making.

Risk Management: EPM consultants aid in identifying and mitigating risks by integrating risk assessment into performance management.

Key Benefits of EPM Consulting for Businesses

Engaging EPM consultants yields several advantages:

Enhanced Decision-making: By leveraging accurate and real-time data, businesses can make informed decisions that drive growth. Bringing together plan, actuals and forecast data opens organizations to the possibilities of understanding the health of the business and amending strategies accordingly.

Efficiency Gains: Today organizations waste considerable effort in modelling and managing, and the planning processes through spreadsheets and emails. Automation and digitization of processes lead to resource optimization, cost reduction, and improved operational efficiency.

Strategic Alignment: The AOP in effect details the investments and objectives for each and every business units, departments and geographies within the organization. EPM consultants and tools ensure all departments work in tandem towards shared objectives, fostering organizational cohesion.

Competitive Advantage: Having a near real time and detailed insight to the business performance in the only route to measuring the effectiveness (or not) of your market strategies and tactics. Effective performance management positions businesses ahead of competitors, as it aids in spotting opportunities and avoiding pitfalls proactively.

In conclusion, EPM consulting acts as a guiding light for organizations navigating the complex terrain of performance management. By providing expertise, tailored solutions, and ongoing support, EPM consultants empower businesses to translate their aspirations into tangible results. 

EPM Consulting for different functions:

Finance EPM Consulting:

Finance EPM consulting is focused on optimizing an organization’s financial management processes. Consultants collaborate with finance teams to enhance budgeting, forecasting, financial reporting, and analysis. By implementing advanced tools and methodologies, they enable accurate financial insights that drive strategic decisions. Finance EPM consultants also aid in aligning financial goals with broader business objectives, ensuring financial stability and growth.

HR EPM Consulting

HR EPM consulting revolves around optimizing human resource management processes. Consultants work with HR departments to streamline talent acquisition, performance management, workforce planning, and employee development. By utilizing data-driven insights, HR EPM consultants enable businesses to make informed decisions about resource allocation, skill development, and succession planning. This ensures a capable and motivated workforce that contributes to overall organizational success.

Supply Chain EPM Consulting

Supply chain EPM consulting focuses on enhancing supply chain management efficiency. Consultants collaborate with supply chain teams to optimize inventory management, demand forecasting, procurement, and logistics. Through data analysis and process optimization, supply chain EPM consultants help organizations minimize costs, optimize inventory, improve ATP (Available to Promise), reduce demurrage, and improve overall supply chain performance. This is critical for meeting customer demands, maintaining competitiveness, and adapting to market changes.

Sales and Marketing

Consultants help organizations refine sales and marketing strategies by  for chalking out sales territories, planning sales quotas, and incentive schemes. Marketing can benefit from aligning their promotions, campaigns, and spends with the sales and product forecasts, running SPIFs, or any other seasonal campaigns.

In conclusion, EPM consulting services and solutions span a wide spectrum of business functions, each tailored to drive efficiency, alignment, and growth within specific areas. These specialized consultants serve as catalysts for innovation and improvement, ensuring organizations remain competitive in today’s dynamic business landscape.

EPM Consulting for various Industries

EPM Consulting in BFSI: Asset and Liability products, multiple sales channels, third-party tie-ups, multiple product pricings, and human resources. The financial services companies have many balls to juggle. By integrating data analytics and forecasting, they enable banks and financial institutions to make informed decisions, manage investments, and improve customer satisfaction.

EPM Consulting in IT industry: In the IT industry, EPM consulting aids in project profitability, resource allocation, and technology investment decisions. Various service lines, thousands of project codes, resource categories, geographies, and customer segments – just some of the dynamics of the IT industry. Consultants help streamline operations, align skills and capabilities with upcoming demand, and enhance project delivery. Through data-driven insights, they enable efficient utilization of resources, improved project outcomes, and the development of innovative solutions.

EPM Consulting in Retail sector: Retail EPM consulting focuses on demand forecasting, inventory management, and pricing strategies. In achieving their business objectives Retailers need to balance multiple variables such as 1000s of SKUs, different segments & categories, locations, merchandise, and channels. Consultants use data analysis to optimize stock levels, predict consumer trends, and refine pricing models. This ensures retailers maintain optimal inventory, meet customer expectations, and maximize profitability.

EPM Consulting in the Manufacturing industry: Manufacturing by far has been the largest proponent of EPM. Given the balance required to be maintained across production, finance, demand, and supply EPM has become a key enabler at Manufacturing firms. Manufacturing EPM consulting involves process optimization, production planning, and supply chain management. Consultants collaborate to enhance efficiency, reduce costs, and ensure timely delivery of products. By implementing data-driven insights, they enable manufacturers to streamline operations, improve quality control, and meet market demands effectively.

EPM Consulting in Healthcare: In the healthcare sector, EPM consulting aids in resource allocation, patient care optimization, and financial management. Consultants help healthcare organizations improve patient outcomes, enhance operational efficiency, and manage costs. Through performance analysis, they enable healthcare providers to make informed decisions that drive better patient care.

EPM Consulting in Energy & Utilities: Energy and utilities sector in capital intensive and involves high gestation period. EPM consulting focuses on optimizing resource usage, sustainability, and compliance. Long range planning is a key ingredient in EPM consulting for Energy organizations. Consultants aid in energy management, cost control, and environmental impact analysis. By leveraging data analytics, they enable energy and utility companies to reduce waste, enhance efficiency, and meet regulatory requirements.

Other Application Areas of EPM Consulting

Beyond these sectors, EPM consulting finds application in various industries like transportation, education, and non-profit organizations. Consultants help these sectors align strategies, improve operational efficiency, and make informed decisions to achieve their unique goals and missions.

In essence, EPM consulting’s diverse applications underline its adaptability and impact across industries, helping organizations achieve their objectives in the ever-evolving business landscape. 

Global Enterprise Performance Management (EPM) Consulting Service

Market Overview

The global EPM consulting service market is witnessing substantial growth due to increasing demand for streamlined performance management across industries. Organizations are recognizing the need for data-driven decision-making, leading to a surge in EPM adoption. This market encompasses a wide range of sectors, including finance, IT, healthcare, and more, indicating its universal applicability.

Growth Factors Driving the EPM Consulting Industry

Several factors are propelling the growth of the EPM consulting industry. The rapid pace of technological advancements, coupled with the growing complexity of business operations, is prompting organizations to seek expert guidance. The need for strategic alignment, faster and effective response to dynamic market changes, risk mitigation, and optimized resource allocation further drives the demand for EPM consulting services.

Emerging Trends in EPM Consulting

Emerging trends are reshaping the EPM consulting landscape. These include the integration of artificial intelligence and machine learning for predictive analytics, enabling more accurate forecasts and proactive decision-making. Cloud-based EPM solutions are gaining traction, offering scalability and flexibility. Additionally, a shift towards sustainability-focused EPM practices reflects the growing emphasis on environmental and social responsibility.

Future Prospects and Forecasts for EPM Consulting Market

The future of the EPM consulting market appears promising. As organizations continue to prioritize data-driven insights, the demand for specialized consulting services will persist. The adoption of EPM solutions in previously untapped sectors and regions is expected to contribute to sustained growth. With technology evolving and business landscapes becoming increasingly dynamic, EPM consulting is poised to remain a key driver of organizational success.

In conclusion, the EPM consulting industry is undergoing a significant transformation driven by technological innovation and changing business dynamics. The market’s trajectory suggests a continued upward trend, as organizations recognize the invaluable role of EPM consulting in achieving operational excellence and strategic growth.

Overview of Top EPM Consulting Firms

The landscape of EPM consulting is marked by the presence of several prominent firms that excel in delivering expert guidance and solutions for performance management. These companies are at the forefront of driving strategic transformation across industries through their specialized services.

Company Profiles and Services Offered by Key Players

  • Deloitte: A global leader, Deloitte offers a comprehensive suite of EPM services including financial planning, budgeting, and risk management. Their expertise spans various industries, aiding organizations in aligning performance management with strategic goals.
  • KPMG: Renowned for technology-driven solutions, Accenture provides EPM services centered on digital transformation, analytics, and operational excellence. Their approach focuses on improving business outcomes through data-driven insights.
  • PwC (PricewaterhouseCoopers): PwC offers a wide array of EPM consulting services, covering finance, operations, and strategy. Their services are tailored to enhance decision-making, optimize resource allocation, and foster growth.
  • EY (Ernst & Young): EY specializes in EPM solutions that enable organizations to align performance metrics with strategic priorities. They emphasize risk management, financial reporting, and operational efficiency.
  • Deflytics Consulting: Deflytics is a niche consulting firm focussed on the EPM domain for 10+ years. Over this period it has implemented more than 55 projects in areas such as AOP, LRP, budgeting, actuals, forecasting, costing, demand planning, workforce planning, etc. It has serviced customers in industries such as Manufacturing, IT services, and Unicorns.

Comparative Analysis of Major EPM Consulting Service Providers

These leading EPM consulting firms share common characteristics, such as a global presence, diverse industry expertise, and a focus on leveraging data for informed decision-making. While each firm has a unique approach, all emphasize strategic alignment, operational excellence, and the integration of technology for achieving client objectives.

Given the breadth of EPM consulting most service providers specialize in select industries and or functions. That gives them the ability to generate insights and best practices which can benefit their new customers.

In conclusion, the top EPM consulting companies play a vital role in guiding organizations toward optimized performance management. Their extensive portfolios of services and commitment to excellence make them indispensable partners for businesses striving for success in today’s dynamic business environment.

Steps Involved in EPM Consulting Engagements

EPM consulting engagements typically follow a structured process to ensure successful outcomes:

Assessment and Discovery: Consultants engage with the client to understand their current processes, pain points, and goals. This phase involves gathering data and conducting interviews.

Solution Design: Based on the assessment, consultants design a tailored EPM solution that aligns with the client’s objectives. This includes selecting relevant tools, processes, and methodologies.

Implementation and Integration: Consultants oversee the implementation of the EPM solution, ensuring seamless integration with existing systems. This phase may involve training staff on new tools and processes.

Data Migration and Transformation: Consultants assist in migrating and transforming relevant data into the new EPM system, ensuring accuracy and integrity.

Testing and Validation: Consultants rigorously test the new EPM system to identify and resolve any issues before going live.

Training, Monitoring and Optimization: After implementation, consultants monitor the system’s performance and provide ongoing support. They also identify opportunities for optimization and continuous improvement.

Best Practices and Methodologies in EPM Consulting

EPM consulting follows several best practices:

  • Customization: Given that EPM solutions are decision-making tools, they are tailored to each client’s unique needs & processes, ensuring maximum relevance and effectiveness.
  • Data-Driven Approach: Analysis and insights need to be followed by action. Only that will complete the loop. Consultants leverage data analytics to provide actionable insights for informed decision-making. They leverage EPM tools which enable actions to be assigned, communicated and tracked to respective team members so as to improve the business plan.
  • Stakeholder Involvement: Engaging stakeholders at every step ensures alignment and buy-in for the new EPM solution. EPM solutions come with process plans, and collaboration capabilities which ensures all stakeholders continue to be on the same page.
  • Futuristic view: Consultants use the predictive modelling capabilities of the tools and help organizations develop a futuristic view of their business plans. Different scenarios can be created to test a strategy an decide on the best one. In addition EPM consultants guide clients through change, helping them adapt to new processes and technologies smoothly.

Case Studies Showcasing Successful EPM Consulting Projects

EPM consulting projects can result in multiple quantifiable outcomes for organizations:

  1. Real-time Income statement and P&L Analysis across Actuals, Budgets, Forecasts
  2. Automated complex models for Revenue, Costs, Workforce, Projects, and Territories
  3. “What-if” based scenario planning
  4. 20-25% faster budgeting & planning cycles
  5. 50-60% reduction in Financial reporting time
  6. Productivity improvement of 25-35%
  7. SG&A cost ratio improvements
  8. Inventory value balance reduction
  9. Productivity improvements for the finance teams conducting data aggregation and forecasting
  10. Alignment of demand and spend priorities due to timely and accurate information
  11. Productivity improvements for executives conducting supply and demand planning

Here’s how one of the Top-3 Life Sciences company brought down its monthly books closure from weeks to days. See how this IT services company used EPM to improve its FP&A and pricing processes. And this Unicorn used EPM to improve its workforce and FP&A planning. 

In conclusion, the EPM consulting process involves a strategic sequence of steps that lead to improved performance, alignment, and growth for organizations. The integration of best practices and methodologies ensures the successful implementation of EPM solutions, as showcased by real-world case studies.

Common Challenges Faced During EPM Consulting

EPM consulting endeavors come with their share of challenges:

Data Integration Complexity: Integrating diverse data sources can be intricate, leading to inconsistencies and inaccuracies that hinder decision-making. Leading EPM tools provide connectors to industry standard ERPs and CRMs and office productivity suites to enable smoother data exchange.

Resistance to Change: Employees might resist adopting new EPM systems due to fear of the unknown or perceived disruptions. EPM solutions provide a spreadsheet like look and fell to help users adopt to the new solution in faster way.

Lack of Clear Objectives: As with other projects, without well-defined goals, EPM projects may lose focus, leading to ineffective outcomes.

Technological Limitations: Legacy systems or outdated technologies can impede the integration of advanced EPM solutions. Scalability to meet future requirements, flexibility to easily incorporate changing business structures & scenarios, and the ability to pay for what you use are some of the key characteristics of new-age EPM solutions.

Ensuring Successful EPM Implementation and Adoption

Executive sponsorship and support: Alignment of the project objectives with that of the organization and the sponsor. And secondly on-going executive involvement in steering committees. This ensures that the project receives the necessary resources, budget, and attention from top-level management, increasing the chances of success.

Plan for User adoption from day-1: Engage and involve end-users early in the process e.g. during the BR phase itself. Apart from planning user training identify the trainer early so that s/he can structure his learning for the role. Ensure she is one of the core team members. Address any resistance or concerns proactively to encourage user adoption. While deciding upon the analysis and dashboards, maintain an end-user perspective more than anything else. Create a model-map which will ensure users understand the model easily. Develop on-boarding videos for new user.

Similarly the initial days after go-live are equally crucial in user adoption. Ensure the implementation partner is readily available to hand-hold the users through digital means.

And also point-5 below.

Plan for the future: Don’t select the tool based on your requirements today but where you will be 18-30 months down the line. You may start with summarized P&L but as competition intensifies look at detailed BOM-level costing, you may start with BU level profitability but in the furue will want to go to project or product-group level profitability. You may begin with FP&A as a use case but will not to extend to Sales or Workforce planning in the further. You may have 10 users to begin with but it will grow manyfold as your business scales. This is especially true for fast-growing businesses.

Cross-functional collaboration: Even though this scope revolves around one use case (FP&A) planning projects are enterprise in nature – e.g. Forecasting will involve sales teams, Actuals will involve IT support, product P&L view will go to BU/product heads. Thus – identifying collaborative SPOCs, sharing ongoing project updates, inviting adjacent stakeholders to contribute, sharing red-flags quickly, and asking for help early are key practices which the project SPOC can follow. This will foster collaboration and communication among different departments and teams that will be impacted by the implementation. Collaboration is key in aligning goals, obtaining valuable input, and ensuring buy-in throughout the organization.

Tip: Capture Behind The Scenes [BTS] moments and share them within the organization to build excitement.

Phase-wise implementation: It’s best to underline this one more time. Divide the projects into phases with each phase delivering a small but complete and usable unit of work. Ensure the accuracy, completeness, and consistency of the data that will be used in the FP&A system. Implement appropriate data governance measures, data validation processes, and data integration strategies to maintain data quality and integrity.

Begin with the End-in-Mind: Borrowing from Stephen Covey and Jeff Bezos – Develop a case study or a press release at the beginning of the project and draft the benefits and outcomes you wish to achieve from the project. Outline the key milestones and the struggles during the project. Lay down clear benchmarks and targets to measure the success of the implementation project. And finally draw out your 1-2 year vision for the project and how it will impact the organization as a whole.

In conclusion, EPM consulting faces challenges, but proactive strategies can overcome these hurdles and lead to successful implementation and adoption. By addressing data integration, change management, and clear objectives, organizations can leverage EPM solutions to drive improved performance and informed decision-making.

EPM Consulting for Medium-sized Enterprises (MEs) and Soonicorns

While there is a notion that EPM Consulting is for large enterprises, organizations with a turnover of $ 100 mn have also benefitted immensely from EPM consulting, especially if they are in a fast-growing, dynamic market. EPM consulting offers MEs and soon-to-be-Unicorns valuable insights and strategies for efficient performance management. Consultants understand the resource constraints of MEs and provide cost-effective solutions that streamline financial processes, aid in strategic planning, and optimize resource allocation. MEs benefit from tailored EPM solutions that empower them to make informed decisions, improve operational efficiency, and navigate challenges in a competitive landscape.

EPM Consulting for Large Enterprises

Large enterprises seek EPM consulting to manage the complexity of their operations. Consultants design comprehensive solutions that integrate data from various departments, enhancing performance measurement and strategic alignment. These solutions enable large enterprises to optimize budgeting, risk management, and reporting processes. EPM consultants aid in consolidating vast amounts of data into meaningful insights, enabling effective decision-making at the highest levels.

Tailoring EPM Solutions to Meet Varying Business Needs

EPM consulting acknowledges that each business size requires unique solutions. For MEs, simplicity and affordability are key, focusing on core performance aspects. Large enterprises benefit from advanced analytics and integration capabilities to manage intricate operations. EPM consultants adapt methodologies and tools to fit the specific needs of businesses, ensuring optimal performance management across the spectrum.

In conclusion, EPM consulting adapts to the diverse requirements of different business sizes. Whether enhancing the efficiency of SMEs or managing the complexity of large enterprises, EPM consulting offers tailored solutions that foster growth, strategic alignment, and competitive advantage.

Role of EPM Consulting in Digital Transformation Initiatives

EPM consulting is a pivotal partner in driving successful digital transformations. Consultants bridge the gap between traditional performance management and modern business requirements. They align EPM strategies with digital initiatives, enabling organizations to leverage data-driven insights, enhance decision-making, and adapt to the rapidly evolving business landscape.

Integrating EPM Solutions with Emerging Technologies

EPM consulting facilitates the seamless integration of emerging technologies into performance management processes. Consultants work to connect EPM solutions with cloud computing, IoT, and other digital platforms. This integration enables real-time data collection, enhances collaboration, and empowers organizations to respond swiftly to market shifts.

Leveraging Analytics and AI in EPM Consulting

EPM consulting leverages advanced analytics and artificial intelligence (AI) to unlock deeper insights. Consultants use AI-powered predictive analytics to forecast trends, identify opportunities, and mitigate risks. Analytics-driven EPM allows organizations to optimize resource allocation, strategize effectively, and achieve operational excellence in the digital era.

In conclusion, EPM consulting is a catalyst for digital transformation. By integrating EPM solutions with emerging technologies and harnessing the power of analytics and AI, consultants enable organizations to navigate the complexities of the digital landscape, driving growth, efficiency, and innovation.

Evaluating Success and Measuring the Impact of EPM Consulting

Measuring the success of EPM consulting requires defining clear metrics and key performance indicators (KPIs) aligned with the initial goals. Consultants collaborate with organizations to track the impact of the implemented EPM solution over time. Regular evaluations assess the achievement of objectives, the adoption rate among employees, and the overall improvement in decision-making, operational efficiency, and financial outcomes.

In summary, best practices in EPM consulting encompass aligning strategy with goals, involving stakeholders, and measuring the impact. These practices ensure that EPM initiatives are strategically aligned, well-received, and effectively contribute to organizational growth and success.

Conclusion In the ever-evolving world of business, where data reigns supreme and strategic decisions determine success, the role of Enterprise Performance Management (EPM) consulting emerges as a guiding light. As we wrap up this exploration, let’s reflect on the key takeaways that highlight the significance of EPM consulting in steering organizations towards growth and excellence.

How Can Enterprise Performance Management Take Your Business to The Next Level?

Enterprise Performance Management (EPM) is one of the decision-support systems which enable organizations to model, monitor, and analyze their business performance across the enterprise – sales, finance, operations, and HR. Using EPM systems organizations can create their business plans/AOP and use it to track the progress through the year with rolling forecasts. EPM solutions can sharpen your demand forecast and optimize your supply plan. It can help you improve the productivity of your sales teams by smarter territory planning and smarter incentive plans. Business analysts and users can analyze the performance across various metrics, respond to changing business dynamics, and ensure all the functions are working towards meeting the annual or long-range business plan. One of the salient features of EPM is its ability not just analyze past data but also predict future outcomes and scenarios.

How Enterprise Performance Management Software Works

In order to support the above mentioned outcomes and functionality, EPM software brings together multiple elements in a cohesive and scalable manner.

It starts with bringing all the relevant data together – budget from spreadsheets, actuals from ERP, forecasts from CRM, inventory/orders from ERP, and human resource data from HRMS. Once the relevant data is brought together, it enables to model the data in a multi-dimensional environment so that it can mimic your business plan – e.g targets by product by territory. You can create organizational structures, rules, assumptions which can be applied across the plans e.g. per diem costs by territory. It will allow you to create different versions of your plan e.g. domestic business. And it will also help you create multiple business scenarios e.g. best case, worst-case. Which is the next stage i.e. enabling analysis and MIS. And then the EPM software can also make future predictions for you – demand, cashflow, inventory, or workforce. It does this by applying statistical algorithms to historical, seasonal or external data.

Let’s dive in to the EPM software capabilities that get this work done.

First up is the user interface because that’s the first thing anyone will see about the EPM software. Most business planning users are heavy users of spreadsheets. Sheets, formulae, look-ups, filters are just some of the common features of spreadsheets. So for the users to be able to easily adapt to the EPM software the Best EPM Software have user interfaces which are very similar to spreadsheets. Most planning users interact with the application in the form of sheets. This way they find it familiar and quick to learn and adopt.

Second important element of an EPM software is multi-dimensionality. We all are familiar with the 2-dimensional view which spreadsheets provide – X and Y axis, rows and coloumns. But the moment we need to analyze a third dimension e.g. sales by products by time and territory, we need to create another sheet/tab within the spreadsheet. Thus one of the fundamental building blocks of EPM software is a multi-dimensional data processing ability. And this differentiates a good EPM software from a great one. The ability to process large volumes of data, complex formulae and business rules, across multiple dimensions and give out the results in real-time – a calculation engine that can support all the above across multiple versions, multiple subject areas (finance, supply chain, etc.), and of course multiple users (modelers, contributors, read-only) is the most important capability of the EPM software.

The next element is the ability to analyze this multi-dimensional data as and when needed. The EPM software should provide user friendly, dashboards, charts, and visualizations. More importantly, it should also provide the ability to drill-down, do historical analysis, compare multiple versions, and conduct ad-hoc reporting. Next, the analysis should lead to actions. The ability to share the analysis, collaborate towards the diagnosis or a solution through alerts and messaging is crucial. And lastly automation of monthly reporting packs. In addition, EPM solutions also help customers to define their budgeting or forecasting processes such that they can be assigned, and tracked to completion for a given schedule.

Why your Business needs EPM Software?

Actually you don’t. If your business is static, has limited drivers, is not a competitive market, and is in an economy where the market forces are not changing dynamically.

Otherwise you do.

Put simply, EPM solutions allow organization to display the business scorecard of their performance. As in sports, without a scorecard the employees will not know how the organization is performing and what they need to do in order to meet their objectives.

All organizations do planning. Some do it in their mind, some on paper, and most on spreadsheets. However as the scale, complexity, and velocity of the business increases running the entire process on spreadsheets becomes time consuming and impacts the quality of decision making.

An EPM solution enables organizations to model their business plans at the most granular level, track the progress, manage the impact of any new scenarios, and predict future business state.

How Can Enterprise Performance Management Helps your Business

● Aligning Strategy and Execution – Translating business strategy into an actionable commercial plan is the starting point for every financial year/period. This may be in the form of a 3-to-5 year long-range plan (LRP) or an annual operating plan (AOP). This plan lists down the key strategies and initiatives the organization will take to meet its financial objectives. The plan details the funds that will be allocated to each of the initiatives, and the targets and goals that each of the function/BU will have to meet in order to justify the investment.

EPM software allows organizations to model their business strategy and goals so that everyone is able to understand their role and measure the success on an ongoing basis.

● Enhancing Financial Planning and Budgeting – The financial plan includes – (a) the budget and target given to each unit/function (b) the actual performance by month (c) the forecast for the upcoming month/quarter and (d) the variance between target and the actual/forecast. The above is broken down by product, segment, plant, etc. The downstream outcome of this is the P&L, balance sheet, and cashflow statements which illustrate the health of the business.

An EPM software’s multidimensional capability enables organizations to model all these elements at the minutest of the levels e.g. Product-group, business unit, sales channel, etc. So the decision makers can get profitability and target achievement status in real-time.

Improving Decision-Making with Data Analytics – The most important change in the business environment in recent times has been – speed and velocity. Customer preferences, raw material prices, employee expectations – all are changing faster than ever. The ability to monitor the trends, identify gaps, and take corrective action in near real-time therefore becomes paramount.

By using the analytical capabilities of the EPM solution organizations can quickly spot variances, adjust the demand forecast, and predict their workforce requirements.

 Promoting Collaboration and Communication – Achieving organizational goals and objectives requires 2 key elements – one is a clear communication of the goals and two transparency about the current state, across stake holders. Only then can root-causes can be un-earthed and accountability established to meet or exceed the organizational objectives.

EPM solutions inherently provide both these capabilities. Using EPM solutions organizations can create and share organizational and divisional goals and compare it against daily/weekly/monthly achievement. Any overperformance can be appreciated whereas the gaps or variances can be diagnosed and corrective actions implemented.

● Mitigating Risks and Ensuring Compliance – Not all strategies go as per plan. The capability to spot a problem or a risk early can help bring-in interventions which can assist in course-correction. A low Q1 coupled with a low forecast for Q2 can warn an organization of a demand slowdown. This can potentially impact its annual plan. In response, the organization can either plan marketing campaigns, sales programs or new product introductions which can help stem the de-growth and bring the numbers back to the expected levels. Or the organization may reduce its raw material procurement plans so that their costs get in line with the muted demand. The ability to spot such issues early is crucial.

EPM solutions enable organizations to bring together data to spot, analyze, and compare scenarios which can help them take appropriate actions – should we reduce the price of our products or increase the spend on marketing. Should we expand into a different territory or improve distribution in the existing ones, should we manufacture this product in-house or take over a competitor. EPM solutions facilitate such critical business decision in near real time.

Best EPM Software for Your Business

An EPM software is a decision-making tool. And decision making is a dynamic process, when you get the required info, you want to look sideways at other related factors before arriving at the final decision. Thus its essential that the planning tool has easy to use analysis capabilities. Secondly the EPM solution needs to be flexible to map to your unique business processes and not the other way round. Three it should be easy for the end user to use and adopt. Lastly it should drive action, communication and change so that it can result in real outcomes.

Anaplan and Adaptive Planning are two EPM solutions that meet the above criterion .. and more.


Most organizations remain in the BAU (Business as Usual) mode until they get hit by a lightning. Taking yours to the next level means demoting current practices that are slow and curtail decision making e.g. spreadsheets and other legacy tools. EPM tools will set the organization free of any dependency – data, tools, information – which can come in the way of faster and better decision making. And in turn a faster and better business.

How to Choose the Best EPM Software for Your Business


Enterprise Performance Management (EPM) is one of the decision-support systems which enable organizations to model, monitor, and analyze their business performance across the enterprise – sales, finance, operations, and HR. Using EPM systems organizations can create their business plans/AOP and use it to track the progress through the year with rolling forecasts. Business analysts and users can analyze the performance across various metrics, respond to changing business dynamics, and ensure all the functions are working towards meeting the annual or long-range business plan. One of the salient features of EPM is its ability not just analyze past data but also predict future outcomes and scenarios.

Why Businesses Need EPM Software

Businesses are dynamic in nature. While they may have a business plan for the year (AOP), market, competitive, and other external factors impact the outcomes, without a platform to monitor the ongoing business performance, businesses could end up reacting to market forces often leading to poor results – lower toplines, reduced margins or higher costs.

An EPM software enables the businesses to track their business performance at a detailed level across different parameters such as customers, territories, products, etc. Understanding the root cause of the performance and its impact on other drivers the EPM software enables businesses to execute interventions which can help align the plan back to its stated objectives. EPM solutions also enable businesses to predict future business outcomes and compare different business scenarios in near real-time.

Choose the Best EPM Software for Your Business

When going about identifying an EPM solution for your organization its best to start with the pains which drove you to look for a solution in the first place. That should be your driver. It may be that your demand forecast is widely varying from the actual plan or that you are experiencing revenue leakage due to poor incentive calculation or you are unable to spot finance variances in time.

Secondly you should look at how your requirements and usage will be three years from now. The solution you are looking for should not just meet your current requirements but also be cater to the future. This is one of the most common mistakes organizations do while evaluating any software solution. It may be that you are looking for a solution for one function, but an adjacent department may also be needing an EPM solution for a different use case in a few quarters time. How does the solution you are looking at enables this progression? Today you are doing product costing at a product-group level but in order to do better margin analysis you will start doing costing at the product level in the future. Does the solution you are buying today have the capability to support both. Do they have customers who are doing this today? Answer to this question will give you an estimate of the solutions prowess.

Coming to the features and functionalities part. Always remember the principle you follow when buying a new car – look under the hood. All the other bells and whistles can be appended but the core cannot be altered. And in EPM solutions the core is the multi-dimensional data processing capability. Its ability to support a complex business structure, at the minutest grain, and yet process the results in near real-time – are some of the foundational functionalities you should seek for. Including the ability to support – multiple versions, alternate hierarchies, currency translations intrinsically, in its multi-dimensional core.

This is not to say what’s above the hood does not matter. At the end of the day usage depends on adoption, and adoption depends on easy-of-use. Most planning solutions today mimic spread sheets in their appearance. Given the affinity of the planning fraternity with spread sheets this is hardly a surprise. But if its not, that a red flag.

Getting together the detailed data and being able to process it in real time offers little value unless you can enable meaningful analysis. So that should be your next lookout. Not just the ability to provide reports and dashboards but the functionality to support ad-hoc analysis and drill-down through drag-n-drop. Some solutions also provide features to automate your monthly MIS packs.

What worth is analysis if it does not lead to actions. An often overlooked functionality is the ability to link analysis to action and resolution. Imagine you have just uncovered a major upcoming variance in a territory or a product group. Instead of calling the relevant executive and explaining the scenario to him why not directly shoot the analysis to the person and ask him to take action. Collaborate, get answers, and resolve the issues proactively.

The last but not the least capability to check for is the security and authentication. With EPM systems holding business critical data the ability to provide selective access becomes critical. Enterprise EPM solutions enable organizations to access by model, sheet, modules, versions, or even cells. Similarly check for audit trail capability. It goes without saying that the safety and security of the organizational data is always paramount.

Plus one: No-code. Can the EPM software be run with minimal or English-like coding? This ensures that users do not have a steep learning curve, non-technical users can manage the application by themselves, and any new users can pick up modeling quickly.

Benefits of EPM Software to Various Departments/Functions

EPM software can benefit organizations across four key categories –

(1) Financial Planning & Analysis

(2) Sales planning

(3) Workforce planning

(4) Supply planning.

Let us look at each of them.


Put simply, the CFO office is tasked with ensuring that the annual plan is met – topline, bottom-line and everything in between. Beginning with AOP, actual performance, and rolling forecasts. By product-group, territory, verticals, etc. Use cases include: AOP, LRP, BOM costing, Subsidiary Recon, Indirect cost allocations, fixed asset planning, capex planning, etc.

In most industries financial planning will sit at the core, connected with the other planning areas such as sales forecasts from Sales Planning, Workforce costs from the Workforce plan, and RM costs from the Supply plan.

Finance teams across industries will find that they are able to close books faster, improve their planning process by 20-25%, reduce data collation/management time by 40-50%, gain 30-40% productivity improvements, and 50-60% in reduction in financial reporting efforts.

This is one EPM use case which is applicable across industries.

Supply planning:

The supply planning process starts with Demand planning and ends with a Supply-chain forecast for the manufacturing and procurement function. Getting the demand accuracy to 90%+ is the target for most organizations. However, given the variables, its better said than done. Availability of RM, production capacity, open orders, at product-group or SKU level, and lastly delivery dates expected by customers. Further elements include: historical trend, and seasonality.

Planning tools enable the supply teams to analyze all these elements together in order to arrive at a consensus plan. They can create multiple versions, scenarios or use built-in statistical forecasting to augment their final plan.

Aligning demand and supply plans has direct benefits in terms of – optimizing inventory, no lost-sales, and higher customer satisfaction.

While Manufacturing is an obvious industry which benefits hugely other industries focussing on balancing their demand and supply will also benefit from Supply planning.

Sales planning:

For businesses which have a significant sales force getting the sales focus and rewards right can mean the difference between exceeding their revenue goals or losing market share. Sales planning enables organization to (1) define their sales territories (2) quotas and (3) incentive compensation plans.

The revenue or growth target identified in the AOP determines the no. of sales persons required to meet the target. This is usually classified by customer, product, territory, and verticals/segments. The deal size, time-to-close, and win ratio are the usual factors that determine the no. of sales reps required. How many customers or territories should each cover? What should be the difference in quota for a salesperson responsible for a large customer v/s once servicing an XL customer? What should be the incentive structure? When we introduce SPIFs, what should be the eligibility and how much should be the payout. All these variable need to be balanced such that the sales teams get the CTC compensation they deserve and at the same time the company is not losing revenue due to wrong-payouts.

Sales planning feeds directly to Financial planning in terms of the S&GA expenses and the rolling forecasts. Sales planning benefits include – higher revenue, motivated sales teams, and better market share.

FMCG, Pharmaceuticals and Financial Services come to mind as two industries having large field force and who could benefit with Sales planning.

Workforce planning:

Service industries in which the ratio of revenue to employees is closely aligned will benefit from Workforce planning. Any drop in the quantity and type of the resources can have a direct impact on their revenue. E.g. in IT services HR team are constantly trying to align their resources to the most sought after technologies. They need to factor in the demand and sales forecast for different types of projects, the associated timeline, possible churn, market availability and lead times in order to prep their resource planning. Similar to Demand and Supply planning the alignment of the right human resources and skills with the customer projects is super critical.

Workforce planning also feeds directly into Financial planning as it has a direct implication on the costs the organization will need to incur to support its business plan or AOP.

In an industry report published by Forrester, it has reported the following benefits from EPM solutions:

  • SG&A cost ratio improvements of 0.5% to 1.5% through better visibility into real-time
  • forecast and budget data
  • Inventory value balance reduction of 10% to 20%
  • Workforce planner productivity improvement of 40%
  • Productivity improvements for – (a) global finance teams conducting financial data aggregation and forecasting, (b) sales representatives and managers conducting planning tasks, and (c) representatives conducting supply and demand planning

Deflytics: EPM Implementation Partner You can count on.

As is true for any consulting company, our work should talk for itself. 10+ years in EPM domain, 55+ projects, almost-100% implementation success. Use cases covering FP&A, Demand planning, Workforce planning and customers in Manufacturing, Services, and Unicorn segments.

Happy to help you begin your EPM journey.

Workforce Planning Guide: Definition, Importance & Best Practices

Workforce planning

In today’s rapidly evolving business environment, organizations face a multitude of challenges, from talent shortages to unpredictable market conditions. Workforce planning emerges as a vital strategic tool that helps organizations align their human capital with business objectives. In this comprehensive blog, we will explore the importance of workforce planning, discuss various types of workforce planning, delve into the key elements involved, highlight best practices for effective implementation, and outline the wide-ranging benefits it offers.

Major Types of Workforce Planning

◎ Strategic Workforce Planning

◎ Operational Workforce Planning

Workforce planning can take different forms based on an organization’s goals and context. Let’s explore two common types of workforce planning:

Strategic Workforce Planning: This type of planning aligns an organization’s human capital strategy with its long-term business objectives. Strategic workforce planning focuses on identifying critical roles and competencies necessary to achieve strategic goals. It involves analyzing internal and external factors, such as demographic trends, talent availability, and technological advancements, to ensure the organization has the right talent to succeed in the future.

Operational Workforce Planning: Operational workforce planning concentrates on short-term workforce requirements to meet immediate operational needs. It involves analyzing current staffing levels, skills gaps, workload distribution, and seasonal variations. Operational workforce planning ensures that day-to-day operations run smoothly by balancing workloads, managing leave schedules, and responding to short-term fluctuations in demand.

Importance of Workforce Planning in Today’s Business Environment

Workforce Planning

Workforce planning is integral to ensuring organizations have the right talent, skills, and competencies to achieve their strategic goals. Here are some key reasons why workforce planning is important:

Anticipating Future Needs: Workforce planning enables organizations to forecast their future workforce requirements. By analyzing business objectives, market trends, and industry changes, organizations can proactively identify the skills and talent needed to meet evolving demands. This ensures a consistent supply of capable employees, preventing disruptions in productivity and customer service.

Mitigating Talent Shortages: Through workforce planning, organizations can identify potential talent gaps and develop strategies to address them. By implementing targeted recruitment, training, and development initiatives, businesses can bridge skill shortages. This proactive approach ensures a strong talent pipeline and reduces reliance on external hiring.

Controlling Labor Costs: Effective workforce planning optimizes labor costs by aligning staffing levels with operational demands. By avoiding unnecessary recruitment or layoffs, organizations can strike a balance between workforce size and business objectives, minimizing costs while maintaining productivity

Key Elements of Effective Workforce Planning

To implement effective workforce planning, organizations should consider the following key elements:

Data Analysis: Workforce planning relies on accurate and reliable data to forecast future needs. Organizations should collect and analyze data related to workforce demographics, turnover rates, skills inventory, performance metrics, and market trends. This data-driven approach provides insights for making informed decisions.

Collaboration: Successful workforce planning requires collaboration between HR, finance, operations, and other key stakeholders. Engaging these departments ensures a comprehensive understanding of business objectives, financial constraints, and operational realities. Collaboration fosters alignment and increases the chances of successful workforce planning implementation.

Succession Planning: Identifying and developing future leaders is a critical aspect of workforce planning. Organizations should establish a robust succession planning process to ensure a smooth transition of key roles and minimize disruptions. By cultivating a talent pipeline, businesses can prepare for potential leadership gaps and ensure continuity.

Talent Acquisition and Development: Workforce planning goes beyond hiring. It includes strategies for attracting top talent, developing existing employees, and creating a learning culture. Organizations should implement effective recruitment and onboarding processes, provide continuous training and development opportunities, and promote internal mobility

Best Practice for Workforce Planning

To optimize the outcomes of workforce planning, organizations should consider the following best practices:

Align Workforce Planning with Business Strategy: Workforce planning should be integrated with the overall business strategy. This alignment ensures that the organization’s human capital strategy supports its strategic objectives. Regularly review and update the workforce plan to reflect changes in business goals and market conditions.

Involve Key Stakeholders: Engage senior leadership, department heads, and line managers in the workforce planning process. Their insights and perspectives are invaluable for understanding the current and future workforce needs of their respective areas. Collaboration fosters ownership and enhances the accuracy of the planning process.

Use Scenario Planning: Develop multiple scenarios to assess the impact of different workforce planning strategies. Consider factors such as technological advancements, industry disruptions, and economic shifts. By exploring various scenarios, organizations can anticipate potential challenges and devise agile workforce strategies to respond effectively.

Invest in Workforce Analytics: Leverage advanced analytics tools to analyze and interpret workforce data. This allows organizations to gain deep insights into workforce demographics, skills gaps, and performance metrics. Workforce analytics enables data-driven decision-making and facilitates proactive planning.

Benefits of Implementing a Workforce Planning Strategy

Implementing effective workforce planning offers numerous benefits for organizations:

Enhanced Agility and Adaptability: Workforce planning enables organizations to adapt swiftly to changing market conditions. By identifying potential skill gaps and aligning talent with emerging needs, businesses can stay ahead of competitors and seize new opportunities.

Improved Employee Engagement and Retention: Workforce planning emphasizes the development and growth of employees. By providing clear career paths, training opportunities, and succession planning, organizations can foster a culture of engagement, motivating employees to stay and contribute to long-term success.

Cost Optimization: Workforce planning helps optimize labor costs by ensuring the right number of employees with the right skills are available when needed. By avoiding unnecessary recruitment or layoffs, organizations can minimize expenses while maintaining productivity levels.

Talent Pipeline Development: Workforce planning facilitates the identification and development of high-potential employees. By nurturing internal talent, organizations can build a strong talent pipeline and reduce reliance on external hiring, saving recruitment costs and ensuring continuity.

Workforce planning is a critical strategic tool that enables organizations to align their human capital with business objectives. By anticipating future needs, mitigating talent shortages, and optimizing labor costs, workforce planning positions organizations for success in an ever-changing marketplace. By incorporating the key elements and best practices discussed in this blog, businesses can unlock the full potential of their workforce and drive sustainable growth.

Steps to Develop a Successful Workforce Planning Process

Developing a successful workforce planning process requires careful planning and execution. Here are the steps to follow:

Define Strategic Objectives: Start by aligning your workforce planning process with the organization’s strategic objectives. Understand the long-term goals and business priorities to identify the workforce capabilities required to achieve them.

Gather and Analyze Data: Collect relevant data about your current workforce, including demographics, skills, performance, turnover rates, and future workforce needs. Use workforce analytics tools to analyze the data and identify trends and gaps.

Conduct Workforce Analysis: Analyze the data to understand your organization’s current and future workforce requirements. Identify areas of strengths and weaknesses, critical roles, and skills gaps. Consider both internal and external factors that may impact your workforce, such as market trends, technological advancements, and regulatory changes.

Develop Workforce Strategies: Based on the analysis, develop strategies to address the identified gaps and meet future workforce needs. This may include strategies for recruitment, training and development, succession planning, talent acquisition, and retention. Align these strategies with the organization’s goals and budget constraints.

Collaborate with Stakeholders: Involve key stakeholders, including senior leadership, department heads, and HR representatives, in the workforce planning process. Seek their input and ensure alignment with the organization’s overall strategy. Collaboration enhances buy-in, ownership, and the accuracy of the planning process.

Implement Actionable Plans: Translate the workforce strategies into actionable plans with clear objectives, timelines, and responsibilities. Identify specific initiatives and programs to address the identified gaps and support the organization’s long-term goals. Allocate resources, budget, and track progress regularly.

Monitor and Evaluate: Regularly monitor and evaluate the effectiveness of the implemented workforce planning initiatives. Review key metrics, such as employee turnover, skills development, and performance, to assess the impact of the workforce strategies. Make adjustments and refinements as needed to optimize outcomes.

Foster a Learning Culture: Encourage a culture of continuous learning and development within the organization. Offer training programs, mentorship opportunities, and career advancement paths to nurture talent and increase employee engagement. Monitor and support the development of high-potential employees for future leadership positions.

Stay Agile and Flexible: Workforce planning is an ongoing process that needs to adapt to changing business environments. Continuously monitor market trends, industry disruptions, and evolving workforce needs. Be prepared to adjust your strategies and plans accordingly to ensure alignment with the organization’s goals.

Communicate and Engage: Effective communication is crucial throughout the workforce planning process. Transparently communicate the objectives, progress, and outcomes of the workforce planning initiatives to all employees. Involve them in the decision-making process when appropriate, and seek their feedback and suggestions.

By following these steps, organizations can develop a successful workforce planning process that aligns the workforce with strategic objectives, addresses skills gaps, and positions the organization for future success.

Best Workforce Planning Tools

⊛ Workday Adaptive Planning

⊛ Anaplan Software

In today’s fast-paced business environment, utilizing effective workforce planning tools can significantly enhance efficiency and accuracy. Two widely used tools in this domain are Anaplan and Workday Adaptive Planning. At Deflytics, we specialize in assisting organizations with the implementation and integration of these tools, ensuring their workforce planning processes are streamlined and effective.

Workforce Planning Tools

Anaplan: Connecting Real-Time Collaboration and Accurate Forecasting
Anaplan stands out for its “connected planning” approach, facilitating real-time collaborations across all business functions. By harnessing the power of hyperscale computing, Anaplan enables more precise and accurate forecasting. This feature is invaluable for organizations seeking to make data-driven decisions based on real-time insights.

One of the key strengths of Anaplan is its ability to narrow down the best candidates within a company. Using attributes such as time in role, years of experience, and skills, the software helps identify the most suitable individuals for specific positions. Anaplan also offers compensation modeling, which allows organizations to work on retention strategies with a focus on diversity, equity, and inclusion (DEI).

Furthermore, Anaplan Strategic HR Planning seamlessly integrates with other software solutions such as Boomi, DocuSign, Salesforce, and OneCloud. This integration capability enhances the overall efficiency and effectiveness of the workforce planning process.

Workday Adaptive Planning: Real-Time Modeling and Seamless Integration
Workday Adaptive Planning empowers organizations to model various what-if scenarios in real time, providing valuable insights into the potential impacts of different workforce planning strategies. By enabling planning based on levels, departments, skills, project locations, and more, organizations can create comprehensive and adaptable workforce plans.

A notable feature of Workday Adaptive Planning is its ability to sync plans and budgets with financial plans in real time. This eliminates the need for back-and-forth email exchanges and ensures alignment between workforce planning and financial objectives. The software also allows for rapid modeling in critical situations like mergers or restructuring, enabling organizations to respond effectively to significant events.

In terms of integration, Workday Adaptive Planning seamlessly connects with any HR system and other Workday-related products within an organization’s ecosystem. This integration capability ensures smooth data flow and enhances the overall efficiency of the workforce planning process.

In the realm of strategic workforce planning, leveraging powerful tools like Anaplan and Workday Adaptive Planning offers numerous benefits. These tools reduce manual effort, optimize resource allocation, and enable faster and more accurate workforce planning outcomes. However, effectively utilizing multiple workforce planning tools can pose a challenge. At Deflytics, we are dedicated to helping organizations overcome this challenge by providing implementation support and expertise in integrating these tools into their existing systems. With the right tools and expert assistance, organizations can enhance the effectiveness and efficiency of their workforce planning processes, ultimately leading to improved business performance.

Frequently asked questions about Workforce Planning

Q. What are examples of workforce planning?

Ans. Strategic workforce planning and Operational workforce planning are two examples of workforce planning

Q. What is the importance of workforce planning?

Ans. Workforce planning gives organization the ability to link their resource plans to their revenue objectives and change the workforce mix to ever-changing business demand.

Q. What are effective workforce planning tools?

Ans. Anaplan and Workday Adaptive Planning are two of the most widely used Workforce planning platforms.

Q. What is succession planning, and why is it crucial in workforce planning?

Ans. Even after taking care of its employees it is likely that some may decide to leave for various reasons. Similarly some employees may be nearing their working tenure. Thus organizations need to proactively work on identifying candidates, both internally and externally, who will be able to take up the roles left vacant. This is succession planning. Succession planning is important because without it organizations will be left with roles but no people to execute them literally impacting the their chances of meeting the annual plan.

Q. How can organizations identify future workforce needs and skill gaps?

Ans. In line with the business plan, every workforce plan must align the resource spend to a particular outcome, deliverables as identified in the business plan. Thus the workforce plan when developed at a detailed level will intrinsically be able to point out which type of resource in which function, location, skill-set is required to support the business plan. And when compared with the current state and probable churn, will easily be help identify the gaps and future needs.

Q. What role does collaboration play in effective workforce planning?

Ans. What role does collaboration play in effective workforce planning? Workforce planning is closely related to the business plan of an organization. Based on the business plan different departments (sales, manufacturing, operations, etc.) need to develop their respective resource plan to support their individual KPIs.


S&OP : Streamlining Business Operations with Sales and Operations Planning

In the fast-paced and competitive world of business, effective Sales & Operations (S&OP) management is the key to success. It is the backbone that ensures smooth and efficient functioning of all aspects of an organization from demand to supply-chain to customer deliveries. From optimizing processes to streamlining resources, effective S&OP management has a profound impact on productivity, customer satisfaction, and overall profitability.

There are 3 broad aspects of S&OP processes:

Demand planning: By analyzing and forecasting demand patterns, organizations can align their resources, such as inventory, workforce, and equipment, with the actual needs. This prevents overstocking or shortages, reduces waste, and improves cost-effectiveness.

Supply planning: By implementing robust contingency plans, diversifying suppliers, and developing efficient supply chain management strategies, businesses can reduce the impact of disruptions such as natural disasters, market fluctuations, or supplier issues.

Operations planning: Effective operations management plays a vital role in delivering exceptional customer experiences. By ensuring timely delivery, accurate order fulfillment, and seamless service, businesses can meet and exceed customer expectations. This results in improved customer satisfaction, loyalty, and positive word-of-mouth, which can drive sustainable growth and success.

Understanding Sales and Operations Planning (S&OP)

Sales and Operations Planning (S&OP) is a collaborative process that integrates sales, demand planning, and supply-chain planning functions within an organization. It serves as a bridge between these departments, aligning their activities to achieve a unified and synchronized approach to business planning and execution.

The primary role of S&OP is to establish a cohesive framework that enables effective decision-making, resource allocation, and demand-supply balancing. It brings together sales forecasts, production plans, inventory management, and financial projections to create an integrated plan that meets customer demand while optimizing operational efficiency and financial performance. Through S&OP, organizations can anticipate demand fluctuations, optimize production and inventory levels, and align resources and capacity to meet customer needs effectively. It enables proactive management of supply chain risks and helps organizations respond quickly to market changes or unforeseen events.

S&OP provides a structured framework that encourages collaboration and alignment across various departments, such as sales, operations, finance, and supply chain. It enables these teams to collectively assess and evaluate the impact of their decisions on the entire organization. By considering multiple perspectives and analyzing the interdependencies between functions, S&OP helps avoid siloed decision-making and fosters a more comprehensive and integrated approach.

S&OP integrates sales forecasts, production plans, and demand data to create an accurate and reliable forecast. By leveraging historical data, market insights, and input from different departments, organizations can develop a more accurate understanding of future demand patterns. This enables proactive planning and resource allocation, helping businesses avoid inventory shortages, minimize excess inventory, and optimize production capacity.

Moreover, S&OP allows organizations to evaluate different scenarios and conduct what-if analyses. By simulating the impact of various factors, such as changes in demand, pricing, or capacity, organizations can assess the potential outcomes of different decisions. This helps in making informed decisions and developing contingency plans to mitigate risks or capitalize on opportunities

The ultimate goal of Sales and Operations Planning (S&OP) is to achieve a balance between demand and supply within an organization. This equilibrium ensures that customer demand is met without excessive inventory or resource shortages. By aligning sales forecasts, production plans, and inventory management, S&OP aims to optimize operational efficiency while fulfilling customer needs. The process involves assessing demand patterns, analyzing capacity and resources, and making data-driven decisions to achieve the right balance. A harmonious balance between demand and supply enables organizations to enhance customer satisfaction, minimize costs, maximize profitability, and maintain a competitive edge in the market.

Key Components of an Effective S&OP Process


Forecasting is part art part science. The science part involves looking at historical data by month, by product, adding seasonality and arriving at a forecast. Organizations can also use statistical techniques to help them automatically forecast on similar lines.

The art part lies with the sales team and their judgement in determining by when they expect their customers to actually place the orders. They will consider the time required to develop BOMs, share proposals, negotiations, and finally customer purchase order process.  

An organization needs to take into consideration both these aspects in arriving at their final rolling forecast.

Demand Planning

Demand Planning is the science of determining how much goods should an organization manufacture given the market demand, available inventory, and the production capacity such that no buyer goes unsold, and they are left with minimum or nil inventory on hand.

So it’s the Demand Planning team’s job to take forecasts from the sales team apply their judgement, use insights/ trends, and market information to finalize the supply plan. The higher their accuracy in forecasting “how much to produce”, the higher the chances of lower inventories and that the company is not leaving money on the table (missed sales).

Forecasting is one of the inputs into the demand plan. The demand planner will take into account the budget, the previous purchase patterns by territory, customer, volume and adjust for the existing inventories to arrive at his final monthly demand plan. The challenge lies in bringing together all this data in a plan-able structure while at the same time being able to analyze on various parameters in order to be able to ascertain the final demand. Apart from analyzing historical trends the demand planning team also brings together external market research data to aid their decision-making. This plan can act as a sound overlay over the historical analysis. This is the starting point of the S&OP process and organizations need to balance the forecast with production such that they are minimizing slow moving stock and demurrage but at the same time delivering the goods on time as required by the customer. These 3 along with the forecast accuracy determine the impact of the Demand planners have on the organization’s top line and bottom line.

Supply Planning

Once the supply planner receives the demand plan he/she needs to take into account the constraints before finalizing the supply plan. Constrains with respect to production capacity, supplier capacity, and raw material lead times. While the capacity can be augmented by adding suppliers it cannot come at the cost of quality. In industries where the raw material is a natural resource like crude, minerals one needs to take into account sudden shortages by stocking adequate reserves.
This s the crucial stage of the S&OP process as this plan will then be rolled out for the production plan and will have a direct bearing on customer deliveries.

The last step in the S&OP process is to finalize the monthly plan. Once the demand plan and the supply plan is determined all the relevant teams including sales, demand planning, supply planning, productions, procurements, and operations come together to finalize the monthly plan. Multiple informal deliberations later, each team offers its final best possible scenarios. Given the accuracy of the forecasts it will be rare to ensure that everyone gets what they want. Some customer deliverables may be impacted, production may have to ramp up slow-moving lines, supply teams may have need to look for new suppliers. All these options and variables are given due weightages begore agreeing on the final plan which is usually called the consensus pls. This is also the stage where system generated, statistical-modelling generated plan are also taken into consideration.

Benefits and Advantages of S&OP Implementation

As seen above, Sales and Operations Planning (S&OP) is a strategic business process that helps organizations align their sales and operations functions to achieve a balanced and integrated approach to decision-making. The implementation of S&OP offers several benefits and advantages, including:

Improved Forecast Accuracy: S&OP facilitates better demand planning by integrating inputs from various departments, resulting in improved forecast accuracy. This helps organizations optimize inventory levels, reduce stockouts, and enhance customer satisfaction.

Enhanced Supply Chain Visibility: S&OP provides a holistic view of the entire supply chain, enabling organizations to identify potential bottlenecks, risks, and opportunities. This visibility allows proactive decision-making and better coordination between different functional areas, such as sales, operations, procurement, and logistics.

Efficient Resource Utilization: S&OP enables organizations to align their resources, including labor, equipment, and materials, with anticipated demand. By optimizing resource allocation and utilization, organizations can improve productivity, reduce costs, and minimize waste.

Better Inventory Management: S&OP helps organizations achieve optimal inventory levels by aligning production plans with anticipated demand. This prevents overstocking or understocking situations, reduces carrying costs, and improves cash flow.

Enhanced Customer Satisfaction: With S&OP, organizations can ensure that they meet customer demands consistently and on time. By aligning sales forecasts, production plans, and inventory levels, companies can fulfill customer orders promptly, improve order fill rates, and strengthen customer relationships.

Agility and Responsiveness: S&OP facilitates a more agile and responsive organization. It helps break down silos and fosters a culture of collaboration and shared accountability. By regularly reviewing and updating plans, organizations can adapt to changing market conditions, customer preferences, and unforeseen events, enabling them to seize opportunities and mitigate risks effectively.

Strategic Decision Support: S&OP provides a platform for strategic decision-making by bringing together key stakeholders to discuss and evaluate various scenarios and options. This supports informed decision-making regarding capacity expansion, product portfolio changes, market entry or exit, and other strategic initiatives.

Financial Performance Improvement: Through better demand planning, inventory management, resource utilization, and decision-making, S&OP contributes to improved financial performance. It helps reduce costs, increase revenue through improved customer service, and optimize investment in resources and capacity.

Overall, the implementation of S&OP provides organizations with a definitive competitive advantage in the market leading to improved efficiency, customer satisfaction, and financial performance.

Common Challenges in S&OP Implementation

The primary challenges in Implementing Sales and Operations Planning (S&OP) are organizational in nature. Some common challenges include:

Organizational Silos: S&OP requires collaboration and integration across different functional areas, such as sales, operations, finance, and supply chain. However, organizational silos and conflicting objectives can hinder effective communication, information sharing, and alignment. Breaking down silos and fostering a cross-functional mindset may require changes in organizational culture and structures.

Planning Horizon and Time Horizons Mismatch: S&OP aims to align short-term operational plans with long-term strategic goals. However, organizations often face challenges in striking the right balance between short-term operational efficiency and long-term strategic objectives. This requires defining appropriate planning horizons and ensuring that decisions made in S&OP meetings consider both short-term and long-term implications.

Implementation approach: As is proven, organizations should take a phased approach to implanting a S&OP solution. S&OP cuts through multiple functions thus impacts them all. So, while the planning may be unified the rollout should be in phases. This will ensure the organization can adapt and apply their learnings to refine and fine-tune the solution tot their processes and vice-versa.

Data Accuracy and Availability: S&OP relies on accurate and timely data from various sources, including sales, production, inventory, and finance. Inaccurate or incomplete data can lead to poor forecasting, unreliable plans, and inefficient decision-making. Ensuring data integrity and establishing data-sharing mechanisms can be a significant challenge.

System Integration and Technology: S&OP relies on accurate and integrated data from various systems, such as Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), and Supply Chain Management (SCM) systems. Integrating these systems and ensuring data consistency and compatibility can be challenging. Organizations may need to invest in appropriate technology solutions or customization to support S&OP processes effectively.

Overcoming these challenges requires a comprehensive approach that involves strong leadership, effective change management, robust data management, cross-functional collaboration, and ongoing monitoring and improvement. By addressing these challenges, organizations can successfully implement S&OP and reap the associated benefits.

Points to consider when evaluating S&OP software

When organizations are looking to evaluate S&OP software they should consider the following points:

The foundational block of S&OP planning is multi-function collaboration. Organizations need to ask how the S&OP software enables connected planning across functions. The software should also have the ability to communicate – capture observations, notify stake holders and those responsible to take actions, maintain the history so that teams can relate to and comment on the tasks/status.

The next important capability is the ability to forecast. At the end of the day the desired outcome of any S&OP project is the improvement in the organization’s demand accuracy. Thus statistical modelling algorithms will have a key role in determining this outcome. The types of algos, their applicability to use cases, their richness and accuracy are key points to look for.

Lastly as different functions are going to participate in the S&OP process it is obvious that the software will need to provide respectable response time to all of them, especially during peak times. Having a robust multi-dimensional engine capable of processing billions of cells becomes a necessity. This means the software having the power to scale to manage the multiple users, their requests and analysis.

S&OP can be a strategic competitive differentiator for organizations them in the market place. The processes have been in place and refined over time. Technology has made it possible to easily manage the scale and complexity presented by S&OP processes. Organization which are able to support their processes by a connected planning software will benefit immensely through lower inventory holding, product availability, and timely deliveries. Deflytics has executed multiple S&OP projects including one for speciality chemicals, another for agriculture producer, and one of a media broadcaster. We can help marry your objectives and processes to the right solution and deliver real-world business outcomes.


What is the difference between S&OP and IBP?

S&OP primarily focuses on integrating sales and operations functions for short- to medium-term planning. It aims to balance demand and supply. On the other hand, IBP takes a broader perspective by integrating multiple functions, including finance, marketing, and supply chain, to align overall business plans and drive performance across a longer time horizon. IBP emphasizes financial integration, strategic planning, and cross-functional collaboration to achieve holistic and integrated decision-making.

How long does it take to implement S&OP?

A S&OP project implementation can take 3-8 months depending upon the scale of the organization, complexity of their processes, and the sub-processes involved.

What are the key success factors for S&OP?

While the key factors have been enumerated above, in short – collaborative processes scalable planning platform, and reliable data are 3 key success factors for S&OP.

Can S&OP help improve customer satisfaction?

Customer Delivery Index measures the on-time delivery of the agreed products to customers. By integrating all the relevant functions responsible for this KPI the S&OP process contributes directly to improving customer satisfaction.

FP&A – A Comprehensive Guide to Financial Planning and Analysis

As per Gartner only 13% of organizations identify performance issues before they hit financials. And 81% of organizations take too long to remediate performance issues. This happens because most organizations attempt to operate their financial decision making without proper systems and tools. Financial Planning & Analysis (FP&A) software is the software platform which enables enterprises to model, visualize, analyze, and predict their business and financial plans.

In this blog we will detail the Financial Planning & Analysis (FP&A) process and how organizations can benefit by deploying FP&A systems.

Understanding Financial Planning and Analysis & FPA Process

Financial planning for an organization starts with its business plan. Visualize it as a sum of planned investments and expected returns for a given period. Investments mean the cost the company will incur for people, machinery, operations, etc. And returns in the form of income, revenue and profits. The period is normally a year broken into quarters and months, usually called the annual operating plan or AOP. The period could also be 3 or 5 years when the organization is conducting this for the long term (called long range planning or LRP).

Step-1 in the process is budgeting i.e. detailing the amounts available for each of the functions to carry out their responsibilities and deliver the business results. E.g. the sales department will be provided a budget of X Mn rupees which they can use to onboard new sales team members, invest for marketing, or deploy a CRM software. Similarly the production department will be given a budget which they can use for their operations, across people, processes and technology. HR, IT, Finance each will be provided their respective budgets. These are normally further divided by territories (State, city) or segments (B2B, B2C, etc.).

The other side of the AOP will detail the expected revenues – by products, territories, segments etc. This becomes the organizational goal or target to be achieved in the given period. Obviously the two – investments (also called expenditure) and returns (revenue) are aligned such that they generate the expected profits. This budget thus lays down the numbers that the organization will spend during the given period in order to achieve the business results.

Once the budget is set the next step is to track the progress. This includes capturing the actual earning and expenses. The YTD actual performance data (sales, expenses, headcount, etc.) is captured from the core transaction systems (ERP, CRM, etc.). The objective is to capture the differences (also called variances) and compare it with the AOP plan. This gives the management a good view of how the business is trending for the year and what is the direction it is headed towards.

The next step is Forecasting. This process is also called the Rolling forecast i.e. forecasting the performance for the remainder of the year such that the organization stays on course to meet or exceed the AOP.

The rolling forecast is usually done for a period of 1+3 months i.e. the immediate next month and the following 3 months. The sales organization is expected to share their estimate of what will be the revenue performance in the coming period. Is it expected to be in line with the AOP plan or any different. Similarly on the expense side the expected spend is detailed and compared to the plan. If the sales numbers are expected to be lower, then the analysis will revolve around the key reasons of the shortfall and what interventions need to be brought in to go back to the plan-levels. The cost of these interventions will then flow back into the expense plan and the annual margin and profit target will be altered to reflect the new plan. This process is carried out at the lowest grain (product, customer, SKU) and across dimensions (territory, segment, sales person) to identify which areas of the business are lagging and where are the tailwinds.

The final step of the process is this monthly analysis pack which is reviewed by the management to understand the trends, suggest remedies, and approve the interventions to bring the rolling forecast in alignment with the AOP.

Benefits and Importance of Effective FP&A

The accuracy, frequency, and detail-level of the rolling forecast is the key to analyzing the performance and identifying the challenges or the growth areas within the business. The accuracy is compromised when the source data is unreliable. This usually happens when the organization is not following proper systems and processes. And instead relying on people and point solutions to source, collate, analyze and predict the business results and forecasts. Frequency of the process is also happened due to lack of enabling systems. This actually forces the organization to run the process at lesser frequency compared to the velocity of the business. E.g. many organizations still do quarterly forecasting even though the market dynamics are moving at a faster pace. If they had a system this could be done much faster as the input-output process would have been automated and reliable. Similarly, when attempting to do the analysis using legacy methods (viz. spreadsheets) analysts tend to forego details leading to poor decisions. Having FP&A systems enable superior decision making as they bring-in accuracy, reliability, and speed in the process so that analysts can spend more time taking business impacting decisions.

In addition, FP&A tools augment decision making through their functionalities of visibility and collaboration. Business leaders and management get a real-time, honest view of the business. Everyone if referring to the same version of truth. They can analyze the data by different cuts/ parameters to determine the exact nature/occurrence of the business issue and by connecting it to other areas identify remedial solution. The analysis can be instantly shared to the respective teams for further analysis and action. This can be tracked for updated and closure in the next review/cycle. As per Gartner, high-quality financial planning and analysis (FP&A) can improve decision outcomes by up to 1% of sales. Where as per Forrester, FP&A can result in inventory value balance reduction of 10% to 20%, and SG&A cost ratio improvements of 0.5% to 1.5% through better visibility into real-time forecast and budget data.


Roles & responsibilities of FP&A analysts

We can broadly classify the FP&A roles into analyst and a manager. The analyst is someone with a Finance background, sound understanding of business financials, and in absence of a tool, spreadsheet expert. His role is to develop the analysis required for decision-making by integrating data points, managing templates, co-ordinating with other stakeholders.

The manager’s role is to guide the analyst in the right direction in order to identify revenue, and cost saving opportunities. He also works with the business stakeholders in communicating and sharing the business trends and insights and identifying new strategies and tactics to meet the financial objectives.

Most FP&A teams are aligned by the business units or territories they are supporting e.g. men’s category, India West, Mid-market, etc.

Today most of the analysts spend 50-75% of their time in non-productive tasks such as data gathering/updating, version management, follow-up with other teams, updating macros, developing chart & dashboards, etc. Majority of these tasks can be easily automated allowing the analysts to focus on analysis and fact-finding.

Key features & What to look for in FP&A Software

While FP&A solutions come in different shape and form some of its key capabilities include:

  1. Spreadsheet like user interface – Spreadsheets is the default tool organizations use for developing their financial plan. It has some very intuitive and useful features which aid business planning. Thus, from an end user perspective FP&A systems having spreadsheet like interface helps in faster adoptions, ease of use, and short learning curve.
  2. Multi-dimensional scenario modelling – While spreadsheets have some useful features one of their fundamental drawback is the inability to do multi-dimensional analysis i.e. you can have sales on X-axis and year on Y-axis, but if you want to see a third axis-Z e.g. Product, one can’t do it on the same sheet. Users then end up developing multiple sheets for each of the third dimension. This not only takes more time and effort but it’s also non-intuitive for analysis. Most FP&A solutions have muti-dimension engine at the heart of their capability which enables organizations to model and analyze financial data across multiple dimensions.
  3. Business logic implementation through non-code mathematical expressions – Most users fear adopting new systems because it involves new learning which is technical in nature. They are not trained for this neither is it their core competency. Thus leading FP&A solutions make it easy for non-technical users to define the business rules and assumptions through non-technical English-like programming syntax. This shortens the learning curve and more important quickly gets the users on board.
  4. Ability to define business assumptions and drivers – All financial plans are based on certain assumptions which apply to the overall business plan. Similarly there are important drivers which enable the expected performance. The plan will continue to evolve, and the FP&A team will need the ability to define and change the core assumptions and drivers on an ongoing basis to be able to align the plan with the new scenarios e.g. economic headwinds, RM costs, etc. Thus the FP&A solution must have an easy to use functionality which lets the FP&A analysts capture the assumptions and drivers.
  5. Data processing capability – “Oh .. my spreadsheet has hanged!”. How often have we heard this. And especially when there is a stringent deadline to meet. Leading to re-work, information loss, and long nights at work. To overcome the data volume and processing challenge FP&A solutions have a data processing capability which ensure that even if someone is analyzing historical data, across three dimensions, involving millions of cells, multiple versions, the systems works and provides the analysis in a matter of seconds. Thus users do not have to worry about data processing speed and output.
  6. Self-service reporting – What’s the point of having all the data if users can’t analyze them for making business decisions. While FP&A systems bring together all finance data at one place they also provide built-in reporting, analysis, and dashboarding tools for users. So that the users – do not need to go ask for data every time, can do the analysis independently, and analyse the data in the shape and form they need, and when they need it. The right FP&A solution will enable the business teams to execute all of their business analysis and decision making by bringing together the necessary data and tools, without any dependency or reliance on other teams/functions.


With a FP&A solution one can expect the following outcomes – faster planning, reduced errors, significantly reduced efforts in data collation, clear visibility of the plan and the status to all stakeholders, and collaborative decision making across the organization.

Given the velocity of the business environment today, the speed in decision making is paramount. With FP&A solutions you can expect to get all the required data and analysis to make tactical and strategic decision at your finger tips. This dovetails into a core competitive differentiator in the market place.

Deflytics has more than 10 years’ experience in the domain of F&A and has implemented more than 55 projects across industries. The two FP&A solutions we partner are Anaplan and Workday Adaptive Planning. Once is the pioneer of the connected planning (xPA) paradigm where as the other was built grounds-up for the CFO office. Both together have more than 8000 customers globally including many Fortune 500 customers.  


How can FP&A help my business make better financial decisions?

FP&A solutions allow you to model, analyze, and predict your financial plan in the minutest grain across (customer, SKU, project, etc) across various parameters (product, territory, segment, etc.). By including actuals and forecast information and leveraging the self-service analysis functionality the FP&A tools organizations can proactively track business performance such as variances, cash-flow, and P&L and take important strategic decisions (reduce margins, expand to new markets, introduce new products, etc.)

How can FP&A support strategic planning and goal setting?

FP&A solutions are fundamentally equipped to model your financial plans. Thus, allowing you to develop goals and targets for every business unit in the organization. The multi-dimensional “what-if” scenario modelling capability of FP&A solutions enable organization to predict future scenario before actually taking the decision e.g. what if we reduce the margin on product-B by 2%? What will be the cost and benefit of expanding to a foreign territory? If we set-up a new plant by investing Rs 100 Cr, when will we start seeing the returns?

What kind of insights can I expect to gain from implementing FP&A systems?

Through a FP&A solution, an organization will be able to proactively manage the health of its business. Some of the key analysis include real-time P&L at SKU, account, project level, Variance analysis, Revenue forecasting, and “what-if” scenario modelling.

How do you tailor FP&A solutions to meet the specific needs of each client?

By studying the current processes and templates and understanding the future-state requirements, we design the FP&A solution to meet individual client requirements. Deflytics has implemented more than 55 FP&A projects and we pull in that rich experience to establish best practices and analytical frameworks which help customers improve the process efficiency and analytics insights for strategic and tactical decision making.

How do you measure the success and effectiveness of your FP&A consulting services?

Our consulting services along with the FP&A solutions we implement have helped organizations – reduce their monthly close process by 10-20%, improve the speed of the FP&A cycle by 20-25%, reduce forecasting errors by 30-40%, reduce the time for financial analysis by 40-50%, and deliver productivity improvements for the FP&A analyst team by 50-70%.

Demand Planning : Your Guide to Demand Planning & Process

Whether you are manufacturing electronics or garments, or whether you are providing financial services or catering services. The starting point for all business is market demand – how many people will buy my products/service in the coming period?

Demand planning is the science of determining how much goods should an organization manufacture given the market demand, available inventory, and the production capacity such that no buyer goes unsold and they are left with minimum or nil inventory on hand. Fluctuating demand, supplier bandwidth, and production constraints- the three core factors that determine how much will be delivered to the customer by when. Demand planning is a system which brings together these 3 elements in a collaborative and transparent manner, overlays it by advancements in predictive modelling to improve their demand accuracy on an ongoing basis.

What Is Demand Planning & Its Importance?

If one does not do demand planning, there are two consequences – either they manufacture less and lose potential business or they manufacture more and are left with excess inventory. Both are not the outcomes any organization would want. While it’s not possible to be 100% accurate, the goal of demand planning is to come as close as possible to the market condition based on customer demand, market dynamics, historical data, stock in hand, and manufacturing constraints. So while the sales teams will be close to the customer and provide their view of how much they expect their customers to buy, Demand Planning role takes a deeper view of the expected demand and adjusts it for the factors mentioned above and develop the final plan. This final plan becomes the basis for supply-chain and production plan.

Demand planning sits in between sales and supply planning and plays a key role in ensuring organization is balancing its objectives between meeting demand and minimizing inventory.

Benefits of implementing demand planning in your business

Demand planning is probably the most challenging business objective to meet. But when done right it provides the best leverage an organization can have. The direct benefits include – Revenues or no business loss, and lower inventory holding costs. You are producing exactly what the market wants, nothing less .. nothing more. Indirect benefits include – customer satisfaction and repeat business. Because you are able to provide the customers what they want, and when they want it they will be satisfied and happy. This will lead to more repeat business which is generally serviced at a lower operational cost. Plus new business with other customers. Downstream impact – improved cash flow, reduced working capital requirement, and better utilization of plant capacity.

Conversely, if you are running your planning on spread sheets today, chances are that the demand planning team is wasting 60-75% of their time in activities such as data collation, version synchronization, macro manipulation, scenario creation, and cross-functional follow-ups. Impact – lengthy cycles, plan errors, static plans and most importantly stale analysis. Not to mention long working hours. Demand planning systems take away these mundane tasks and enable accelerated planning cycles, instantaneous P&Ls, reduced forecast errors, real-time visibility, and multi-dimensional analysis. And more.

Components, Steps, Common Challenges in demand planning

To accurately predict the demand for the forthcoming period – this is the objective of the demand planning team. And a complex one. To begin with, there are at least 4-5 different functions involved in this process – sales, demand plannings, supply planning, production, and delivery. Imagine if sales teams promise deliveries without knowing the stock and order status. Or the demand team creating the plan without knowledge of upcoming orders. Or the manufacturing team producing based on their available capacity alone. All the above scenarios will lead to unintended consequences – non-availability of goods for sale or over production of stocks not in demand.

Thus the planning process entails all the relevant teams collaborating to come up with a consensus plan. The process starts with the sales teams providing their sales forecasts for their territory/ customer. However they may not be able to give it at the grain and accuracy that is required. Plus they may not have knowledge about other factors which matter e.g. historical trend, seasonality, current inventory, and production schedule. E.g. salesperson A has the habit on over-estimating, territory-B is always shows slower offtake in Q2, or RM101 has a lead time of 6 weeks which will impact 8 SKUs. The demand planning team will look at these and many such variables in detail to come up with their demand plan.

A key component is the ability to develop multiple “what-if” scenarios in order to arrive at the final plan e.g. what if we increase the demand for SKU-145 by 1.5%, how will it impact other SKUs. Or what if we reduce the available capacity by 5%, how will it impact the quantities for other customers. Demand planning systems make this super easy for demand planners to visualize multiple scenarios and their impact on other parameters in order to arrive at the best decision.

The key challenges in this process are lack of visibility and collaboration across different stake holders, unavailability of timely historical data, and the time wasted by the demand planning team in collating the required data for analysis. Many a time the plan takes weeks to be frozen across teams, leading to poorer planning and forecast plans.

Apart from predicting the demand at the SKU level, the demand planning team is also the custodian of 3 other KPIs viz. SMS (slow moving stock), DND (detention and demurrage), and last CDI (customer delivery index). They need to balance the demand plan with these 3 objectives i.e. minimize SMS, DND and maximize CDI.

Tools and Software for Demand Planning

Understandably, spreadsheets are the first tools anyone uses for demand planning. While they support the early days, spreadsheets are not designed to handle the complexity, scale, collaboration and analytical capabilities required by the demand planning teams.
Demand planning needs to be executed in sync with the other related planning processes e.g. sales forecast, supply-chain plan, and production plan. Thus the planning solution should be able to support multiple use cases for the organization to be able to have all of their plans connected to one another.

Because Demand planning is essentially a prediction function the system should provide various forecasting models such as linear regression, additive decomposition, triple exponential smoothing, etc. It should have the ability to suggest the best fit model and provide sales forecast prediction. The system should have the ability to do forecast at aggregation level and then disaggregating at SKU level.

Apart from this the common expected capabilities include features such as spread sheet interface, multi-dimensional engine, analytics & dashboarding, and collaboration.

Best practices for demand planning

While the demand planning objectives remain consistent across organizations, they vary based on whether you are in B2B or B2C, whether you are in a MTO or MTS business. Some of the best practices include:

  • A defined and accepted process – Well understood roles and responsibilities, a shared consensus about the role and importance of the demand planning process, having a clear monthly schedule for all the teams to provide their respective rolling forecast numbers, a consistent template which all the stake holders can adhere to,
  • SKU/ account level planning – As they say the devil is in the detail. It’s always possible to get summary data from the detailed data but not the other way round. So wherever possible do the demand planning at a SKU/account level. At least of major products/customers. This will enable to organization to decipher the trends better and reason the factors attributing to the demand.
  • 3 demand plans – While this may seem a lot of effort a practice of developing multiple scenarios is easily enabled by a planning tool. One could be your best-case plan, second one as the more realistic case, and the third one as the worst-case plan. All together culminating into an overall agreed consensus plan.
  • Cross-functional collaboration – This is key to a successful plan. Every department will have its priorities and constrains – the sales team wants to sale more, the production teams wants to utilize its capacity to the fullest and the finance team wants to ensure that the organization is not missing its financial KPIs. When you offer visibility into the assumptions and drivers to everyone concerned there is a likely output which is in the best interest of the organization., and lastly bring together all the stakeholder and jointly develop the final consensus plan.

What is your monthly demand forecast accuracy? If you are able to answer this question and monitor it month-on-month you will be able to find newer ways of improving it. Every single percentage point improvement can mean a revenue impact of millions. A Demand planning solution will ensure that you are capturing more market share and optimizing your costs and inventory.


Q. What is demand planning, and why is it important?

Ans. Imagine a customer walks into your store but you do not have what he wants OR you have lots of quantities of another product which no one is asking for. Demand planning helps you solve this problem and that’s why its so crucial to any business.

Q. What are some of the components of demand planning?

Ans. Sales forecast, current inventory, production capacity, seasonality, and historical trends are some of the components that go into making the demand plan.

Q. What are the key steps involved in demand planning?

Ans. Capturing the sales forecast, normalizing it using past data and predictive techniques, comparing with trends/seasonality, and considering inventory and production capacity are the key steps involved in demand planning.

Q. How does demand planning differ from sales forecasting?

Ans. Sales forecasting is done by the sales team listing the orders they expect from their customers in the coming months. The demand planning team will use the sales forecast as a starting point for their process and develop the final demand plan taking into account other factors such as trends, seasonality, inventory, capacity, etc.

Q. What are some demand forecasting techniques that businesses can use?

Ans. Liner regression, triple exponential smoothing, additive decomposition, and winter’s multiplicative are some of the statistical techniques used for forecasting.

Q. What are some challenges that businesses may face in demand planning?

Ans. Not having proper sales forecasts, inability to analyze past data, inability to bring together all the data required for planning purposes, providing trustworthy visibility to relevant stake holders are some of the challenges in the demand planning process.

Q. What role do technology and software tools play in demand planning?

Ans. Doing demand planning without software tools is akin to traveling to a destination without using navigation maps – you will get to your destination but it will cost you more time and money.


EPM – Enterprise Performance Management

In order to run and operate their business organizations deploy enabling systems and tools. Some systems record and process the business transactions e.g. ERP which captures sales orders, financial entries, inventory dispatches, etc. And CRM which captures service requests, deals, promotions, etc. The second set of systems analyze these transactions and help organizations take important decisions. These are called DSS or decision-support systems..

As the name suggests, Enterprise Performance Management (EPM) is one of the decision-support systems which enable organizations to model, monitor, and analyze their business performance across the enterprise – sales, finance, operations, and HR. Using EPM systems organizations can create their business plans/AOP and use it to track the progress through the year with rolling forecasts. Business analysts and users can analyze the performance across various metrics, respond to changing business dynamics, and ensure all the functions are working towards meeting the annual or long-range business plan. One of the salient features of EPM is its ability not just analyze past data but also predict future outcomes and scenarios.

What is EPM?

Imagine you are playing a game of cricket. You are batting and you need to know how is your team doing and what do you need to do to win the game? Obviously you will look at the score card. It will tell you where you are currently vs the target, what is your current run-rate vs what it should be, which bowlers have completed how many users, where was the other side at the same point in time, etc. This will enable you to pace your performance to meet the target.

In simple words, this is what an EPM system enables an organization to do.

EPM (Enterprise Performance Management) entails the business processes of creating, planning, monitoring, and analyzing the corporate and divisional business plans such that they meet the organizational objectives viz. revenues, profits, costs, margins, etc.

Benefits of Enterprise Performance Management (EPM)

All investment and expenditure decisions organizations make need to deliver a ROI. EPM enables organizations to model, analyze, and visualize this entire process i.e. from making investments (production capacities, sales & promotion, IT & systems) to generating returns (revenues, cash flows, valuation). EPM solutions execute this process across the stake holders within an organization – finance, sales, operations, and HR. Key benefits:

  • Communicate the business strategy with all stakeholders – EPM system allows organizations to model and visualize their business plans. These reflect the business strategies in terms of investments, expenses, and outcomes. This can be done for annual, short-term (1-3 years), or long-range period (3-5 years). Thus, all the stakeholders will be easily able to internalize the overall plan and understand the business direction.
  • Proactively manage the health of the business – EPM solutions can help organizations capture early trends by detecting performance vs plan. Alerts can be programmed to highlight exceptions or triggers for users to act. E.g. If the cash flow projections trend down by more 0.5% pls alert the Finance manager. Monitor progress and Identify interventions needed. Don’t need to wait till the end of the period to determine if they are tracking to plan.
  • Test and validate business strategies before they are executed – This is a unique capability of EPM solution. Whether you ought to make a decision related to capex spend or adding a new sales channel or entering new markets, EPM solutions enable organizations to model these strategies and evaluate the possible outcomes, even before you have executed any of them. This is enabled by the “what-if” scenario modelling capability of EPM solutions.
  • Predict and develop future scenarios – EPM solutions include statistical models which can help organizations predict outcomes e.g. demand forecast. Thus, EPM becomes a system which not only allows them to analyze the past performance but also project the future state.

By providing an instantaneous view of the company’s financial and operational position, EPM allows organizations to proactively manage the health of their business. EPM is one of the key decision-making tool available with an organization to analyze how their strategies are playing out and what interventions are necessary to ensure they meet the goals. Dynamic business plans, accurate business forecasts, real-time decision making, and faster planning cycles are some of the key benefits of EPM.

Types of EPM solutions

The business plan is usually translated into an annual operating plan which is a holistic plan extending across the organization. The organization as a whole may target $ 500 million revenue goal, translating to 17% market share or 23% YoY growth. Post that this plan will get translated into the revenue target for sales, production target for the production team, and P&L target for Finance. Even though every function may look at the plan distinct to others, the overall plan is inter-linked. Thus, EPM solutions need to provide for a “enterprise” or “connected” nature of planning where different plans are connected and reflect the changes made to one another automatically. Gartner calls this xPA i.e. Extended Planning & Analysis.

From a functional perspective, EPM solution can be deployed for every business across functions e.g. Finance can use EPM for Financial Planning & Analysis (FP&A), HR can use it for Workforce planning, Sales teams can use it for forecasting, territory, quota planning and incentive compensation. And lastly Manufacturing oriented business can use it for demand planning and supply-chain planning and sales & operations (S&OP) planning.

EPM solution can take multiple forms – some tend the focus on the function-specific planning purposes while some others look at an organization-wide approach. Organizations need to look at their medium-term requirements and priorities before finalizing the direction they wish to take.

Some of the leading EPM solutions include Anaplan and Workday Adaptive Planning.

How to Choose the Best EPM Software for Your Business

While EPM solutions come in different shape and form some of its key capabilities include:

  1. Spreadsheet like user interface – Spreadsheets is the default tool organizations use for developing their business plan. It has some very intuitive and useful features which aid business planning. Thus, from an end user perspective planning systems having spreadsheet like interface helps in faster adoptions, easy of use, and short learning curve.
  2. Multi-dimensional scenario modelling – While spreadsheets have some useful features one of their fundamental drawback is the inability to do multi-dimensional analysis i.e. you cane have sales on X-axis and year on Y-axis, but if you want to see a third axis-Z e.g. Product one can’t do it on the same sheet. Users then end up developing multiple sheets for each of the third dimension. This not only takes more time and effort but it’s also non-intuitive for analysis. Most EPM solutions have muti-dimension engine at the heart of their capability which enables organizations to model and analyze data across multiple dimensions.
  3. Business logic implementation through non-code mathematical expressions – Most users fear adopting new systems because it involves new learning which is technical in nature. They are not trained for this neither is it their core competency. Thus leading EPM solution make it easy for non-technical users to define the business rules and assumptions through non-technical English-like programming syntax. This shortens the learning curve and more important quickly gets the users on board.
  4. Define business assumptions and drivers – All business plans are based on certain assumptions which apply to the overall plan. Similarly there are important drivers which enable the expected performance. The plan will continue to evolve, and the planning team will need the ability to define and change the core assumptions and drivers on an ongoing basis to be able to align the plan with new scenarios e.g. economic headwinds, RM costs, etc. Thus the solution must have an easy to use functionality which lets the planners capture the assumptions and driver. And any changes made to these should flow into the entire plan seamlessly.
  5. Data processing engine – “Oh my spreadsheet has hanged!”. How often have we heard this. Ans especially when there is a stringent deadline to meet. Leading to re-works, information loss, and long nights at work. To overcome the data volume and processing challenge EPM solutions have a data processing capability which ensure that even if someone is analysisng historical data, across three dimensions, involving millions of cells, the systems works and provides the analysis in a matter of seconds. Thus users do not have to worry about data processing speed and output.
  6. Self-service reporting – What’s the point of having all the data if users can’t analyze them for making business decisions. While EPM systems bring together all business data at one place they also provide built-in reporting, analysis, and dashboarding tools for users. So that the users – do not need to go ask for data every time, can do the analysis independently, and analyse the data in the shape and form they need, and when they need it. Some solutions also provide features that enable the analysis to be embedded into their monthly MIS packs.

The right solution will enable the business teams execute all of their business analysis and decision making by bringing together all the necessary data and tools, without any dependency or reliance on other teams/functions.

How Enterprise Performance Management Software Works:

EPM solution enable businesses to predict the future outcomes of their decisions across multiple dimensions – costs, workforce, sales, margins, etc. Visualize an automatically aggregated data cube with multiple parameters (time, territory, segments) showcasing all the key business metrics (P&L, Balance sheet, Cash flow, EBIDTA) at the most granular level (product, segment, project).

The process usually starts by bringing in the business plan data based on forecasts, market analysis, or future projections. This is then dovetailed to represent revenue, costs, EBIDTA by functions, segments, products, territories, etc. Normally this translates into business objectives for the various functions and the respective roles. This process is called the AOP (Annual Operating Plan) and once completed becomes that baseline to compare future performance.

After the AOP is finalized comes actuals and rolling forecast. The actual performance is captured from the core ERP/transactional systems. This needs to be loaded into the EPM systems to arrive at the actual performance and the variance analysis. This is an important step as now the organizations will be able to find out which strategies are working and which need tweaks. E.g. a product may be above plan in certain territories and below plan in others. Practices across territories can be compared and shared to improve performance for the territory which is lagging. Or Production may not be meeting its KPIs but Sales has. Variance analysis forms a key output of the EPM system. It gets reviewed in every possible details i.e. impact on P&L, balance sheet, cashflow of the respective segment, product, BU and territory.

The next step is to develop the ongoing plan which will take the organization towards the annual target – it is called the rolling forecast. In this, functions review their recent variance and calibrate their plan and provide a revised forecast for the upcoming period. This is normally done for 1+3 months period i.e. next 1 month’s forecast as firm and the 3 months as directional.

This is a continuous process executed by the planning teams to give the organizational view of where they stand against the annual plan at any given point in time. And which areas need attention in order to make the AOP.


EPM is one of the best decision support system organizations can benefit from whether its sales, finance, operations, or human resources. Imagine a system which has it has historical data, with linkages and traceability across functions – so you can get a Finance view, a Sales view, A HR view, or a Production plan view. Users are not only able to view the data but can also input data where applicable (e.g. forecasts, cost allocations, etc.). Thus, EPM software provides organizations a complete environment where they can store and analyse business performance. The acronym EPM says it all – manage the performance of your entire enterprise.

How Deflytics helps

Deflytics has been in the EPM domain for more than 10 years. During this period, we have helped several organizations solve their business priorities through EPM solutions viz. AOP, budgeting & planning, workforce planning, pricing analysis, capex planning, demand planning, etc. We leverage this domain knowledge and the EPM software knowledge to help organizations quickly draw up their business planning processes, identify bottlenecks, and propose solutions which solve their challenges. The four broad areas where we operate include – Financial Planning & Analysis (FP&A), Supply planning (Demand, Supply-chain, and Sales & Operations (S&OP) planning), Workforce planning, and Sales planning (territory allocation, quota planning, incentive compensation, sales forecasting, marketing planning). We have completed more than 70 projects across these use cases and served customers in Manufacturing, IT/ITeS, Life Sciences, Services, and Media, SaaS, and Unicorn domains.


What is EPM software?

EPM software enables organizations to model, monitor, and analyze their business plan towards meeting their corporate objectives across departments.

ERP vs EPM – what’s the difference?

ERP is a transactional system which records the business transactions where as EPM is the decision-making system which models and analyzes the business performance.

What are the benefits of implementing an EPM software in my organization?

Its the organizational scorecard. EPM provides organization-wide visibility of the business performance, predicts future scenarios, and evaluates different strategies and outcomes.

What are the key components of an EPM system?

EPM system includes – a multi-dimensional cube, spreadsheet interface, data processing engine, reporting & analysis capability, and non-technical business programming.

How can EPM help me make more informed business decisions?

EPM provides you with a single source of to-date business performance, across multiple dimensions. You can compare, contrast, drill-down, do ad-hoc analysis, develop dashboards and predict future business scenarios using a EPM solution.

How does EPM differ from Business Intelligence (BI)?

BI tool provides the analysis of past performance whereas EPM generates future business performance and scenarios.

What are some popular EPM software solutions available on the market today?

Anaplan, and Workday Adaptive Planning.

Do I need to learn new skills in order use a EPM system?

As a user if you know spreadsheets you are 50% there. The other 50% got to do with how the system is structured, its nomenclatures, and user interface. This should take 4-6 weeks to learn.

How can EPM be applied to specific industries, such as manufacturing or finance?

While the individual use cases will vary any organization which has Sales, Finance, and HR operations will benefit from a EPM system.

Is EPM only for large organizations or it can be used by start-up as well?

Many start-up are already using EPM solution to model, monitor and analyze their growth, costs, and margins. EPM systems benefit both start-up s as well as established organizations.