EPM – Enterprise Performance Management

Makrand Jadhav 📋 blog 📅 May 11, 2023

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.

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