How to Choose the Best EPM Software for Your Business

Makrand Jadhav πŸ“‹ blog πŸ“… July 25, 2023


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.

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