How to Choose the Best EPM Software for Your Business
Enterprise Performance Management (EPM) is one of the decision-support systems that enable organizations to model, monitor, and analyze their business performance across the enterprise – sales, finance, operations, and HR. Using the best EPM software 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 software is its ability to not just analyze past data but also predict future outcomes and scenarios.
Why Businesses Need EPM Software
While businesses may have a business plan for the year (AOP), market, competitive, and other external factors impact the outcomes. An EPM software enables the businesses to track their business performance at a detailed level across different parameters such as customers, territories, departments, products, etc. Next, it enables organizations to understand the root cause of the performance and its impact on other drivers. 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
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. Including the ability to support - multiple versions, alternate hierarchies, and currency translations intrinsically in its multi-dimensional core.
This is not to say what’s above the hood does not matter. Solution usage depends on adoption, and adoption depends on ease 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 it’s not, that’s a red flag.
Getting together the detailed data and being able to process it in real time offers little value unless you can perform meaningful analysis. Not just the ability to provide reports and dashboards but also support for ad-hoc analysis and drill-down through drag-and-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 least capability to check for is the security and authentication. With best enterprise performance management software holding business-critical data, the ability to provide selective access becomes critical. The best EPM software enables 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 are always paramount.
Plus two: 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.AI/ML: Recent EPM trends include AI/ML-based algorithms that help organizations refine their financial forecasts, detect anomalies, and improve the accuracy of their demand and supply forecasts.
Benefits of EPM Software to Various Departments/Functions
Finance:
Put simply, the CFO office is tasked with ensuring that the annual plan is met – topline, bottomline, 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.
Finance teams across industries will find that they are able to close books faster, accelerate their planning process, reduce data collection/management time, gain productivity improvements, and reduce their financial reporting efforts.
Supply planning:
The supply planning process starts with demand planning and ends with a supply chain forecast for the manufacturing and procurement functions. 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. And, historical trends and seasonality.
Aligning demand and supply plans has direct benefits in terms of optimizing inventory, no lost sales, and higher customer satisfaction.
Sales planning:
For businesses that 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 organizations to (1) define their sales territories, (2) quotas, and (3) incentive compensation plans.
The revenue or growth target identified in the AOP determines the number of sales teams required to meet the target. This is usually classified by customer, product, territory, and verticals/segments. Variables such as quotas, coverage, incentives, and SPIFs need to be balanced such that the sales teams get the 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.
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. HR teams need to factor in the demand and sales forecast for different types of products/projects, possible churn, market availability, costs, and lead times in order to prep their resource plan.
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.
Benefits of EPM
In an industry report published by Forrester, it has reported the following benefits from EPM tools:
- 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) 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. 12+ years in EPM consulting services, 60+ projects, almost-100% implementation success. Use cases covering FP&A, Demand planning, workforce planning, and customers in manufacturing, services, media, retail, and Unicorn segments.
Happy to help you begin your EPM journey.
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