What is enterprise performance management?

Enterprise Performance Management (EPM) software helps you analyze, understand, and report on your business. EPM refers to the processes designed to help organizations plan, budget, forecast, and report on business performance as well as consolidate and finalize financial results (often referred to as “closing the books”). EPM solutions are primarily used by CFOs and the office of finance, while other functional areas, such as HR, sales, marketing, and IT, use EPM for operational planning, budgeting, and reporting.


The EPM cycle

While often tied to enterprise resource planning (ERP) systems, EPM software complements ERP by providing management insights in addition to top of operational data. In other words, ERP is about operating the business—the day-to-day transactional activity—and EPM is about managing the business—analyzing, understanding, and reporting on the business.

Today, EPM software is considered to be critical for managing all types of organizations by linking financial and operational metrics to insights—and ultimately driving strategies, plans, and execution. With EPM software, managers can drive improved performance across the organization by monitoring financial and operational results against forecasts and goals and using analytics to recognize key trends and predict outcomes.

In an environment of constant change, new competitors, and economic uncertainty, EPM offers a tool for organizations to manage their agile businesses. With finance at the helm, EPM business processes (strategic modeling, plan, consolidate and close, report, and analyze performance) can help organizations understand their data and use it to make better business decisions.

Business value of EPM software—critical in uncertain times

The key to surviving disruption is flexibility. Whether the disruption comes from outside forces (such as new regulations or global weather events) or market realities (one product skyrockets to success while another flops), organizations that respond quickly are able to stay ahead of the curve. A modern EPM solution enables you to understand how, when, and where to adjust to disruptions.

  • Optimize the financial close—In a changing regulatory environment, you need to adapt quickly to new requirements and deliver faster, more accurate insights to all stakeholders. EPM helps you streamline the financial close and report with confidence and insight.
  • Streamline account reconciliation—Account reconciliation is the number one reason for non-data-related delays in the financial close. EPM enables you to efficiently manage and improve global account reconciliation by exploiting automation and comprehensively addressing the security and risk typically associated with this process.
  • Drive accurate and agile integrated plans—The digital economy demands more than spreadsheets and department-oriented planning processes. Truly effective planning should seamlessly connect your entire organization for a better vision. With EPM you can align planning across the enterprise, so that you can develop agile forecasts for all lines of business and respond faster and more effectively to change.
  • Manage and drive profitability—To survive in uncertain times, you must be able to manage and drive profitability. EPM helps you gain insight into dimensions of cost and profitability to determine where to invest limited resources.
  • Align tax reporting with corporate financial reporting—Changing tax laws are causing global organizations to plan and manage their tax affairs very differently than they have to-date. EPM supports effective tax reporting by connecting the processes, data, and metadata that tax and finance share, such as financial planning, financial close, and regulatory reporting.
  • Satisfy all your reporting requirements—No matter how many reporting standards you have to comply with, you want to be sure that the data you provide in your reports is accurate, complete, and the most current information available. EPM reduces the need for multiple reporting systems.
  • Manage change with enterprise data management—Whether you're migrating applications to the cloud, managing applications in a hybrid environment, or spearheading major business and financial transformation, an enterprise data management platform provides data accuracy and integrity with the alignment of your data and master data.

History of EPM—from paper to spreadsheets

The concept of EPM has been around for decades. Before computers, EPM processes and solutions were managed manually via meetings, phone calls, and discussions. In the 1970s, the first EPM software applications became available and accounting solutions began collecting budgeting and financial information for reporting purposes. Spreadsheets were introduced in the 1980s with software such as Lotus1-2-3 and VisiCalc. Spreadsheets allowed finance teams to automate budget and report creation and replace manual worksheets. The availability of email in the 1990s allowed people to share spreadsheets, which led to better collaboration and collection of budgeting and reporting data. Around the same time, the first EPM software packages began to automate the financial consolidation and reporting process. These products included: IMRS Micro Control (which later became Hyperion software), Hyperion Enterprise for financial consolidation and reporting, and Hyperion Pillar for planning processes.

EPM today—from on-premises to the cloud

Over the past couple of decades, EPM software platforms evolved from Windows-based client/server systems to internet-enabled, web browser-based applications. Today, there’s an increasing demand for cloud-based EPM software, also known as software as a service (SaaS). When EPM software is “in the cloud” it simply means that the application is housed on a network of remote servers, instead of at a company’s location.

The cloud offers a more affordable alternative for EPM that lowers both operational expenses (OpEx) and capital expenses (CapEx), because it eliminates the need for companies to purchase software and hardware or hire additional IT staff. With no costly infrastructure to support, resources can be invested in growth opportunities, while employees can focus on more value-added tasks instead of managing IT.

Evolution of EPM

Basic accounting software applications

Early spreadsheet solutions

Lotus 1-2-3 and VisiCalc to automate budgeting.

Email and spreadsheet sharing for collaboration and communication

Hyperion, one of the earliest successful EPM software companies.

Desktop to browser

EPM software moves from Windows-based to web-browser-based.

EPM in the cloud

Cloud-based EPM becomes the new standard.


Next-generation EPM—analysis to action

Historically, EPM systems have focused on transitioning finance from spreadsheets to more robust solutions that let teams spend less time on low-value tasks such as data manipulation and reconciliations and more time on high-value tasks like analysis. But even after making the move from spreadsheets, there’s still too much time between analysis and action.

Enter the next generation of EPM, which has new capabilities that incorporate emerging technologies, such as artificial intelligence and machine learning. These technologies are powerful decision-making tools because they close the gap between analysis and action. They help improve the quality of decisions made by finance managers and executives by detecting hidden patterns and insights in historic data. The impact on decision-making is widespread, from tactical (which vendor to pay first) to operational (budget reallocations) to strategic (mergers and acquisitions).

Beyond decision-making, these technologies can automate routine tasks to eliminate manual labor and reduce the likelihood of errors. There are many tasks in the financial close and reconciliation process that fall into this category. This type of automation will free up valuable time for finance professionals to engage with operations and spend more time providing the forward-looking guidance that management needs to capitalize on the next opportunity.

Embracing EPM in the Cloud—the suite always wins over point solutions

An important characteristic of modern EPM cloud is the unified solution or applications suite. When compared to deploying a single-point software application—such as consolidations or planning and budgeting—an EPM cloud suite offers the best advantage. A complete solution integrates management processes across the organization, aligning strategy with execution. Employees gain improved visibility and insight into all aspects of the business. Moreover, the most effective EPM solutions are integrated suites that help customers leverage their investments through seamless data and process integration with their core ERP systems. A next-generation EPM cloud suite enables finance leaders to build a future-ready finance organization.