Many factors influence a company’s ability to stay ahead of its competitors. Financial agility is undoubtedly one of the most important qualities an organization can have. Organizational efficiency can be measured by how well a company sets and adheres to its budgets.
Enterprise performance management (EPM) is essential for tying operational needs with financial projections. What exactly is EPM? In short, it’s a complex list of processes that applies performance evaluation to every business function, be it manufacturing, sales, or marketing.
EPM software automates budgeting, strategy, and planning, arguably the three most important functions in an enterprise. Here’s how these software help companies remain competitive and financially robust.
Accurate Business Projections
Every enterprise has multiple departments, each with different functions. All of these departments have to create rolling projections that predict a future period. These projections help them request budget allocations from a central finance department.
The problem with rolling projections is that they’re tough to manage. Many variables that are essential to input cannot be finalized before the report is published. For instance, every enterprise executes a monthly close process. However, revenue and income data can be accurately calculated only once the month has passed and all sales are processed.
The result is that a monthly close report is typically generated in the middle of the following month, by which time it’s necessary to start producing that month’s closing report. Instead of rolling analysis, teams spend their time creating one report and moving on to the next, taking no time to actually look at data and derive insights.
EPM software eliminates major bottlenecks in this process by automating financial data collection and consolidation. Teams can automatically populate their software with relevant financial data that is formatted and also use data from other teams to inform their projections if there is a dependency.
Thus, teams can spend more time crunching numbers instead of following up with other people about their numbers and verifying their accuracy. Projections and forecasts are as accurate as possible, and this helps managers spot trends in their data and react quickly to them.
Greater Resilience
Business conditions and trends change regularly, and the only way to stay ahead of the curve is to regularly model future scenarios and test business resilience. Modeling the impact of a business decision and future-proofing the organization is an essential task in these cases. EPM software helps managers model a wide range of scenarios along with their financial impact.
For instance, the rise in popularity of a new product might require a company to hire people with certain skills. How will these costs affect profitability, and at what rate should the company optimally hire new employees?
If an organization decides to expand into a new market, how will expansion costs impact manufacturing timelines, and what will the financial impact?
Linking operational and financial processes gives managers valuable information to use as input in even more complex models. The result is greater resilience in the face of changing conditions and lasting competitive advantage.
Cross-Organization Reporting and Analytics
Projections, models, and scenario analysis can get complicated in a hurry, and the number of reports a team can generate is substantial. From an organizational perspective, the number of reports the executive team has to analyze is large. Manually standardizing and crunching data is a challenge, as is making sense of what all those numbers mean.
EPM software simplifies cross-organizational reporting by consolidating all reports onto a single platform and allowing executives to combine and slice metrics from all parts of the enterprise. No matter what scenario they’re looking at, executives can roll data sets up and use them to create accurate budget forecasts and measure efficiency.
The best part of these reporting platforms is dynamic reports that incorporate live data. As data is refreshed, executives can view changes to their projections in real-time, without having to prepare a new projection from scratch.
Employees can access a central report hub and run ad-hoc reports that can help them leverage insights in their jobs. As a result, the entire organization benefits from the wealth of data they collect and become more efficient.
Seamless Data Integration
Enterprises have a range of data storage venues on the cloud and on-site. Combining them into reports can be challenging. Add to this the need to view reports on the go on mobile devices and tablet interfaces, and it’s easy to see why EPM software is essential.
By integrating multiple business systems, EPM systems can give users the insights they need. Whether it’s running an ad-hoc report in a presentation to slice and dice data deeper or projecting departmental spend, EPM platforms allow companies to take any number of data variables into account.
Data collection is also simplified thanks to auto-formatting and collection workflows that remove the need for clerical work.
Stronger Businesses, Better Assets
A robust EPM software platform will help enterprises build better businesses and products. By increasing the efficiency of employee man-hours, companies can spend more resources on generating value-add work. The result is a resilient organization that can withstand any changes in consumer trends.
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