It takes a lot of software to manage the operations of an enterprise, but when it comes to Enterprise Performance Management (EPM) and Enterprise Resource Planning (ERP), it’s not a zero-sum game.

In today’s complex business environment, companies are finding that many of the software solutions they have implemented to help simplify operations are, in fact, just adding to the complexity they have to deal with on a daily basis. ERP systems, for example, tend to expand as a company grows, often leading to additional processes – many of which can be streamlined.

That is a worst-case scenario, and the reality is that most companies improve their performance with ERP implementation. ERP systems help determine the best ways to use given resources within the company on a day-to-day basis. ERP includes a general ledger which summarises all of the details from other modules like purchasing, accounts payable, and accounts receivable, and it can perform some actual vs. budget reporting, so many people think it does the same thing as EPM.

However, while the two can overlap, they are entirely separate systems, both of which offer specific benefits to the organisation. ERP, which is designed to process transactions, helps optimise crucial operations. EPM, on the other hand, enables management to create forecasts and manage budgets by integrating data from ERP as well as other platforms.

Moving the business forward

Most organisations start off by implementing an accounting or ERP system to handle day to day transactions, and will often use Excel spreadsheets to manage EPM processes such as budgeting, forecasting and financial reporting. As the business grows and expands, they quickly outgrow spreadsheets and will implement EPM applications as a replacement.

EPM software is designed to help the enterprise set goals, develop and execute plans and make vital business decisions. EPM allows for rapid, periodic collection of financial and operational results for fast and effective decision-making. However, some EPM systems are more comprehensive than others, so companies should look for solutions that are flexible and support modelling and advanced analytics, which can help the CFO and other executives perform “what if” analysis that improves decision-making. A good EPM solution will also make the financial auditing process much simpler and faster.

While many ERP systems will feature a comprehensive dashboard and built-in analytics to assist company leadership in managing various operations efficiently, EPM solutions help create a single source of truth where all business data is consolidated in one location. So, while there is some overlap with ERP, EPM is more strategic in nature and can work across multiple ERP systems.

ERP + EPM = business success

Perhaps the biggest difference between ERP and EPM systems is the time it takes to implement each type of solution. ERP can take years to reach its implementation goals, while EPM is much simpler and faster to implement. Despite the fact that an EPM system can work with multiple ERP integrations, a cloud-based EPM system can be implemented in just a few months.

Ideally, a company should invest in both EPM software and ERP software to ensure they have solid transactional as well as management processes and systems, and implementing an EPM suite ahead of any ERP upgrades can ensure a stable reporting and planning system before, during, and after the ERP upgrade. By integrating EPM with ERP and other systems, companies can connect all data sources together into a single version of the truth; increase the accuracy of resource management, planning, and allocation; improve the quality and reliability of management information; and increase the efficiency of data management and analysis.

Frequently Asked Question