Your business is expanding into multiple territories and adding more products to its list of offerings. It is only natural that you are also generating an overwhelming amount of data, making it impossible to keep track of all the spreadsheets manually, let alone analyse them to draw valuable conclusions.
It has come to your attention that Enterprise Performance Management (EPM) software can help unite data from all business units into one unified platform for planning, budgeting, forecasting, reporting, and analysis.
But hold up! Today’s software market is not short of vendors that promise exceptional features and benefits. Investing in a new business solution is a serious subject, so don’t commit until you read through this article!
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Defining your EPM requirements
A successful enterprise performance management implementation starts with a clear understanding of your company’s requirements for the system, a.k.a., what you need it to do and what specific problems your EPM solution should fix.
The right EPM selection begins with a deep analysis of your current challenges. Common pain points can include:
– Company expansion leads to more departments, products, locations, and financial data.
– Manual and inefficient budgeting, forecasting, and financial closing processes.
– Inability to get a centralised system for a real-time view of financial and operational performance.
– Data resides in different systems (ERP, CRM, HRIS, etc.), making it hard to get a holistic view of the business and align departmental goals with overall strategy.
– Businesses struggle to model different “what-if” scenarios (e.g., market changes, price adjustments) and understand their potential impact.
– Meeting regulatory requirements and generating accurate, timely financial reports becomes increasingly complex.
– Operational goals are not clearly linked to the overarching business strategy.
Think about your organisation’s mission and objectives, be specific about what you want to achieve, and set clear key performance indicators to measure success.
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It also helps to review potential challenges and risks you might face during the EPM implementation project. Finding these difficulties early lets you pick the right stakeholders and support structure to solve problems in a timely manner before they get out of hand.
However, don’t focus solely on the present; look ahead and anticipate future needs. Many organisations focus only on current problems without thinking about growth. Prioritise adaptable solutions that grow with your organisation.
Once you know your pain points and goals, build a detailed feature checklist based on your needs. Start by mapping the current business processes. Not understanding existing processes can create barriers to getting the right data for analysis.
Additionally, don’t overlook integration capabilities. Your EPM software needs to be able to connect seamlessly with other existing systems, like accounting or ERP. Integration problems often lead to hidden costs and frustration, so review how well potential solutions fit your current and future IT landscape to ensure smooth data flow.
While technology matters, EPM is not just about getting numbers faster; it is about improving organisational performance through better analytical decision-making. Therefore, obtaining the approval and involvement of leaders from key departments, like Management, Finance, IT, Project Management, and Operations, early on is a must.
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The executive sponsor plays a significant role in:
– Taking ownership throughout the project lifecycle, providing necessary resources, and keeping other executives informed.
– Ensuring transparency about why changes matter and associated risks.
– Creating a network of leaders who support the change across the organisation.
A RACI model defines who is Responsible, Accountable, Consulted, and Informed for each task. This framework helps everyone understand their role, boosts accountability, and enhances communication.
Evaluating EPM software capabilities
After defining your requirements, you need to assess what EPM software can do for you. The right EPM solution should deliver maximum value through four key functional areas.
Budgeting, forecasting, and planning tools
EPM software that offers the following features can help make your job a whole lot easier:
– Advanced budgeting and forecasting tools to make financial planning quick and simple
– Interactive dashboards allow you to grasp insights in a pinch
– Predictive planning features to test different assumptions and lower risks in decision-making
These tools create forecasts automatically by looking at past data patterns, which helps finance teams make better projections.
A complete solution also handles planning across revenue, expenses, balance sheet, and cash flow statements that comply with your industry’s standards. On top of that, it should also utilise advanced simulation capabilities such as Monte Carlo simulations to let you model complex financial scenarios with extensive, freeform modelling.
Financial consolidation and reporting
Quality EPM software automates complex tasks, like reclassifications, adjustments, and eliminations, thus speeding up the closing process and making financial consolidation easier while ensuring data accuracy across your organisation.
The systems should provide pre-built templates for financial statements and built-in tools for currency translation, intercompany eliminations, and data tracking. These features bring endless convenience and significantly streamline both the consolidation and reporting processes.
Additionally, with the increased speed and visibility, the chosen EPM solution should track audit trails for journal adjustments, keep duties separate, monitor data changes, and log user activity. The system should also let you collect supporting details for statement balances through templates that make signoffs, confirmations, and drill-back features simple.
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Support for modelling and scenario analysis
Strong scenario modelling tools let organisations create multiple what-if situations to understand the different levels of impact a decision brings. In addition to providing financial insights, they should connect all parts of financial performance—from earning potential to working capital management, capital spending, taxes, and structure.
Unlike spreadsheets, robust EPM solutions come with built-in financial modelling tools that enable users to develop complex financial logic quickly. Look for systems that can help you build various scenarios for each business unit and test how sensitive they are to key performance drivers.
You might also want to consider advanced features like debt schedulers for fixed or variable-rate debt instruments and deal period tools that show how mergers, acquisitions, or sales would affect the business at different times. These tools help finance teams make crucial decisions for both immediate needs and future success.
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Integration with ERP and other systems
The core purpose of EPM is to provide a centralised view of performance for all key leaders. This cannot happen if data is hidden, locked up, or requires cumbersome, manual processes to move between systems.
Manual data transfers (e.g., exporting to spreadsheets and re-uploading) are notoriously error-prone and inefficient. Integration pulls data from disparate sources together, allowing for:
– Automated data transfer
– Data validation during transfer, flagging issues before they “contaminate” the EPM system.
– Agile decision-making based on the most current information.
– Freeing up IT resources for more strategic initiatives and lowering operational costs associated with data management.
Beyond just the technical aspect of data flow, the usability of that data is equally critical. This is where EPM’s self-service dashboards and reporting tools come into play. Self-service reporting tools allow you to generate your own reports and slice, dice, and drill down into data without constantly relying on the finance or IT department.
When data flows freely and is easily accessible, it fundamentally changes how teams interact and operate.
Selecting the right EPM vendor
A detailed vendor assessment will give you a shortlist of potential partners that can support your organisation’s needs throughout the EPM lifecycle.
Assess vendor maturity and support
Vendor maturity associates directly with implementation success. You need a knowledgeable team with a solid understanding of core business objectives to assess potential EPM providers.
A structured evaluation scale helps weigh each requirement against its value and priority to your organisation. This scoring method highlights vendor differentiators and ranks each value-add’s importance to your business. Smart customers buy solutions, not just products.
Your vendor assessment should break down:
– The implementation team’s experience and skill sets
– The vendor’s track record with comparable implementations
– Client references and success stories from organisations like yours
– Support options for extra functionalities and updates after deployment
Good vendor support goes beyond the original implementation. EPM software success depends on how well your organisation uses the software as business needs change over the years.
Check scalability and performance
The business landscape changes faster than ever, making scalability essential rather than optional. Cloud-based EPM solutions offer better scalability than traditional on-premise options, allowing users to adjust resources as needed without heavy investment in new hardware or software.
Beyond just scaling resources, the internal architecture of the EPM software, specifically its data management layer, is paramount to performance. An EPM system is not just a single database; it often leverages a combination of technologies to optimise different types of data operations.
Leading EPM vendors architect their solutions to leverage the strengths of each:
– Relational for robust, transactional data and master data management.
– OLAP for rapid, multi-dimensional analysis and complex calculations; crucial for planning and reporting.
– NoSQL for handling diverse, high-volume data sets and supporting advanced, real-time analytics.
This multi-faceted data architecture ensures that the EPM solution can deliver optimal performance across all its functionalities—from data integration and financial consolidation to sophisticated planning and real-time reporting—regardless of the data volume or complexity of the analytical query.
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Review user experience and training resources
The vendor should provide detailed training resources with video tours, tutorials, and step-by-step guides for different user roles:
– Implementation specialists and administrators
– Business users across departments
– Finance professionals with specialised needs
– Executive stakeholders requiring dashboard access
The interface should be easy to use and support finance and line-of-business users’ ongoing needs. Solutions with simple interfaces boost productivity and speed up adoption across your organisation.
Compare pricing and total cost of ownership
Total Cost of Ownership (TCO) includes all costs of owning and operating a system throughout its lifecycle. The EPM vendor evaluation should also take into account these TCO components:
– Start by calculating acquisition costs for hardware, software, and network infrastructure. Include extra costs like additional licences for relational database management systems or middleware. Factor in implementation expenses such as consultancy fees, training, and temporary staff replacement costs.
– Next, estimate operational costs for maintenance, upgrades, and support. Many vendors now offer subscription-based pricing models. These models reduce upfront investment but need careful evaluation of long-term cost implications.
– Last, determine potential ROI by looking at cost reductions and revenue opportunities. Cost savings come from increased efficiency and reduced headcount needs. Revenue opportunities arise from better pricing and cross-selling capabilities. This detailed financial assessment shows each vendor’s true value beyond the initial price.
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Choosing the right EPM solution: Final considerations
The Forrester’s Total Economic Impact study shows organisations using EPM solutions got a 393% return on investment over three years [1]. These returns came from several value streams. Teams saved work equal to five full-time employees by removing manual modelling and reporting.
Additionally, organisations cut down 2,000 hours monthly in data collection and 1,040 hours of manual work each month. Finance teams now spend 55% more time analysing information instead of just putting data together [2].
Benefits go beyond just saving time and money. Companies with EPM software make forecasts three times more accurately. This leads to better decisions. Teams also removed over 100 forecasting spreadsheets. This fixed the version control and data problems that manual work creates.
Teams can verify their assumptions and lower risks with EPM’s predictive planning. The system helps prepare for different economic and competitive situations through advanced scenario modelling. Quick and accurate responses to market changes give companies an edge over competitors.
The right vendor definitely deserves equal attention as they bring not just reliable software but also a comprehensive support structure, proven scalability, accessible interfaces, and clear pricing models.
All in all, the right EPM solution and vendor transform financial processes from reactive reporting exercises to strategic decision-making tools. Implementation needs significant investment and organisational change, but the benefits make it worthwhile—better accuracy, improved collaboration, and greater business agility.
We hope this guide helps your organisation direct the EPM selection process confidently and pick a solution that brings lasting value.
References:
1. https://planful.com/blog/what-kind-of-return-to-expect-from-an-epm-investment/
