Enterprise Performance Management vs. Enterprise Resource Planning

erp-vs-epm

It takes a lot of software to manage the operations of an enterprise, and two of the most useful and utilized are Enterprise Performance Management (EPM) and Enterprise Resource Planning (ERP).

While on the surface it may sound like these software systems overlap in terms of features and functionality, these are entirely separate types of systems. Which is most useful? Which is easier to implement? Which will deliver the most value for the expenditures of time, money, and effort?

Defining and Describing Enterprise Resource Planning

ERP is focused on transactional processing and coordinating the company's resources, providing operational data to the organization.

bigstock-Enterprise-Resource-Planning-85712066Enterprise Resource Planning, or ERP, is a system that is designed to process transactions and keep track of the resources within an organization. For instance, ERP tracks materials from the procurement phase through production to the paid-in-full deliverable product. ERP helps the organization determine the best ways to use given resources within the company on a day to day basis. ERP includes a general ledger which summarizes all of the details from other modules like purchasing, accounts payable, and accounts receivable.  And it can perform some actual vs. budget reporting, so it does overlap EPM in some areas of financial planning and decision making.

Defining and Describing Enterprise Performance Management

EPM supports the management processes that the enterprise can use to improve profits, and performance.

bigstock-Business-hand-touching-organiz-72661558Enterprise Performance Management, or EPM, is a suite of applications designed to support management processes - planning, modeling, consolidation and reporting of data from single or multiple ERP systems as well as analytics.  It is generally driven by the finance department or CFO of the enterprise. EPM is a system used to monitor, analyze and manage the performance of the organization, particularly in terms of evaluating and allocating resources.  It is used to help management optimize performance and get the most from its investments. EPM is designed to help the enterprise set goals, develop and execute plans and make changes needed through periodic reviews of results.
 

 

EPM assists the CFO and finance department in creating initial targets or budgets, and to coordinate planning across the organization. It allows for rapid, periodic collection of financial and operational results for fast and effective decision-making - weekly, monthly, quarterly and annually.  The right EPM solution is flexible and supports modeling 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. So while there is some overlap with ERP, EPM is more strategic in nature and can work across multiple ERP systems.


The Differences Between EPM and ERP

ERP systems are very complex in nature and can take from six months to a full year or more to implement.  Despite the fact that an EPM system can integrate and work with multiple ERP systems, (as well as HCM and CRM)  a cloud-based EPM system can be implemented in three months or less.  Most organizations 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.  However,  as the organization grows and expands, they quickly outgrow spreadsheets and will implement EPM applications as a replacement.

If an organization is considering an upgrade of its ERP and spreadsheet-based EPM system, then implementing an EPM suite ahead of the ERP upgrade can be beneficial.  This approach provides a stable reporting and planning system before - during - and after the ERP upgrade.  Optimally, the enterprise will invest in both an EPM and an ERP to ensure they have solid transactional as well as management processes and systems.  See related blog article on this topic.

To learn more about utilizing EPM and ERP software together, download the free whitepaper, "Best Practices: ERP and Enterprise Performance Management" today. This is a free gift to you from Host Analytics.

Download the Whitepaper

Posted by on September 10, 2015
Topics: EPM
John O'Rourke

John O’Rourke is Vice President of Strategic Marketing at Host Analytics. With a background in accounting and finance, John has over 30 years of experience in the software industry and 20 years of experience in EPM product marketing at Hyperion Solutions, Oracle and Host Analytics. He has worked with many customers and partners on financial reporting and planning initiatives and has spoken and written on many topics in EPM. John has also held positions in strategic marketing and product marketing at Dun & Bradstreet Software, Kenan Systems, and Decisyon. John has a BS degree in accounting from Bentley University and an MBA from Boston College.

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