The concept of enterprise performance management (EPM) has been around for over 15 years. But in recent years, adoption of EPM software has been accelerating as the availability of cloud-based EPM solutions has made EPM more accessible to small and medium enterprises, as well as large ones.
Read on to learn about the benefits of EPM software and the top 3 reasons EPM is moving to the cloud.
What Is EPM?
Enterprise performance management (EPM) is a process and software system designed to help organizations (i.e., companies, government entities, educational institutions, and non-profits) achieve financial goals by linking strategies to plans and execution. Sounds easy, right? As anyone who has worked in a business enterprise knows, this can be challenging as an organization grows and evolves beyond its roots. To support this, EPM includes the following management processes:
- Budgeting, planning, forecasting, and modeling
- Consolidating results and closing the books on a periodic basis
- Reporting results to internal and external stakeholders and analyzing performance
Are CPM and BPM the same as EPM? Yes and no. Other terms used in the industry include CPM (corporate performance management) and BPM (business performance management), which mean basically the same thing as EPM. The term EPM, however, can be more broadly applied outside of the Finance department and in non-corporate environments, such as governments, higher education institutions, and non-profits.
What Are the Benefits of EPM?
Managing a closed-loop process like EPM can be challenging when organizations are relying on spreadsheets and manual processes. However, with purpose-built EPM applications and the power of the cloud, EPM can help transform Finance processes. This can be summarized in what we call the “three A’s” – automate, accelerate, and align:
- Automate key tasks and reduce manual work to eliminate errors and increase Finance team productivity
- Accelerate planning, consolidation, and reporting to deliver results faster and shift more time to value-added analysis
- Align financial and operational plans and make Finance a better business partner by empowering operations with information and supporting improved decision-making
Why is EPM Moving to the Cloud?
EPM software platforms have evolved from mainframe accounting systems to Windows-based client/server systems, then to internet-enabled, web-browser-based applications. Today, there’s increasing demand for software as a service (SaaS) (a.k.a. cloud-based software), and the market is rapidly shifting to adopt cloud-based EPM solutions.
Why the cloud? It’s a better way to deliver software. It’s making EPM accessible to more organizations because there’s no infrastructure to set up, and because it costs less. Thousands of companies are voting with their pocketbooks, trading in Excel or old legacy software to gain the advantages of the cloud. Adoption is accelerating as Finance has grown more confident in the security of the cloud and more aware of the benefits.
These are the top 3 reasons EPM is moving to the cloud:
1. Faster time to value (TTV) – With cloud-based EPM solutions, the effort and costs of setting up infrastructure are eliminated. Organizations can be up and running with EPM applications in 3-6 months vs. 6-12 months for on-premises applications.
2. Reduced total cost of ownership (TCO) – Cloud-based EPM suites are typically one-fourth the overall cost of on-premises software. This is clear when organizations compare initial implementation and ongoing subscription costs of cloud-based EPM suites vs. the implementation, up-front licensing, and ongoing maintenance of on-premises software.
3. Increased autonomy – The cloud empowers Finance to drive and control both the initial implementation and the ongoing maintenance of the EPM solution.
Technology analyst firms like Forrester are now recognizing the cloud as the primary deployment model for EPM solutions. Gartner notes that large enterprises, not just mid-market companies, are shifting to the cloud and that, by 2020, 60% of medium and large organizations will have deployed cloud-based solutions. Finally, Ventana Research cites that faster time-to-value and lower total cost of ownership are the key reasons that Finance professionals are increasingly accepting the cloud over on-premises alternatives.
To learn more about the benefits of EPM software and why EPM is rapidly moving to the cloud, download the white paper “Introduction to EPM in the Cloud.”