Imagine having the power to transform your business performance and make smarter decisions effortlessly. That's what enterprise performance management (EPM) can do for you. As the backbone of modern business success, EPM encompasses the processes, methodologies, metrics, and systems used to monitor and manage performance across the organization.
According to a study by Gartner, over 70% of finance leaders have adopted EPM software to streamline processes, support financial data integration, and improve forecasting and budgeting. Businesses with a robust EPM strategy are more likely to achieve their strategic goals and boost their operational efficiency compared to those without one.
In this article, we'll explore key investment priorities and challenges in EPM, focusing on how businesses can enhance their operational efficiency and decision-making capabilities. Keep reading to learn how businesses are mastering EPM to drive success and achieve strategic goals.
1. Improve EPM performance with master data management
Master data management (MDM) is the backbone of any successful EPM strategy. It involves the creation, maintenance, and governance of a single, consistent view of critical business data across the organization. Efficient MDM ensures that data is accurate, complete, and accessible, enabling better decision-making and improved operational efficiency.
Key benefits of MDM
- Enhanced data accuracy and consistency: Inaccurate or inconsistent data can lead to poor decision-making, operational inefficiencies, and increased costs. By implementing efficient workflows for changes and updates, organizations can ensure that their master data remains reliable and up-to-date.
- Improved customer satisfaction: A well-maintained customer database allows businesses to tailor their marketing efforts, resulting in higher engagement and conversion rates. Additionally, MDM can help organizations comply with regulatory requirements by ensuring that data is accurate and traceable.
Common challenges in implementing MDM
Despite its importance, master data management is not without its challenges. Financial services organizations, in particular, often face difficulties in standardizing master data across the enterprise. These challenges can arise from a variety of factors, including:
- Siloed systems and tools: Disparate databases that do not communicate with each other can lead to data inconsistencies and redundancies. Adopting integrated MDM solutions helps unify data across the enterprise and ensure a single source of truth—a key element of digital transformation.
- Data integration following acquisitions: When organizations acquire new businesses, they must integrate the acquired data into their existing systems. This can be a complex and time-consuming process, requiring careful planning and execution. A comprehensive MDM strategy that includes data mapping, cleansing, and validation can ensure a smooth integration.
- Weak data governance: Effective data governance involves establishing policies, procedures, and standards for managing data throughout its lifecycle. Without proper governance, organizations may struggle to maintain data quality and consistency. Implementing robust data governance frameworks that define roles, responsibilities, and processes for managing master data is essential.
2. Streamlining consolidation and close cycles
Building on the foundation of master data management, managing consolidation and close cycles is another critical aspect of EPM. These processes involve aggregating financial data from various sources, reconciling accounts, and preparing financial statements. Efficient consolidation and close cycles are essential for providing timely and accurate financial information to stakeholders —key to enhancing overall financial performance and compliance.
Challenges organizations face in consolidation and close cycles
One of the main challenges organizations face in this area is the complexity of consolidating data from multiple systems and sources. This complexity is often exacerbated by mergers and acquisitions, which require large-scale data integration and harmonization efforts. During these periods, organizations must ensure that their IT systems are robust enough to handle the increased workload and maintain data integrity.
Solutions for efficient consolidation and close cycles
To address these challenges, organizations can invest in advanced consolidation and close solutions that automate and streamline the process. These solutions can:
- Reduce time and effort: Automating the consolidation and close cycles can reduce the time and effort required to complete the cycles, allowing finance teams to focus on more strategic tasks.
- Improve accuracy and reliability: Advanced solutions can improve the accuracy and reliability of financial data, enabling better data-driven decision-making and regulatory reporting.
3. Automate merger and acquisition data integration
Mergers and acquisitions can have a significant impact on EPM processes and IT systems. Organizations must integrate their financial and operational data, harmonize processes, and ensure that their IT systems can support the increased workload. This can be a daunting task, requiring careful planning and execution.
- Maintaining IT strength and focus: Mergers can divert resources and attention away from other important initiatives, potentially impacting the organization's ability to execute its strategic goals. Developing a comprehensive integration plan that outlines the steps and resources required to successfully merge systems and processes is crucial.
- Large integration and harmonization projects: These projects involve consolidating data from multiple sources, standardizing processes, and ensuring data consistency. Investing in advanced EPM solutions that can automate and streamline the integration process, along with establishing clear communication channels and governance frameworks, is essential for managing the integration effectively.
4. Enterprise planning to enhance financial performance and forecasting accuracy
Another critical way businesses are mastering EPM is through enterprise planning. This process involves the development of comprehensive strategies and methodologies to achieve organizational goals. It includes setting objectives, allocating resources, and monitoring progress to ensure that the company stays on track.
Effective enterprise planning helps businesses to anticipate future challenges, adapt to changing market conditions, and make data-driven decisions. By integrating modern cloud-based solutions into their planning efforts, organizations can improve planning efficiency, enhance collaboration across departments, and drive long-term success.
Key benefits of enterprise planning
Enterprise planning provides numerous benefits that strengthen a company’s financial performance and planning capabilities. These include:
- Integrated support for revenue management
- Headcount and compensation planning
- Long-term planning for capital assets
- Closing gaps in project planning
- Enabling more accurate forecasting and budgeting
Planning methodologies that support EPM strategies
Enterprise planning allows for leveraging different methodologies for various parts of the business, including driver-based, trend-based, and manual or zero-based. Here's how you can plan for these different aspects:
- Driver-based accounts: Identified operational drivers can be used to calculate financial statement accounts, applying assumptions and variability. These could also include percentage increases or decreases, and manual topside adjustments.
- Trend-based accounts: Accounts impacted by seasonality can be set up as trend-based accounts by leveraging historical data. This could involve pattern trending or leveraging AI/ML prediction capabilities.
- Manual accounts: Some accounts may be best suited to be planned manually leveraging a zero-based approach.
Additionally, traditional planning approaches like activity or zero-based budgeting can be utilized to justify areas of investment across the business or organization.
In summary, enterprise planning provides a comprehensive framework that supports all parts of the business, applying various planning methodologies, ensuring that all aspects are effectively managed and optimized.
With a solid enterprise planning framework in place, businesses can better adapt to changing market conditions and anticipate future challenges, as illustrated in the following case study.
5. Using analytics and reporting to drive smarter decisions in EPM
To further enhance EPM processes, incorporating analytics and reporting is crucial for driving data-driven decision-making. Analytics can provide valuable insights into business performance, helping organizations identify trends, opportunities, and areas for improvement. By leveraging advanced analytics tools, businesses can gain a deeper understanding of their operations and make more informed decisions.
Key benefits of analytics in EPM
- Measuring profitability and performance: By analyzing financial and operational data, organizations can identify the most profitable products, services, and customers. This information can be used to optimize pricing strategies, allocate resources more effectively, and improve overall profitability.
- Visual reporting: Presenting data in a visually appealing and easy-to-understand format allows organizations to communicate insights more effectively to stakeholders. Visual reports can help highlight key performance indicators (KPIs), track progress towards goals, and identify potential issues before they become critical.
Real-world impact: Adapting business plans with Alithya's EPM solutions
During the pandemic, a southern US retail bank faced challenges in adapting its business plans due to fluctuating customer visits, interest rate changes, and rising costs. The CFO struggled with old forecasting methods that relied on email and spreadsheets. To overcome these challenges, the CFO turned to Alithya's Bank Margin Planning solution, leveraging Oracle EPM Cloud for real-time planning, budgeting, and forecasting.
Benefits of Alithya's EPM solutions
- Connecting the C-suite, finance, and branches: Alithya's solutions unify these functions, improving agility and enabling rapid responses to changing business conditions.
- Leveraging Oracle’s Enterprise Performance Management Cloud: By using Oracle’s EPM Cloud, the bank could visualize results, analyze performance, and adapt plans quickly. This transformation in their business planning process allowed the bank to respond more effectively to the rapidly changing environment, ultimately enhancing their operational efficiency and decision-making capabilities.
Your EPM partner for smarter planning and performance optimization
At Alithya, we pride ourselves on our expertise in enterprise performance management. We guide organizations through every stage of their performance transformation, helping streamline EPM processes, enhance data accuracy, and drive data-driven decision-making. Our comprehensive solutions address unique business challenges, ensuring seamless integration and optimal performance. Whether you need assistance with master data management, consolidation and close cycles, enterprise planning, or advanced analytics and reporting, Alithya is here to support you every step of the way. Contact us today to get started.