Skip to content | Skip to navigation

News

EPM is management tool of the future

27th September 2007 > ITWeb

 

There can be no doubt that enterprise performance management lies at the heart of business management.

 

Today's business world is characterised by a unique set of pressures: the need to gain visibility into performance, soon enough so as to be able to implement corrective change while it still matters; to report rapidly in terms of governmental and other regulatory compliance; to leverage investment in ERP and other production systems; and to unite many disparate business processes and corporate systems.

All of this must happen off a single view of the truth, so all in the boardroom can agree on the figures being presented and the conclusions being drawn.

It was from such a set of pressures that the discipline of enterprise performance management, or EPM, was born.

Until around 2000, various vendors offered components of the EPM suite, and it is really only over the last seven years that EPM has come to be known as such. It has gone through at least two other iterations, depending on which vendor or consultancy you speak to: corporate performance management or business performance management, or CPM and BPM respectively.

Whatever acronym you choose to use, the discipline is about the coming together of a set of formerly discrete business activities, all informed by and running against a commonly agreed set of business intelligence data. This data, typically stored in a high-performance multidimensional database, such as Hyperion Essbase or Cognos, allows management to run its set of business activities in a common, iterative process. These activities include:

  • Information hub: This is typically the multidimensional database, or OLAP system (which can draw its data from a data warehouse). Data has been extracted in a standard, uniform manner, aggregated and then imported into this OLAP system, where it can be interrogated by various EPM applications.

  • Reporting and analysis, typically accessed today through a Web browser. Many organisations today choose to view their data in a dashboard or scorecard, a sensible step as it gives management a highly visual interface into the performance of the organisation.

  • Applications: These are typically planning (including strategic planning), budgeting and forecasting, activity-based costing, financial consolidation and the balanced scorecard. In my experience, financial consolidation tends to be the first application to be targeted, as it is the one where there is most pain, it most directly addresses financial issues, it is an area rich in gains in terms of regulatory compliance, and it allows management to dramatically narrow the gap between close of business and reporting to all stakeholders.
  • Reference data: A solid, robust framework is best supported by a common data model informed and supported by industry-standard data definitions. This is where the concept of master data management rears its head.

  • Source data: Data to be fed into the information hub will come from a number of sources, including ERP systems, financial and non-financial systems and legacy systems. They may also tap external sources of data and information so as to provide deeper and broader context.

  • Workflow: This ensures that EPM becomes part of the corporate fabric, or DNA, of the corporation. It does this by compelling people to work through a designated process, automating certain processes, and encouraging collaboration.

  • Security, management and development: As the EPM tools carry within them critical corporate data and decisions, they need to be locked down securely, with all the integrity expected of such systems. They also need development tools for the creation of add-ons and other customisation, and to encourage easy administration.

 

The future of EPM


There can be no doubt that EPM lies at the heart of business management. It can confer on executives a level of control they have never enjoyed before, and an undisputed single, controlled view of business activities, driven against one, high-performance, aggregated view of the truth.

For the first time, executives can gather around the boardroom table, secure in the knowledge that they are working off the same facts; planning, budgeting, forecasting, consolidating and reporting, all with sufficient leeway to change tack while it still matters.

However, there are many challenges on the road to EPM success, which is what I will discuss in the next Industry Insight in this series.