ERP 2110 Introduction to Enterprise Resource Planning

Introduction

The paper presents information and knowledge about the importance of Enterprise Performance Management or EPM Process and the wide array of benefits associated with it. Organizations nowadays have aimed at closing the gap between the strategy and its execution, which ensures meeting the needs of various stakeholders in business including the shareholders or investors, employees, customers, etc. This serves the purpose of accomplishing the shared vision and goals, thus, enabling the company to achieve long-term growth and success in business (Cokins, 2017).

Enterprise Performance Management (EPM) Process

Enterprise Performance Management process, also known as EPM is a procedure that has been well supported by proper strategic planning, preparing reports, and using a business intelligence software. It allows the organizations to connect with the strategy of managing proper planning and execution, while also including various aspects of the financial reporting process, consolidation, and reporting various processes. Not only does it include these activities, but also the EPM process allows for monitoring the performances of the individuals across the enterprise, furthermore, aim at improving the overall business performance (Moskalenko, 2018).

This process, serving the management of major businesses in the form of financial as well as operational planning, do supports proper planning, budgeting, forecasting the scopes and capabilities, and also enhancing the potential to evaluate the key performance indicators or KPIs, carry out analysis and manage reporting of progress at every stage. It is very much crucial and supports the businesses by linking the strategic plan with the budget prepared annually and the forecasting done periodically, with the help of both bottom-up and top-down approaches or methodologies (Mayer et al., 2021). Due to this, the gap between strategy planning and execution is reduced, which ensures successful management of needs of customers, shareholders, and employees, while bringing consistent growth and long-term success for the organization too.

 The Enterprise performance management process has been designed in such a manner that the process has been integrated with the Enterprise Resource Planning or ERP system for providing a management layer on the top of ERP modules This supports the various organizational practices that align with the financial aspects along with operational aspects for integrated business planning, thus, established a foundation for better enterprise-wide strategic planning. Peura (2021) also stated that the EPM process integrated into the financial functions managed by the organization allows for better financial planning, better analysis of performance gaps experienced, and gain in-depth knowledge about the root causes. This further facilitates collaborating strategically with the organization as well as managing the reduction of gaps between the strategy and execution.

Benefits of EPM

The Enterprise Performance Management (EPM) Process has various benefits that are related to management efficiency, exertion of strategies, both operational and financial strategies, improve overall business performance, reducing chances of risks, gain competitive advantage and contrast the differences between running a business and managing it properly.

The organizations need to focus on growth and attaining higher profit, which is the topmost priority. To manage consistent growth and profitability, businesses need to gain insight into the operational costs and also forecast sales, revenue generation capability. The EPM process could improve the functionality of business, by formulating integrated plans, maintaining agile forecasts as well as responding to changes in the economy, experienced within the marketplace, thus, sustaining in the long term (Balogh & Kolawole, 2017). Also, the process allows the company to eliminate and extend spreadsheets and focus more on the improvement of strategic plans and process of reporting, with the help of centralized databases, maintaining a flow of work, and controlling processes. This represents the benefit of EPM in improving management efficiency.

Considering the benefits, EPM has been designed to enable the organization to plan, forecast, budget, and report on the business performances while consolidating the financial outcomes. It has been mainly used by the companies in the financial aspects and other areas of organizational functions such as sales, human resources management, marketing, information technology, etc (Druzhaev, Isaev & Ogurechnikov, 2019). The EPM also facilitates operational planning, planning for budgetary aspects, and reporting, which reduces gaps between strategy and execution too. This process, as stated by Adiguzel (2018), also assisted the organization to adapt to the changing requirements and deliver better results for all the stakeholders involved, furthermore, manage to streamline financial close and account reconciliation. This improves the execution of strategy and derives positive outcomes for the organizations as well.

The improvement of performance represents the various areas that have been improved with the implementation of the EPM process. The process has provided analytics for data and information, provided reports on performance, forecast, thus, enhancing the organizational capability to understand various aspects of business, while strategically planning for the business. Also, the process incurs periodically assessing, reviewing, and reporting the progress and results at various stages, which ensures that the various departments remain aligned with the end goals and objectives (Akhtar & Sushil, 2018). This also improves the business potential to remain aligned over time, while carrying out activities, allowing the company to respond better to the unpredictable and volatile business environment with ease and effectiveness. Adopting solutions that enable the company to anticipate and respond to changing situations becomes easier, thus, improving the business performance.

Here are multiple financial risks that are associated with every business' functioning. The EPM process could be a viable solution for the reduction of risks experienced by the organization. It has been found that often organisations tend to remain dependent highly upon a single system for fulfilling the requirements of reporting. Moreover, risks also emerge when the changes in Domestic and International GAAP reporting standards are outdated. The EPM process, managed with the help of Oracle software brings better agility for the organization to ensure adaptation of changes quickly as well as fulfill the reporting requirements efficiently as well. A huge amount of data and information sets are difficult to handle and this often contributes to errors, which could be dealt with with the use of the EPM process (Moskalenko & Fonta 2020). This process with the inclusion of a Cloud-based platform improves the business potential to govern changes while reducing chances of errors, thus, managing centralization and deployment of business aspects with the use of financial data much more conveniently. Also, the centralization of financial processes helps in administering the periodic ending close process and improves both budgeting and forecasting through overall perfect strategy execution (Kiran, 2017).

Attaining a competitive advantage is based on various factors such as profitability achieved, integrated business strategy, automation of financial procedures, regulatory oversight, and faster reconciliation of financial accounts. The EPM allows for identifying the existing margin and compare with the present outcomes, which associates with the prediction of future profitability, thus increasing overall profit margin along with identification of new opportunities for increasing profit and gaining a competitive edge over its competitors. The data and information have been consolidated from various business lines, which provides a comprehensive view of the present and future performance thus facilitating the decision-making process. Also, the EMP process prevents usage of spreadsheets and reduces human errors, while constantly automating financial processes. This has been well supported by compliance with the regulatory aspects, tax-related matters, and legal matters required for financial close, thus, improving reporting systems and supporting the reporting standards too (Isaev, 2019). The automated workflow further prevents delay of financial close, while eliminating risks and managing global account reconciliation, which contributes to the competitive advantage in business.

Running a business represents the everyday activities and operations that are managed to make a business run properly while business management refers to the supervision and management of human resources. Running a business represents business administration, which includes various activities such as the management of the EPM process, which integrates the strategic plans within the financial procedures, thus, improving overall performance and reducing risks too. Managing a business requires the acquisition of proper talent, along with providing the knowledge and skills with the help of training and development sessions (Zou & Bai, 2021). This enhances their knowledge and expertise, thus, allowing them to perform to their potential while ensuring the successful management of the business.

Conclusion

Concluding the matters, it could be highlighted that the Enterprise Performance management process has been of significance for the business not only in terms of overall performance improvement but also for allowing the company to gain a competitive advantage. The EPM process integrated into the corporate strategies and functions reduced the chance of risks associated with the organizational functions, brought management efficiency with the help of automation of processes, manage the reconciliation of contracts, forecasted profits, and improved financial aspects, which should contribute towards lessening the gap between strategic planning and execution, furthermore, ensure success and growth in the long term future.

References

Adiguzel, Ç. (2018). Building an embedded enterprise performance management solution: an exploratory case study (Doctoral dissertation). [https://run.unl.pt/handle/10362/56924]

Akhtar, M., & Sushil, S. (2018). Strategic performance management system in the uncertain business environment: An empirical study of the Indian oil industry. Business Process Management Journal. [10.1108/BPMJ-05-2017-0102/full/html]

Balogh, J., & Kolawole, S. (2017). Enterprise Performance Management and Best Practices in Business Planning and Advanced Analytics. Global Business Intelligence, 127-145. [https://books.google.co.in/books?hl=en&lr=&id=CmcPEAAAQBAJ&oi=fnd&pg=PA127&dq=Enterprise+Performance+Management+(EPM)+&ots=T6hIg_VpFd&sig=2G0HnT2ElbQhPfITXGJSGCTnuRU#v=onepage&q=Enterprise%20Performance%20Management%20(EPM)&f=false]

Cokins, G. (2017). Enterprise performance management (EPM) and the digital revolution. Performance Improvement, 56(4), 14-19. [10.1002/pfi.21698]

Druzhaev, A. A., Isaev, D. V., & Ogurechnikov, E. V. (2019). Principles of managing development of EPM systems. Ð‘изнес-информатика, 13(2 (eng)), 73-83. [https://cyberleninka.ru/article/n/principles-of-managing-development-of-epm-systems]

Isaev, D. (2019). Development of EPM Systems: Management Principles and Tools. In CEUR Workshop Proceedings. [http://ceur-ws.org/Vol-2413/paper07.pdf]

Kiran, S. (2017). Effectiveness of Real-time Business Intelligence on Enterprise Performance Management: a Systematic Literature Review (Master's thesis). [https://urn.fi/URN:NBN:fi:tty-201705191429]

Mayer, J. H., Hebeler, C., Esswein, M., Göbel, M., & Quick, R. (2021). Evaluating a Forward-Looking Maturity Model for Enterprise Performance Management. In Engineering the Transformation of the Enterprise (pp. 287-299). Springer, Cham. [10.1007/978-3-030-84655-8_18]

Moskalenko, V. (2018). Module of selecting the company development strategic goals in the Enterprise Performance Management System (Doctoral dissertation, МО Бондаренко). [http://repository.kpi.kharkov.ua/handle/KhPI-Press/55125]

Moskalenko, V., & Fonta, N. (2020, October). The Cascading Subsystem of Key Performance Indicators in the Enterprise Performance Management System. In Conference on Integrated Computer Technologies in Mechanical Engineering–Synergetic Engineering (pp. 704-715). Springer, Cham. [10.1007/978-3-030-66717-7_60]

Peura, P. (2021). Agile development and requirements change management in enterprise performance management modelling.

Zou, T., & Bai, S. (2021). Enterprise Performance Optimization Management Decision-Making and Coordination Mechanism Based on Multiobjective Optimization. Mathematical Problems in Engineering, 2021. [https://doi.org/10.1155/2021/5510362].

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