Easy answer: EPM stands for Enterprise Performance Management which means anything, everything, and nothing all at once (which goes to show that you should never let a technology acronym be determined by a marketing focus group). A better answer would be that it helps the office of the CFO take a number and do something with it (more on this in a bit). The second part of the question is where things get more nuanced and exciting. EPM matters because it can elevate your company (and on a personal note, elevate your career).
Companies should be changing as fast or faster than the industry they’re in. Those companies have huge amounts of data available and every day, they struggle with how to deal with all that data. Just as EPM can help your company grow, your EPM skills make you an invaluable resource to your company, because, like entropy, data tends to increase over time.
EPM hasn’t always been called EPM, but the concept has been there. In the ‘70s, EPM solutions and processes were managed via phones and meetings then spreadsheets came in the 80s with software like Lotus 1-2-3. The availability of email then allowed the sharing of spreadsheets. After this, the next step forward was the creation of systems to hold data in a place that’s easier to manipulate (in a good way). Then cloud computing came about, lowering both operational and capital expenses and making it easier to process large volumes of data to make better business decisions faster.
What does EPM do?
EPM includes anything that helps you look at a number, be it backward, forward, or at the present. There’s no strict definition of what is and what isn’t EPM, but it can include the following helpful business functions:
- Planning, budgeting, and forecasting
- Financial consolidation and close
- Profitability and cost management
- Account reconciliation
- Tax reporting
- Management reporting
- Hierarchy management
- Scenario planning and strategic modeling
- Data visualization
- Narrative reporting (variance analysis)
Recall that EPM as a concept used to be done via spreadsheets… and shocking absolutely no one, it still is in some dark corners of the enterprise; however, that’s not the way it should be. Spreadsheets are for viewing, not storing data. They’re not a database and they’re lousy places to store business logic. If you want to build strategic plans, you need software to handle the bulk activities.
Where is EPM headed?
In 2021, the global EPM market was $5.7B. By 2026, it will be $7.7B. The biggest trend is the move to the cloud: roughly half of all companies have already moved their EPM solutions to the Cloud which also means that roughly half are still sitting with their EPM on-premises. Almost every company will move to the cloud eventually, newly appointed strategic CFOs are putting everything on the cloud and people who haven’t moved tend to be those retiring. |
Finance leaders are driving change and systems & technologies are how it happens. CFOs are focused on driving best practices and figuring out how to turn data into an asset. Acceleration of digital investment creates opportunities, for example, for automation to enable FP&A teams to optimize the speed of end-to-end processes. The general rule of thumb is if something can be done by a computer, it eventually will be. EPM is now viewed as an enabler, or strategic driver, in reaching company goals.
EPM also helps manage uncertainty. It alleviates the complexity of bringing all data into a single source and helps businesses bridge gaps between financial plans and actual results. It’s cliché to say, but the world is changing and every day, it’s changing faster than before. Companies that excelled the most over the past several years were able to pivot quickly, and for many, the finance function has been a strategic driver of digital transformation and success.
How can EPM help you?
As EPM continues to grow in importance, the people who understand and utilize EPM systems, particularly those in the Cloud, are going to become more and more valuable as employees. It’s important to build your EPM knowledge and focus on building your skills in areas including:
- EPM best practices
- Integrated systems
- Automated solutions
- Agile processes
- Modernized technology
Digital skills are seen as building blocks that a successful company needs and EPM competency will become more and more valuable as companies use data to make business decisions. Companies will increasingly look to EPM to help them transform, and employees skilled in EPM are going to enable that transformation.
If you don’t already have EPM on your resume, start learning now, and in the future, the world will be your (digital) oyster.
Learn more about EPM by attending OATUG’s Cloud EPM & Hyperion Week, August 15-19. This 15-session live virtual event is free for OATUG members.
Edward is Chief Performance Officer at Argano, a business and technology services provider. Learn how Argano helps clients implement and use Oracle technology.