If you are looking for a software solution to manage your business, you might have come across the terms ERP and EPM. But what do they mean and how are they different?
In this article, we will explain the basics of ERP and EPM, their benefits and use cases, and how they can work together to provide a comprehensive view of your business performance.
What is ERP?
ERP stands for Enterprise Resource Planning. It is a software system that automates and streamlines the back-office transactional processes that make up the bulk of your day-to-day business. For example, ERP systems include modules for accounting, inventory, purchasing, sales, human resources, manufacturing, and more. ERP systems help you manage your operational data, such as invoices, orders, receipts, payroll, etc.
The main benefits of ERP are:
- Improved efficiency and productivity by reducing manual tasks and errors
- Increased visibility and control over your business processes and resources
- Enhanced collaboration and communication among departments and stakeholders
- Better compliance and security by enforcing rules and standards
- Lower costs and higher profits by optimizing resource utilization and reducing waste
Some of the popular ERP vendors are SAP, Oracle, Microsoft, and Infor.
What is EPM?
EPM stands for Enterprise Performance Management. It is a software system that helps you analyze, understand, and report on your business performance.
EPM refers to the processes designed to help organizations plan, budget, forecast, and report on business performance as well as consolidate and finalize financial results (often referred to as “closing the books”).
EPM solutions are primarily used by CFOs and the office of finance, while other functional areas, such as HR, sales, marketing, and IT, use EPM for operational planning, budgeting, and reporting.
The main benefits of EPM are:
- Improved decision making by providing insights into your business performance and trends
- Increased agility and responsiveness by enabling scenario planning and what-if analysis
- Enhanced alignment and accountability by linking strategic objectives to operational plans and actions
- Higher quality and reliability by ensuring data accuracy and consistency
- Faster and easier reporting by automating data collection and consolidation
Some of the popular EPM vendors are Oracle, IBM, Anaplan, Workday, and Adaptive Insights.
How are ERP and EPM different?
While ERP is primarily concerned with transactional data, EPM is primarily concerned with management data. EPM enables customers to comprehend the relationship between their financial and operational performance and their overall company success and recommends improvements to maximize both. ERP systems provide the raw data that EPM systems use to generate insights and recommendations.
ERP and EPM solutions overlap in both budgeting and forecasting. However, ERP solutions focus on actual business processes, while EPM analyzes the results. The relationship between the two systems is cause and effect: how your company uses an ERP determines the metrics your EPM measures.
How can ERP and EPM work together?
ERP and EPM are complementary solutions that can work together to provide a holistic view of your business performance.
By integrating ERP and EPM systems, you can leverage the operational data from ERP to feed into the analytical models of EPM. This way, you can ensure data quality, consistency, and timeliness across both systems.
- You can also create more accurate and comprehensive reports that cover both financial and non-financial metrics.
- You can also perform more advanced analytics, such as variance analysis, profitability analysis, cash flow analysis, etc., to identify opportunities for improvement.
- Moreover, by integrating ERP and EPM systems, you can align your strategic goals with your operational plans. You can use EPM to create budgets and forecasts based on your business objectives. Then you can use ERP to execute those plans by allocating resources accordingly. You can also monitor your progress against your targets using both systems.
Oracle ERP vs Oracle EPM
Oracle is one of the leading vendors of both ERP and EPM solutions. It offers a range of products for different industries, sizes, and needs. Some of the Oracle products are:
– Oracle Fusion Cloud ERP: A cloud-based ERP solution that covers financials,
procurement, project management, risk management, supply chain management, etc.
– Oracle Fusion Cloud EPM: A cloud-based EPM solution that covers planning,
budgeting, forecasting, financial consolidation, reporting, analytics, etc.
– Oracle NetSuite: A cloud-based ERP solution that covers accounting, inventory,
ecommerce, CRM, etc.
– Oracle Hyperion: An on-premise EPM solution that covers financial consolidation,
reporting, planning, budgeting, forecasting, etc.
Oracle ERP is mainly focused on managing day-to-day activities, whereas Oracle EPM is used for improving overall performance and making better decisions based on data analysis. Both are integrated with one another to provide an entire solution for managing a business’ operations and performance.
ERP and EPM are two different but related software systems that can help you run and grow your business. ERP helps you manage your operational data and processes, while EPM helps you analyze your business performance and plan for the future. By integrating ERP and EPM systems, you can gain a complete and accurate view of your business performance and align your strategy with your execution.
If you are interested in learning more about ERP and EPM solutions, contact us today. We can help you find the best solution for your business needs and goals.