Enterprise Performance Management ( EPM ) is basically a set of management processes, often supported by technology, that help to improve the strategic decisions people in organisations make every day.In the end it is the quality of those decisions that will separate successful companies from the rest. Performance Management is therefore a modern umbrella term for a set of management approaches that enable organisations to define and execute their strategy, and to measure and monitor performance in order to inform strategic decision making and learning.
In the first step to Enterprise performance management ( EPM Software) model, organisations start with defining their strategy, then move on to measuring performance, then use these indicators to analyse performance in order to extract insights and make better informed decisions which lead to actions and performance improvements. Let’s briefly look at each of these steps:
Strategic Planning – This step involves creating a business model and strategy (either corporately or for a business unit). State of the art tools that are commonly used here include Balanced Scorecard Strategy Maps and value-driver mapping. Informed by strategic analyses organisations identify what strategic objectives they plan to accomplish and how they plan to accomplish them.
Performance Measurement and Monitoring – Here organisations design key performance indicators (KPIs) to measure and monitor how well they are delivering on their strategic objectives. Most important is to ensure the metrics are relevant and meaningful. Many fall into the trap of measuring what is easy to measure instead of what will provide the best insights.
Business Intelligence (BI), Analytics and Modelling – In this step organisations use their performance data and metrics to analyse performance. This step is all about creating a solid evidence-base to inform decision making. Examples of analytics, BI and modelling approaches include marketing and sales analytics, customer analysis or click stream analysis.
Decision Making – In this step organisations translate the insights gained from their performance information into management decisions. It is all about evidence-based decision making facilitated by the performance review processes. Leading edge organisations put in place performance improvement meetings to create a dialogue about performance leading to joint decision making.
Upon the initial steps of Enterprise performance management approach it integrates with other key management processes. Here we briefly look at some of those processes in turn and explore the need for alignment.
Financial Budgeting, Business Planning & Consolidation – By integrating your budgeting and financial planning with your corporate objectives and priorities you ensure that the financial resources are spent on the things that actually matter the most. Some of the leading organisations are now able to update their budgets and forecasts on the fly, based on a continuous inflow of both financial and non-financial data.