The Business Impact of EPM (a case study)

What difference does Enterprise Performance Management (EPM) make in your business?

This is the question Finance, IT, and the business should be asking themselves (it’s the same question they should be asking about any initiative, by the way).

You can look at it in at least 3 different ways:

1. Table Stakes - EPM enables standard management processes that every (publicly traded) company must do well:
   • Budgeting, Planning & Forecasting
   • Financial Consolidation & Statutory Reporting
   • Management Reporting & Business Intelligence
   • Profitability Analysis
   • and other financial and operational modeling, planning, analysis, and reporting
2. Improving Performance - EPM can have a material impact on revenue, profit, cash flow, and overall return on capital:
   • Understanding customer and product profitability allows companies to focus on marketing and selling the products that give the best return, as well as have an impact on pricing strategy to make sure they have the right balance of volume, mix, and revenue
   • Gathering and sharing information on DSO, DPO, and DII - delivered to the right people in the organization (and tied to employee rewards) - can have a positive impact on cash cycle
   • Quickly modeling NewCo scenarios in a pending acquisition and basing those models on historical data and actual constraints (by product, by geo, by customer segment, etc.) can give a more accurate picture of available synergies to set the expectations of the street
3. Executing Strategy - EPM should close the loop between what you want to happen in the business (and how), and what actually happened (any why):
   • Records & Documents business model assumptions, constraints & drivers
   • Connects those models into your annual operating plans, budgets & forecasts
   • Monitors and alerts exceptional variances from actual to plan
   • Helps you understand the root causes of variance and plug that corporate knowledge back into the business model and strategy
   • Ties it all together with a common business language, common master data, and improved visibility & alignment.

Let’s take the a look at the potential impact of EPM using a real company scenario.