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Thursday, May 16, 2013

BI and EPM

Sample Diagram of EPM Components (from www.SAP.com/epm)


A modern enterprise relies to a wide range of many data sources, ranging from financial systems, to operational metrics, to social & customer relational KPI's, to supply-chain, and even general-purpose economic indicators, such as interest rates or currency exchange rates.

To support evidence-based decision making and effective management approaches such as continuous improvement, some key challenges include the integration, governance &  presentation of so many types of data.  Today, and in particular with cloud-based options and open API's, there are an unprecedented range of tools that now allow solutions that were either impossible, prohibitively time-consuming, or not affordable up until very recently.

Building on the foundations of financial planning & analysis (FP&A), and typically incorporating operational and/or sales metrics, the development of business intelligence (BI), sought to combine these important data sources to yield the next level of insights for effective management or development of decision support systems.

By also adding Strategy elements and including metrics to help align efforts to maximize results, in the early 2000's, Corporate Performance Management (CPM), or Enterprise Performance Management (EPM), went even further and defined a "closed-loop" process of six semi-standard steps, as per Kaplan & Norton's definition:

  1. Strategy Development
  2. Strategy Translation
  3. Organization Alignment
  4. Operations Planning
  5. Learning & Monitoring
  6. Testing & Adaptation

While all steps might not apply to all firms in all cases, EPM's framework can be adapted to suit most organizations, and includes a set of process technologies such as strategy maps, balanced scorecards, budget & forecast variance analysis, business valuation/market cap, rolling forecasts, sales pipelines, customer relationship/social metrics (CRM), and even extending to corporate social responsibility (CSR).  ...Lastly, the process of integrating data sources from across and enterprise include managing data quality and governance, so that the presentation of these data can be focused on the highest current priorities, as defined in the strategy development, thus closing the loop to hopefully cycle through the process again in the most agile-friendly fashion.


Enterprise Performance Management (EPM) is the process of monitoring performance across the enterprise with the goal of improving business performance. An EPM system integrates and analyzes data from many sources, including, but not limited to, e-commerce systems, front-office and back-office applications, data warehouses and external data sources. Advanced EPM systems can support many performance methodologies such as the balanced scorecard.
          --Gartner Group


On this blog, I'll try to show examples of how the latest software tools now facilitate the development of complete solutions for these broad sets of important business issues.


Note:  Over time, several of the more technical & specific functions of financial consolidation, financial close management, and disclosure, etc. have evolved to be kept separate from some of the more adaptable and flexible elements above.  In fact, in 2015, the Gartner Group described the "Breakup of the CPM Suite", into so-called Financial & Strategic parts ("FCPM" and "SCPM"), which would then allow optimal or best-of-breed products to be leveraged as necessary to facilitate control on the financial-specific side, yet also enable flexibility for the strategic.  ...This site, due to time/space, will have to focus on the SCPM-side, so to speak, but for any interested in new, fantastic, cloud-based tools for complex financial consolidation, please take a look at www.Workiva.com and SAP's own recommendation, www.Blackline.com.  Hopefully, at some point I'll have a chance to post about them in the future as well.



More on this:
https://www.gartner.com/doc/3101017?ref=SiteSearch&sthkw=breakup%20of%20cpm%20suite&fnl=search&srcId=1-3478922254

https://kellblog.com/2016/06/02/the-new-split-cpm-magic-quadrants-from-gartner/



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