Enterprise resource planning (ERP) and enterprise performance management (EPM) solutions help companies automate and improve business processes. More specifically, ERP solutions streamline management of day-to-day business processes and transactions. EPM solutions analyze, report, and optimize business key performance indicators (KPIs).
Discover how ERP and EPM are different and how to best use them to improve business operations. Then, explore examples of popular solutions to help automate your operational and management processes.
ERP refers to a modular and integrated suite of business applications from financials to human resources. These solutions originated from the inventory control and material requirements planning systems of the 1960s. Today all-in-one ERP software automates the essential processes for inter-departmental collaboration in businesses of all sizes.
These systems also offer visibility into workflows by keeping all data in a single, connected database. Whether they’re deployed on-premises or in the cloud, they also improve data security. In recent years, cloud-hosted ERP systems have increased in popularity.
The following features make it possible to streamline back-office processes:
Add-on modules offer even more industry-specific functionality. For example, some ERP solutions target construction contractors, manufacturers, and supply chain businesses.
EPM solutions monitor select KPIs to measure a company’s progress toward its business goals. Also known as corporate performance management (CPM), EPM helps develop business strategies by analyzing what worked in the past and attempting to replicate that success. These reporting processes were done manually in the past, usually through in-person meetings or shared spreadsheets. However, since the 1970s, EPM software has automated most of this work.
Successful EPM depends on selecting the right KPIs based on the specific industry and market share. By knowing which goals matter the most, businesses can develop effective strategies. They can make plans by using the following methodologies, depending on the one that best suits the business:
Like ERP solutions, EPM solutions can create financial reports. They can also create visuals, like dashboards and scorecards, to show relevant KPIs for sales, marketing, operations, and HR departments in an easy-to-understand way.
The following feature help improve company strategies for long-term success by using proven data analysis to inform better decision-making:
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.
Key differences include:
Despite these differences, ERP and EPM solutions work well together. Both focus on improving efficiency, minimizing risk, and increasing performance. Many businesses implement software to further automate ERP and EPM functions.
“What-if” scenario modeling tools
Q: How do ERP and EPM overlap? A: Both ERP and EPM can generate financial reports businesses can use to measure performance and inform decision-making.
Q: Can ERP and EPM software work together? A: Yes, ERP and EPM software can work together. In fact, some ERP systems include modules for EPM.
Q: Which is faster to implement? A: EPM software is faster to implement than ERP systems.
Because ERP and EPM systems complement each other, businesses often integrate both solutions to fully cover planning and execution. In fact, some ERP software includes EPM functionality as an optional add-on.