Understanding Analytics-Based Enterprise Performance Management

EPM is essentially a combination of the concepts of strategy maps, balanced scorecards, profitability management, activity-based costing principles, driver-based budgeting, and a few others. When you are a CFO, everyone looks to you for all the answers. EPM is a method to glean deeper, more meaningful insight by collecting and aligning all of the data from various software and applications and combining it for a richer, more comprehensive view of the status of the enterprise.

EPM is More Than Mere Statistics or BI

Enterprise performance management is much more than just business intelligence or statistical analysis, and gives much deeper insight into the current status of the organization, as well as what the future holds.

Until now, CFOs (and other executives at the helm of large corporations) had a relatively small pool of analytical tools. Using spreadsheets and other more or less manual means, they could derive a bit of business intelligence using data analytics and statistical methods. EPM is a far more robust set of tools and techniques to work with.

EPM involves gathering data from a wide range of disparate sources and combining the data for a fuller, more comprehensive analysis. The deeper, richer data lends to more robust analysis, including the ability to conduct predictive analysis to guide the business into decisions that do not only work now, but will also serve their purposes well into the future. A good way to look at the difference in EPM and ordinary BI is what kinds of questions you can answer using each method. Using BI, you can answer the question, “What happened?” Using EPM, you can answer the question, “What can happen?”

Analytics-Based Enterprise Performance Management Includes Internal & External Data

The data that goes into enterprise performance management is not just the internal data that belongs to the organization. It also includes as much external data as possible to give a holistic view of the situation.

Naturally, the data that is lumped into enterprise performance management includes all of the internal data from spreadsheets, CRM software, marketing software, financial software, etc., but it also incorporates as much data from external sources as possible. External data can include historical data on financial markets, industry ratios and benchmarks, consumer information, etc.