What is Enterprise Performance Management (EPM)?
Enterprise performance management (EPM) is a category of enterprise software that is purchased by corporate finance departments, adjacent to enterprise resource planning (ERP), and includes support for a number of critical processes, including:
- Strategic financial planning, scenario analysis, and driver-based planning.
- Planning and budgeting, creation of annual operating plans (AOP).
- Forecasting, using the AOP as a basis for periodic financial forecasts.
- Financial consolidation and close management.
- Reporting, including financial, management, statutory, and ad hoc reporting
- Analysis, including tools for multi-dimensional and other more advanced forms of analysis.
What is Corporate Performance Management (CPM)?
EPM is an unusual software category for two reasons: (1) customers rarely refer to the category by its name, preferring instead to discuss the individual areas it covers and (2) because the industry has never agreed on a single name for it. While Gartner refers to EPM as corporate performance management (CPM), Forrester has referred to as both financial performance management (FPM) and EPM, and BPM Partners refers to it as business performance management.
Choice of name aside, is there any real definitional difference between EPM, CPM, FPM, and BPM? The answer is basically no. For the most part, it is safe to treat all of them as synonyms, with a few nuances.
- CPM implies that the software is useful for corporations but not other forms of business such as government or non-profits. That is why, at Host Analytics, we prefer the term EPM because the software is useful for all forms of enterprises.
- FPM tends to imply that the software is useful only within the finance department. This is a narrow view of EPM because while EPM is certainly used widely within finance, EPM has always been used by budget-owners throughout the enterprise and is now increasingly used to tie together financial models and operational models strewn throughout an enterprise.
What’s the Future?
While we believe the industry is trending towards EPM as the standard terminology, another new development is taking shape. The market is increasingly splitting the concept of EPM in two, as Gartner recently did by replacing their single CPM magic quadrant (MQ) with two MQs: a strategic CPM and a financial CPM magic quadrant. In fact, some go so far as to argue that EPM as a concept becomes superfluous in this split world, where the integrated concept may simply be replaced by strategic and operational financial software.
No one knows when and if this will happen. In the meantime, we will continue to refer to the category as EPM, believe that EPM is best purchased as an integrated suite, and do believe that the suite has two natural sides: a strategic side oriented towards helping companies plan their future and an operational side oriented towards helping finance departments automate and accelerate their day-to-day operations.