EPM solutions enable business operators to react faster to recognize revenue, manage the marketing or sales pipeline, and have a clearer view of consolidated charts of accounts.
The role of the CFO has changed. It has become more strategically-focused, more value-focused, and more future-focused. Finance teams are now leading business innovation as a part of broad-reaching digital transformation initiatives.
The modern CFO must approach strategy formulation and performance monitoring in an integrated framework – one that goes beyond reporting to offer decision support that aligns operational strategy with business execution. As strategic partners to their businesses, CFOs and their finance organizations should utilize EPM solutions to strategize, plan, analyze, optimize, and close and disclose financial results in a scalable framework.
While analysts agree that EPM plays a pivotal role at the nexus of finance and operations, the exact ROI of an EPM investment is difficult to measure. One could argue that EPM is critical to the wellbeing of an organization in much the same way that exercise is vital for a healthier life.
While the benefits of EPM can be hard to quantify, they are clear. In 2012, CEB reported that the “insight” deficit in finance had very discouraging results in terms of company performance. CEB concluded that analytic capabilities are central to a finance team’s ability to establish influence with business partners, noting that this influence can play a critical role in driving business outcomes and impacting annual total shareholder return (TSR).
There are many intangible benefits to implementing an EPM solution, including improved data quality, higher management efficiency, and more-informed decision support. EPM solutions empower finance professionals with the tools needed to extend the capabilities of current and legacy systems to drive full-scale organizational transformation. This includes increased agility and accelerated planning cycles, improved decision making, and reduced time associated with manual processes.
A company that has multiple, disconnected software systems (e.g. ERP, CRM, ATS, HCM, etc.), each with its own data structure, will not have the real-time visibility into operations and market opportunities required of today’s leaders. Tight integration with an EPM solution as the basis can speed operations and eliminate manual tasks across all departments in the enterprise. Business operators can react faster to recognize revenue, manage the Marketing or Sales pipeline, and have a clearer view of consolidated charts of accounts, for instance.
Hours spent manipulating large Excel spreadsheets, investigating discrepancies, maintaining various iterations, and checking formulas can be allocated to other more value-adding activities. In addition to fostering data integrity and a single version of the truth, EPM solutions enable finance professions to save time spent on the manual drudgery of financial close, management reporting, budgeting, consolidation, and monthly forecasting.
A 2015 study conducted by BPM Partners reported that 22 percent of respondents indicated they use spreadsheets as the primary solution for financial reporting. In the same survey, 12 percent specified that they were utilizing spreadsheets as the primary solution for financial consolidation.
Historically, many organizations that have upgraded from Excel spreadsheets have deployed financial consolidation and reporting applications on-premises. These legacy solutions can be time-consuming and costly, especially when it comes to software maintenance, data warehousing, and server costs.
This is fueling increasing interest and demand for best-in-breed cloud-based financial consolidation and reporting applications. Many cloud-based solutions offer the same technical capabilities as on-premises solutions, with advantages that significantly reduce total cost of ownership (TCO) vis-à-vis faster deployment, reduced reliance on IT, no hardware cost, and enhanced security in the cloud.
With access to accurate, consistent data and analytics capabilities across multiple systems, business leaders and managers can make faster, smarter decisions with EPM. Integrated planning functionality enables operators to run comprehensive “what-if” scenarios to measure the implications of various decisions to the business (e.g. headcount requirements for a new product launch).
By implementing a best-in-class EPM solution, the CFO can help shift the paradigm of finance as a custodian of corporate assets and financial data to a core business steward tasked with helping the enterprise measure and focus on the right indicators of performance across the business.
Jim Perry is the Director of EPM Enablement for Infor.•