What is the difference between CPM and EPM?

By Sigma Conso, a Prophix Company

Close up businessman with digital tablet

What we’re going to talk about:

  • The key difference between corporate performance management (CPM) and enterprise performance management (EPM): a CPM system focuses more on financial processes, while EPM takes a holistic view of the whole organization.
  • CPM software has multiple functionalities, including automatic data collection, report generation, data visualization, and budgeting.
  • EPM software has the functionality to collect data from different functions across the organization such as supply chain or marketing.
  • Both EPM and CPM software aim to reduce or eliminate inefficient and inaccuracy due to spreadsheet and manual entry errors.
  • CPM software is key to not just improving day-to-day processes but in providing the right data and solutions for long-term planning and strategy in business performance management.

It can be hard to define the subtle differences between corporate performance management (CPM) and enterprise performance management (EPM), as both are focused on enabling companies to reach their goals by connecting strategy to execution.

The two terms are also often used interchangeably, particularly when describing the processes, rather than the software that supports these processes. You may also come across business process management (BPM) software, which is focused on increasing efficiency in day-to-day processes.

However, CPM and theCPM software which supports this framework tends to focus more on finance processes, financial management, and financial reporting, while EPM and its associated software takes a more holistic approach, gathering data for key performance indicators across the whole organization.

Are you interested in discovering more about corporate performance management (CPM) software? If so, please get in touch. We have a team of experts who will be happy to discuss your specific needs and what our CPM software can do for you.

What is CPM?

The term CPM was originally coined by Gartner, who defined it as “an umbrella term that describes the methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise.”

This is to say that CPM is not a single method or solution. Rather, it is a concept: efficient process management will create better business intelligence, which in turn will drive better strategic planning and decision-making. Effective implementation therefore relies on relevant applications – CPM software – which provide the right data and tools.

Uses of CPM software

CPM software tends to focus more on financial data. The right CPM software enables a range of tasks to be performed quickly and efficiently, using the most accurate and up-to-date data. Different packages have different functionalities, but most will include:

  • Data collection: CPM software will pull real-time data from a range of sources, and enables this complex process to be automated, saving time, money, and expertise
  • Budgeting: tools to generate and share short-, medium-, and long-term budgets in a variety of formats
  • Forecasting: enabling better financial planning to reach financial goals
  • Sharing: a cloud-based CPM software package allows colleagues to share information efficiently and securely, creating space for better planning and more effective collaboration
  • Analytics: most CPM packages have powerful analytic tools to crunch numbers and provide the financial performance information decision-makers need. Predictive analytics can also aid in long-term planning
  • KPIs: teams can set, track, and manage key performance indicators
  • Visualisation: data shown on a single platform via dashboards which can be easily accessed and shared between relevant teams, increasing visibility and transparency.

What is EPM?

Gartner’s definition of an EPM system is narrower than that of CPM: “The process of monitoring performance across the enterprise with the goal of improving business performance.” It further points out that EPM integrates and analyses data from many different sources.

EPM solutions and software can be used by the entire organization, from human resources to marketing, to measure their success against key performance indicators. For example, a marketing team might use it to examine the success of a campaign on social media, using data and analytics to drive key decisions around what platforms should be used, which customers should be targeted, and what content is driving engagement.

EPM systems also emphasize the importance of revisiting, reporting, and reviewing to keep pace with best practices, rapidly changing industries, and business landscapes.

Uses of EPM software

EPM software usually takes a wider view of an organization than CPM, meaning it can be applied to a variety of organization types, such as universities, non-profits, or government agencies. It has the functionality to encompass key performance indicators in processes and functions which take place across the entire company, such as supply chain, HR, sales, or procurement, as well as finance.

Many of its functions can also be found in CPM software. Like CPM software, it aims to replace company-wide reliance on spreadsheets, enabling information to be gathered, analysed, shared, and used with maximum efficiency. It can be used for:

  • Automating data collection from functions across the organization
  • Rapid completion of financial processes including budgeting, forecasting, and generating reports
  • Visualising a variety of data from across the organization – for example, visualising attrition rates for HR, or changing prices for supply chain
  • Monitoring key performance indicators from different organizational departments
  • Secure sharing, collaborating, and reviewing
  • Analysing data to inform better decision-making

The strategic importance of CPM software

By allowing automatic data collection, a central storage point, and ease of sharing, plus task tracking and simple standardised workflows, CPM software aims to solve the pain points created by reliance on traditional spreadsheets and manual data entry.

It is estimated that around90% of all spreadsheets contain errors, which can have catastrophic results. It was a simple spreadsheet error which double-counted debt, for example, and caused investment bank Lazard Ltd to undervalue SolarCity Corp, the solar energy company by $400mbefore its sale to Tesla.

CPM software brings an immediate benefit to your team. Its timesaving, improved efficiency and accuracy will free up your finance professionals to concentrate on tasks which add value, and to further improve processes such as the financial close.

However, CPM software can also make a vital difference when it comes to a company’s long-term strategy. Being able to access and analyse this data enables finance teams to make longer-term decisions based on facts. Data visualisation allows for easy information sharing up to and across decision-makers in non-financial department, along with investors and shareholders.

Companies are collecting more data than ever before: over the next two years,the amount of enterprise data is set to increase at an annual rate of 42.2%, according to a report from Seagate. But that same report points out that 68% of that data goes unused. The winners will be those companies who use the data: who collect, share, and learn in order to drive improvement and surpass strategic goals. CPM software enables companies to have the right data at the right time: key to success in an increasingly uncertain world.

Are you interested in discovering more about corporate performance management (CPM) software? If so, please get in touch. We have a team of experts who will be happy to discuss your specific needs and what our CPM software can do for you.