Enterprise performance management (EPM) is defined by AMR Research as a superset of applications and processes that cross the traditional department boundaries to manage the full lifecycle of business decision-making. EPM combines planning, forecasting, and modelling capabilities with strategy execution. In addition, it encompasses performance metrics, operational reporting, and business alerts that enable users to take corrective action.
According to AMR Research, enterprise performance management … is not a one-time event; it is an iterative, continuous process. Its ultimate goal is to pilot the business in the desired direction. Ability to respond to changes in anticipated outcomes lets you make course corrections quickly so that you can align actions to strategic goals and measures.
Key market forces have converged to create an urgent need for enterprise performance management, including:
- Regulatory – New government regulation and landmark legislation, such as Sarbanes-Oxley Act in the United States, are having a profound impact on how corporations manage their businesses.
- Competitive – Business in most industries face more and different competition than they did ten years ago. Technology, an economy that is more global than ever, deregulation in certain industries and consolidation in others have accelerated markets and even blurred the lines across many channels and markets.
- Economic – A struggling global economy in the first few years of the 21st century drove most organizations to decrease investments and focus on cost reduction; since most organizations have largely squeezed costs as much as possible, they now face significant pressure to improve visibility and grow the business.
The key to effective enterprise performance management is tying performance metrics to business strategy. As a result, organizations need to combine the capabilities of two critical technologies:
- Performance Metrics – a robust business intelligence platform for automated data exchange, reporting, and analysis.
- Strategic Management System – a comprehensive system that manages the key business processes that impact strategy execution, including objective management, initiative management, resource management, risk management, and incentive management.