SAP : Enterprise Performance Management – what’s there in it for your organization?

First of all my apologies to friends who were following this blog, it took me a while to post the second part … there has been a lot of interest in EPM and I’ve been kept busy.

So, starting with where we left in the first part (http://www.infosysblogs.com/sap/2009/08/enterprise_performance_managem.html#more). There are a few broad areas that EPM covers at the strategic and operational levels – Strategy Management; Business Planning, Forecasting and Budgeting; Financial Consolidation; Profitability Management; Management Reporting & Analytics for your Business Functions (e.g. Supply Chain Performance Management).

Strategy Management helps you define your strategy, create goals and initiatives that will help you achieve this strategy, assign these initiative to owners in your team and define KPIs that will help you measure the success of these initiatives and take timely action. As a couple of friends leaving their comments to the first part of this blog highlighted, it is also essential to have a risk-adjusted strategy where the strategy you make for your organization considers the positive and negative risks and plan ahead for them. Business Planning, Forecasting and Budgeting is needed by every function of your organization to plan ahead to meet the strategic goals and initiatives. For e.g. a retail organization may plan its sales by store and product and based on the same it plans for its demand from its suppliers and production needs. The Human Resources department of an organization may plan for the workforce of the organization based on the skills needed (aligned to the strategic goals) as well as for the salaries.

To be able to understand how your organization is doing against its strategic goals and plans made, you need to consolidate the financial information on revenues, profits, margins etc which may be no simple task given the currency conversions, elimination of inter-company transfers and compliance (both legal and management) needs. Financial Consolidation as an areas helps you simplify this process and ensure quality and compliance efficiency while reducing the time to close.

Profitability Management helps you achieve your strategic goals by ensuring your organization is focusing on the most profitable customers, products, regions and channels. It also helps price your products priced appropriately to make them most profitable by ensuring the right proportion of overhead costs is considered in the price.

Similarly management reporting analytics solutions help set up the management of performance for every business function by focusing on your business KPIs, being able to see how you are doing on these and helping you drill down and across various dimensions to view the analysis trails and understand your areas of focus and better decision making.

While this provides a brief answer to what EPM comprises of, there is more that you could read on these different areas at http://www.infosysblogs.com/sap/enterprise_performance_management/

Until next time...happy blogging and do leave your comments. Cheers.