The difference between ERP and EPM: how to choose the right system
What is an EPM system?
An enterprise performance management (EPM) system allows organizations to strategically plan for the impact of operational and financial factors on their future performance and business outcomes. They include reporting and analytics capabilities that enable businesses to set goals and objectives and monitor performance against those objectives.
EPM systems vary hugely in complexity and automation capabilities, from the straightforward spreadsheet alternative to refined multi-user systems that enable cross-enterprise collaborative planning, provide a broad spectrum of analytics, and use advanced technologies such as machine learning.
EPM software is becoming more popular with organizations of all sizes. But one size doesn’t fit all. SMEs (Small and Medium Enterprises) have different needs and challenges, and they make other choices when it comes to enterprise performance management technology deployments, preferring tightly integrated solutions and a clear preference for SaaS over on-premise.
What is an ERP system?
According to tech research and advisory firm Gartner, enterprise resource planning (ERP) can be defined as:
“Enterprise resource planning (ERP) is the ability to deliver an integrated suite of business applications. ERP tools share a common process and data model, covering broad and deep operational end-to-end processes, such as those in finance, HR, distribution, manufacturing, service, and the supply chain. As a result, ERP applications automate and support a range of administrative and operational business processes across multiple industries.”
Essentially, ERP is a platform used by organizations to manage and unite various parts of the business, such as finance, HR, procurement, operations, and project management.
The 3 main differences between EPM and ERP
If you’re thinking about enterprise software implementation, you might be considering whether you should adopt ERP, EPM, or both. So, let’s look at three of the key differences between the two platforms.
1. Focus area
Depending on the features and functionalities an organization needs, ERP implementation can take longer than that of EPM. Standard, Cloud-based EPM integration needs minimal IT support and usually takes less time to implement, which is why some companies choose EPM applications before upgrading to ERP. Although many modern ERP solutions include built-in EPM functionalities that are sufficient for most organizations’ needs.
2. Complex implementation
Depending on the features and functionalities an organization needs, ERP implementation can take longer than that of EPM. Standard, cloud-based EPM integration needs minimal IT support and usually takes less time to implement, which is why some companies choose EPM applications before upgrading to ERP. Although many modern ERP solutions include built-in EPM functionalities that are sufficient for most organizations’ needs.
3. Reporting scope
ERP solutions enable management reporting and consolidation of data to create financial statements such as balance sheets, cash flow, income statements, budgets, and forecasting reports. Having an add-on for EPM then allows a deeper dive into analytics and reporting capabilities.
Which system is right for your organization?
Sadly, there really isn’t a one-size-fits-all answer to this. Each organization needs to weigh up the pros and cons and look at its specific business needs to guide its decision.
The first step and best practice for selecting an ERP would be to create a research and selection team that can audit any existing solutions, applications, and workflows. Then, focus on data quality improvements, decide on the ERP modules that work best for your business use cases; and it is also important to assess the technical backgrounds and skills of your IT team that will be using and assisting in implementing the system. Once you have all the information you need, it is time to start the selection process, compile all the questions you might have, and request demos for the products that you think might be right for your business.
Click to read ERP product brochure Gated
What the analysts say
Dresner’s annual Wisdom of Crowds Enterprise Performance Management market study is one of the most authoritative reports out there, and their report for 2022 named Unit4’s FP&A a leader in the EPM market. In the report, they state that annual financial budgets, cash-flow forecasting, and headcount planning remain the most critical concerns across the board. They also found that EPM usage is up 3% from last year to 54%. And although most of the adoption comes from large and very large organizations, small and medium-sized organizations are not far behind. Compared to last year, openness to adopting enterprise performance management is up to 44% (from 37%).
Dresner’s report ranked Unit4 FP&A above the industry average compared to other vendors in many metrics. Specifically, we rank above the competition in terms of the following:
- Reliability – Our customers rely on us to get the job done, so we’re delighted with this ranking.
- Usability and Customization – “User Experience” isn’t just a fashion statement for us – People Experience is core to what we offer as a company and is built into every aspect of our products.
- Ease of installation and Overall Deployment Support – this reflects our commitment to making implementation effortless through our Industry Models – which halve the industry average time for implementation.
- Responsiveness to Customer Queries – once again echoing our commitment to customer success – our teams are laser-focused on helping the people we work with to do better things through our platforms.
How can Unit4 transform your operational and financial planning?
Harness the power of fully aligned teams with Unit4's FP&A software to drive success. Our solutions help you by combining automated, AI-infused financial planning and analysis, budget management, and financial forecasting with highly interactive dashboards and powerful, pre-configured models.
Our ERP and FP&A software solutions free your teams to spend more time delivering insights and creating value for the business. We help you understand the numbers more deeply and then turn that insight into action for better business results and accurate consolidation.
Our Cloud FP&A software solution gives your people better, faster ways to put the numbers to work — through smarter planning, budgeting, forecasting, reporting, visualization, and analytics. As a result, your organization can take a flexible, integrated approach for all your organization's financial planning needs, whether planning cash flow, managing operational budgets, or forecasting sales, costs, and revenue.
Organizations can better manage their operations with industry-leading software for Financial Planning and Analysis (FP&A), Enterprise Resource Planning (ERP), and Human Capital Management (HCM).
You can check out Unit4's People Experience suite here.
And if you want to learn more about the enterprise performance management market in 2022 (including insights from your peers on how they’re prioritizing their digital investment, the way the market is evolving, and how you can leverage these developments to stay ahead of the curve) and how Unit4 FP&A performs against the competition, download this excerpt from Dresner: Wisdom of Crowds EPM Market Study 2022 now.
