Since its launch over 10 years ago, the concept of managing performance in organizations has had a variety of labels applied to it. These are the most popular variations:
- Business Performance Management (BPM)
- Corporate Performance Management (CPM)
- Financial Performance Management (FPM)
- Enterprise Performance Management (EPM)
Many practitioners and experts in the industry have positioned all of these labels as basically meaning the same thing. They see each as a process and software system designed to link strategies to plans and execution. Each includes the monitoring and managing of key performance indicators (KPIs). This then lets managers in various departments and divisions of an organization understand key market and business trends. Ultimately, it allows them to respond quickly to ensure they meet business objectives.
However, subtle differences actually exist between these terms and what they are intended to convey.
Business Performance Management (BPM) was the name originally used by a number of vendors and consulting firms when the concept was first launched in 2003. It included the processes of Goal Setting - Modeling - Planning - Reporting - Analysis. It’s a good label from the standpoint of applying these processes in Finance or line-of-business operations.
Yet there’s a downside of using the BPM label. It often gets confused with the other BPM – Business Process Management. And that’s an entirely different market. This includes a set of software tools providing workflow and process management capabilities in a wide variety of functions.
Corporate Performance Management (CPM) has also been widely used since the category was created. It’s the term used by Gartner, as well as a number of software vendors and consulting firms in the market. This term is typically used to highlight the “corporate” application of performance management processes, mainly driven out of the Finance organization.
To extend the concept out of Finance, some experts will use the term “Operational Performance Management” (OPM) as a companion to CPM. Under this use, they apply the same core concepts and processes to line-of-business operations.
Financial Performance Management (FPM) is a term that has been used primarily by Forrester Research. This flavor of the terminology clearly puts the focus on the Finance organization and the key processes they support. These include Financial Budgeting and Planning, Financial Consolidation, Reporting, Disclosure Management, and Profitability Management. But this term doesn’t address the application of performance management processes outside of Finance.
Enterprise Performance Management (EPM) is a more modern label that broadly applies the concepts of performance management across the enterprise. This includes Finance, which is typically the key driver of EPM. But it also includes Sales, Marketing, Services, Manufacturing, Supply Chain, and other line-of-business operations. This is the term used by Host Analytics, as well as some other vendors and consulting firms. In our view, EPM includes the following business processes:
- Setting goals and objectives
- Creating strategic, financial, and operational plans
- Closing the books on a periodic basis (monthly, quarterly, annually)
- Reporting results to internal and external stakeholders
- Analyzing financial and operating results and adjusting plans and resources as needed
Supporting the broader concept of EPM, as opposed to the more narrow concepts of CPM or FPM, requires a broad set of software capabilities. For instance, in Budgeting & Planning, it requires the ability to support the financial budgeting process. It also requires support for planning in other areas, such as Sales & Marketing.
In the area of Reporting, it requires the ability to generate formatted financial statements and disclosures for external stakeholders. It also requires the ability to deliver interactive dashboards and reports to executives and other internal stakeholders. This allows them to track key performance indicators (KPIs) and other metrics on a regular basis.
While most EPM, CPM, BPM, and FPM applications have been deployed on-premises, Cloud-based EPM allows organizations to get up and running much faster. Cloud-based EPM is more easily able to expand beyond Finance. It allows you to address new requirements much faster than with on-premises solutions. It also provides a lower up-front cost and lower ongoing cost of ownership vs. on-premises solutions.
Vendors, consultants, and IT analyst firms have all sought to stake out a unique position in the market by adopting a specific flavor of “PM terminology.” If you’re with an organization considering a PM solution, the important thing is to gain a clear understanding of your needs and requirements in the short-term as well as your long-term strategy and vision for applying PM processes and software.
Will it be confined to Finance? Or will it apply more broadly across the enterprise? How many users will you need to support in the long-term? Will they require mobile access? How quickly do you need to implement a new solution? Are cloud-based solutions part of your IT strategy?
Identify the answers to those questions, and then identify a software vendor and solution approach that will address your immediate needs. Most importantly, identify the vendor or solution that can support the growth of your business and your future requirements as well.
By John O’Rourke, from: http://www.hostanalytics.com/blog/epm-cpm-bpm-whats-in-a-name
John O’Rourke is Vice President of Product Marketing at Host Analytics. With a background in accounting and finance, John has over 30 years of experience in the software industry, and over 16 years of experience in EPM Product Marketing at Hyperion Solutions and Oracle. He has worked with many customers and partners on financial reporting and planning initiatives and has spoken and written on many topics in enterprise performance management. John has also held positions in strategic marketing and product marketing at Dun & Bradstreet Software, Kenan Systems and Decisyon. John has a BS degree in accounting from Bentley University and an MBA from Boston College. See John’s articles on EPM Channel here.