Role of ERP vs BI vs EPM in Financial Consolidation: Know the Differences and Choose the Right Tool

Introduction

The growing business scale in the era of big data and digital transformation demands something more than classic techniques of making decisions. Imagine this: Your team is working overtime to close the quarter, but despite your best efforts, numbers aren’t adding up. The financial reporting system you rely on is slow, clunky, and doesn’t give you the insight you need to make critical decisions.

What solutions will fix this recurring monthly problem? How will I get actionable insights to make better forecasts? What will help me to consolidate the processes and operations? You might be wondering about these questions after the gruelling report-making days are over. 

This blog is about helping you understand better what is EPM, what is BI, how they differ from ERP and what works best for my organization.

The right tool could make all the difference, but choosing wisely requires a deeper understanding of how each works. Let’s break it down and help you make the right choice for your business.

What is EPM?

Enterprise performance management i.e. EPM software is a suite designed to assist management processes like planning, modeling, and consolidation of data from single or multiple instances of ERP systems that an enterprise can utilize to improve its profits and performance. EPM software specializes in budgeting, forecasting and financial management. Generally, it is driven under the leadership of the CFO or finance department.

EPM aids the CFO and finance department in creating initial budgets and coordinating the planning across the organization. Business strategy and execution can be aligned.

Key EPM Functionalities

1.Budgeting & Target Setting: Helps CFOs and finance teams set initial budgets and targets.

2.Cross-Department Planning: Coordinates financial and operational planning across the organization.

3.Financial Consolidation: Aids in gathering financial and operational results quickly for timely decision-making.

4.Advanced Analytics: Supports modeling and analytics for data-driven insights and scenario planning to assess potential outcomes.

5.Simplified Auditing: Streamlines and accelerates the financial auditing process.

What is BI?

Business Intelligence (BI) refers to the systems and processes used by organizations to analyze data, extract insights, and drive strategic decision-making. An effective BI practice empowers everyone in the organization — from executives to front-line staff — to make informed decisions based on a shared, reliable source of data.

It overlaps with several data-driven disciplines, and understanding these differences is crucial for maximizing their combined value. At its core, BI fuels Enterprise Performance Management (EPM) by providing the data and analytics needed for effective financial and operational planning.

BI tools analyze, manipulate, and report on data, and support a wide range of business needs, including EPM. Most EPM systems rely on BI-generated insights and data, either built upon or fed by BI software.

Key BI Functionalities

1.Performance measurement: Multiple KPIs and metrics which are useful for the overall business functions like accounts payable or inventory are tracked and reported with ease.

2.Business process optimization: BI tools aid in identifying inefficiencies and bottlenecks in the operational and transactional data. This helps managers to understand and analyze data in a refined manner.

3.Predictive and trend analysis: BI tools are able to use historical data to identify patterns and trends that aid organizations in making proactive and data-driven decisions.

4.Reporting and Dashboards: BI generates reports, dashboards, and interactive visualizations to present data in a precise and user-friendly format.

What is ERP?

ERP i.e. Enterprise Resource Planning is a system that focuses on transactional processing and keeps track of the organization’s resources. The ERP system gathers and organizes data on materials wherever the organization interacts with them, from ordering to procurement, and from supply chains to delivery. It is designed to document transactions and monitor resources inside an organization.

The data from an ERP system helps business leaders identify efficiencies and improve processes and resource management. An ERP can overlap with Enterprise Performance Management (EPM), especially in areas like financial planning and decision-making. However, implementing an ERP system can be a lengthy process, often taking months or even years in larger organizations to fully roll out.

Key ERP Functionalities

1.Integration: ERP systems help you with giving a central view of the financial and operational data. ERP is the base for developing BI. The reports and insights provided by ERP can be utilized to optimize resource allocation and use.

2.Automation: One important functionality here is the ability to automate repeated business tasks. For instance, a line of business with a financial module could automatically trigger a month-end report on cash flows and other metrics.

3.Report making: ERP reporting modules can compile operations data into reports aiding the stakeholders to make informed decisions in the light of real-time data.

4.Financial Management: With ERP in place finance leaders can assist management in tracking and analyzing critical business data. Capital projects, funding, cash management, and other departments can make a collaborative decision.

EPM vs ERP: Know the difference

EPM solutions can work with multiple ERP integrations and can be implemented in a lesser time as compared to ERP; the catch here is how fast you are aiming to grow your organization and what tool you would implement to make your decision-making data-driven.

EPM vs BI: Understanding key differences

Both EPM and BI are designed to help businesses understand the overall performance across various functions. BI tools can assist in presenting data on how business is performing and unexplored opportunities. Integrated with BI, EPM can aid in strategic decision-making for improved performance.

The integration of EPM and BI creates a hybrid ecosystem which combines the strengths of both, thus offering a comprehensive and flexible approach to data analysis. The modern world with its challenges continues to evolve leaving no other choice but to upgrade and keep up with the industry.                   

Consolidate your financial statements with ResultLane

As a financial leader, you would want to access insights and reports for making strategic moves to propel your business forward. While EPM, BI, and ERP offer multiple functionalities to enhance your decisions, what it does not offer is a dedicated platform tailored only for finance.

ResulLane is a smart finance platform that simplifies finance closing processes with one click consolidation reporting and gives you much-needed time to focus on strategic and tactful business moves. Its integration capabilities with ERP make it an indispensable tool at the disposal of the CFOs and other finance leaders. What you save is countless hours of report making and with customizable formats you can track your KPIs just the way you want.