Enterprise Performance Management (EPM) has come a long way from solutions that were first seen almost two decades ago. Of course, it could be argued that the first “EPM Technology” was the spreadsheet—dating back more than 30 years now.

Understanding those humble beginnings, and where the technology is heading, is vital for business users and IT managers as they chart a course for their company’s future EPM strategy.

Why are spreadsheets still so prevalent?

Simple answer: Spreadsheets are easy. They're intuitive enough for analysts to become “developers” by creating mild to sophisticated models using functions that don’t require programmer skills, and input forms can be created even for novice users. A wide range of resources can develop, administer and use spreadsheets, making them the lowest price of admission to the EPM world.

Why not stop with spreadsheet EPM?

While spreadsheets are generally useful, they have limitations when it comes to complexity. Environments with many users, more than 65,000 rows of data, and complex modeling will soon require workarounds to avoid weaknesses. At some point, the side effects cause the solution to get progressively worse.

Linked workbooks, data limitations, and intolerance of multi-user scenarios are common pain points. Out of desperation to make the EPM process more sustainable, concessions are often negotiated: data volume is cut back, users are curtailed, modeling complexity is restrained, and the cycle frequency is limited.

Many companies implement a form of EPM solution to handle these limitations. For example, a “generation 1” EPM solution might address a single process such as financial planning in isolation, with rudimentary automation. Success will be measured in cycle time saved by cutting manual processing—but it's still a tiny fraction of what could be achieved with the right orientation.

If spreadsheet EPM is failing…what's a better strategy?

Between 2006 and 2009, the EPM industry went through a major consolidation: Previously standalone EPM solutions were acquired by the software megavendors to constitute EPM suites. This has introduced new capabilities, and with these, enabled new heights of value to be achieved.

SAP’s portfolio, for example, has three forms of integration available that drive additional value when implemented properly.

Intra-EPM integration: In the past, each EPM product had distinct capabilities to support certain use cases. For example, a strategy management tool could parse strategy maps to cascade responsibility for a strategic objective to measurable tasks for each manager—but a tool optimized for financial planning would not do very well in this use case. These best of breed components can now function as a unit, with a common user interface and common data components behind the scenes to enhance adoption and increase effectiveness. As a result, users along the EPM continuum don’t need to learn different proprietary interfaces.

EPM & Business Intelligence (BI) integration: With recent advancements in the integration between these two technologies, it is possible to intelligently link BI reports to EPM and vice versa—eliminating questions about how much detail is needed or which reports should be run in EPM or BI. By adding the highly valuable performance management context to BI, more relevant insights can be gleaned than would be possible from either in isolation.

EPM and ERP integration: If the ERP system is where transactions are processed, and the EPM system is where the company’s future direction is determined and measured, it follows that the closer you bring these products together, the more value. Data that enables you to view the ramifications of a given transaction on the company’s strategic goals in real time also equips decision makers in the field to make the right choices.

Technology integration (mobility/in memory): Adding the ability to surface this EPM information whenever and wherever decisions are made is where additional value will come in the future. Mobile platforms make access to this information in the field a reality. Freeing this information from long running process times will enable even more value to be achieved.

You don't need a crystal ball to see that the future of EPM means that “decision makers” will no longer be restricted to executives in a board room. Every employee can participate in how the company invents, makes, sells, services its products; how employees are hired, compensated, assessed, and retained; and how all manner of operations are carried out. Every level of the organization can have the right information, proper accountability, and contribution measurements.