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Unlocking the full potential of your organization’s performance hinges on the seamless integration of Corporate Performance Management (CPM) and Enterprise Resource Planning (ERP) software. In today’s dynamic business environment, where agility and strategic decision-making are paramount, the synergy between these two essential systems are the backbone to deliver the enhanced visibility organizations need to optimize performance, drive growth and stay resilient in today’s evolving business environment.

ERPs Run the Business – CPM Manages the Business

ERP systems are often thought of as the central nervous system of the enterprise and are essential to the effective execution of day-to-day transactional activities. CPM systems can be thought of as the “brain” of the enterprise, helping to align and coordinate goals, objectives, financial and operational plans and execution across the enterprise. Both systems are critical to the success of an organization. ERP systems are used to run the business, CPM systems are used to manage the business and make critical decisions.

CPM systems source most of their data from internal systems including ERP, but also human capital management (HCM), customer relationship management (CRM) and increasingly external sources such as websites, social media and industry information. And while single-instance ERP has been a goal of many IT organizations, the reality is that most large enterprises have multiple ERPs in use across their various subsidiaries and locations. Therefore, an enterprise-class CPM solution must be capable of integrating and mapping data from multiple ERPs, other source systems and data sources.

Get More Value from SAP Investments with CPM

Many organizations have invested in SAP ERP systems to run their businesses, and SAP data warehouse systems to capture large volumes of transactional data for decision-making. Some have standardized on SAP across all operations, while others run a mixed environment of SAP as well as other ERP systems.

Whatever the case, a unified CPM platform helps organizations get more value from their ERP investments by integrating data from all ERPs and other sources, validating and consolidating that data to create a single source of the truth and “system of record” for consolidating financial results, external financial reporting, internal management reporting, financial and operational planning, analysis and effective decision-making.

Having direct integration to SAP and other ERPs and data sources is critical to having effective and agile reporting and planning processes, and the ability to make fast and informed decisions that can impact corporate performance.

Integrating SAP to OneStream

This was the focus of a webinar hosted by OneStream partner inlumi titled: “All the World’s a Stage – Integrating SAP to OneStream.” The webinar was led by Francisco Amores, MDM and Data Integration Lead at inlumi, who has over 12 years of experience designing and building CPM integration solutions. Here’s a quick summary of the key topics he covered in the webinar.

The webinar started off with an overview of how data is integrated from multiple sources and “staged” in OneStream. OneStream has the ability to integrate data from any source via APIs or Web Services and can also load data via flat files and Excel spreadsheets. Whatever the integration method, it’s in the Stage engine that data is transformed, validated and then loaded into the financial model for processing – whether for financial consolidation, planning, forecasting, and various types of analysis.

In OneStream, data is available to users for reporting and analysis via “cubes” where users can view and analyze summary data, then drill down into the details in the Stage engine, and then drill further back to the original transactional details from the source system.

OneStream Intelligent Finance Platform

The webinar then highlighted the key benefits of direct, seamless integration between OneStream and the source systems. These benefits included:

OneStream leverages several approaches for direct integration with SAP data sources, OneStream connections need to be established only once for ongoing integration with SAP:

The webinar then provided detailed examples of how several of these integrations are configured and how they work, including HANA ODBC Driver and the SAP Integration Connector. And then the power of OneStream to support “round trip” integration with SAP by loading Profit Center balances from GLPCT were demonstrated, as seen in the graphic below:

OneStream drill-down "round trip" to SAP data

Then validating that all imported data was mapped to the target intersections, loading data into the target financial model/cube, drilling down to Stage from reports and dashboards. Then drilling back into the transaction details in SAP GLPCA as shown below.

OneStream drill-back to SAP

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This webinar provided a short, but powerful overview and demonstration of the ability OneStream provides organizations to leverage their investments in SAP ERP and data warehouse systems, as well as other data sources. OneStream provides direct and seamless integration to a unified Intelligent Finance Platform that supports consolidations, close, financial and management reporting, financial and operational planning, and reporting and analysis for Finance and line of business users.

To learn more, watch this webinar on how to Unlock Financial Excellence through SAP and OneStream with Avvale and Langan, or check out our eBook on how to Get More From Your SAP Investment.

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The terms enterprise performance management (EPM) and corporate performance management (CPM) have been in use in the market for at least 20 years.  These terms are both used to describe a similar set of management processes, although there are some subtle differences in the intended meaning and scope of these processes and the software used to support them.  What is EPM and how does it differ from CPM? Read on to learn more.

Enterprise Performance Management (EPM) Defined 

According to IT industry research firm Gartner’s EPM definition: “Enterprise Performance Management (EPM) is the process of monitoring performance across the enterprise with the goal of improving business performance.”   While monitoring performance across the enterprise is part of EPM, I’ve always preferred to think about EPM more broadly.  In my view, EPM is a set of management processes and a system designed to help organizations achieve their financial objectives by linking their strategies to plans and execution in a continuous management cycle.

These management processes include the following:  Goal Setting, Modeling, Planning, Financial Close & Consolidation, Reporting, and Analysis.  The continuous management cycle and relationship of these processes can be seen in Figure 1 below.

Performance Cycle

Figure 1 – The Performance Management Cycle 

How Does EPM Compare to ERP Systems? 

An EPM system integrates and analyzes data from many sources, including, but not limited to, ERP systems, HCM, CRM, and Supply Chain applications, data warehouses, and also cloud and external data sources.  And this brings up an important point and differentiator about EPM vs. ERP and other enterprise systems.  While ERP’s and other systems help organizations “run the business”, EPM systems help organizations “manage the business.”

What does that mean?  What it means is that EPM software systems provide management with data analytics and insights across multiple operational systems and processes (see Figure 2). EPM solutions provide agility in forecasting and strategic planning, reporting, and decision-making.  And they help organizations create alignment across the enterprise.

Performance Cycle

Figure 2 – EPM/CPM Systems Integrate Multiple ERP Systems 

How Does EPM Compare to CPM?  

So now you might be asking, how does enterprise performance management (EPM) differ from corporate performance management (CPM)?  The answer is – they are essentially the same.  And for that matter so are terms such as business performance management (BPM) and financial performance management (FPM).

The latter term, FPM, is by nature more aligned to the Finance function, and CPM sounds more aligned to managing “corporate” functions.  The EPM term was clearly intended to sound broader, encompassing management processes across the enterprise. But again, these terms are used synonymously in practice depending on the organization, and especially by different software vendors.

Alternative Software Approaches to EPM

This brings us to the next topic – what type of software is available to support EPM?  The answer is that there are basically three alternative enterprise performance management software approaches here:

Spreadsheets – are the “go-to” EPM solution for many Finance processes and can suffice in a small enterprise.  But organizations often outgrow the spreadsheet approach to budgeting and planning, and they don’t provide adequate controls and audit trails when used for financial consolidation and reporting.

GL/ERP Systems – the general ledger module found in most ERP systems does provide the ability to capture budgets, produce financial statements, and comparisons of actuals vs. budget.  But these EPM products aren’t designed to support the budget data collection process or consolidate financial results from multiple GL/ERP systems.  And the management reporting capabilities are limited in GL/ERP systems.

Purpose-Built EPM Applications – these applications have been available in the market for over 20 years and are the preferred approach to supporting EPM processes in organizations that have complexity that cannot be handled by the spreadsheet approach.  They provide the ability to integrate data from multiple GL/ERP systems and have specific automation functionality required to support EPM processes such as budgeting & planning, financial close and consolidation, financial and management reporting, and various types of analysis including risk and impact analysis.

While purpose-built EPM applications were initially delivered as on-premise software, these applications are now available as cloud-deployed solutions with subscription pricing, also known as software as a service (SaaS).  One caveat to be aware of is that not all EPM applications are created equally. Some are focused only on budgeting and planning, others only on financial close.  And some vendors provide multiple applications to support the various management processes while others support them through a single EPM tool or platform.

OneStream’s Intelligent Finance Platform

Figure 3 – OneStream’s Unified Intelligent Finance Platform 

For example, OneStream Software provides a single, unified platform (see figure 3) that supports all the EPM processes in the management cycle described earlier in this article.  Customers who adopt OneStream are typically replacing spreadsheets they have outgrown, multiple legacy EPM applications, or cloud-based point solutions.

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Whether you call it EPM, CPM, or some other term – a continuous management process that helps organizations link their strategies to their plans and execution is essential to creating and sustaining the corporate agility required to navigate rapidly-changing business and economic conditions.  Spreadsheets and email can support the EPM needs of small enterprises, but purpose-built EPM software applications are becoming the preferred approach for most mid-sized to large enterprises with any level of complexity.

To learn more about EPM software and how various vendors in the market compare, download the Dresner Advisory 2021 EPM Market Survey report.

Contact us to learn more about the benefits of OneStream’s unified EPM software for your company.

Like all things that change over time, the corporate performance management (CPM) or enterprise performance management (EPM) landscape has been through several key changes.  Many of you may remember the consolidation of smaller niche vendors nearly 15 years ago when OutlookSoft, Cartesis, Hyperion, Cognos and TM1, to name a few, were swallowed up by those mega-vendors of today – SAP, Oracle and IBM.   The critical importance of CPM in Finance Transformation continues to grow.

With increasing market demand for Finance Transformation, newer CPM vendors have since flourished alongside continual market growth and increasingly more organisations recognising the need for such solutions.  Indeed, the mega-vendors now have multiple areas of focus, outside of CPM, and have probably found themselves with declining CPM businesses, which only contribute a small percentage of mega-vendors’ overall revenues.

Not surprisingly, then, there is a natural push from legacy vendors to divert focus and attention towards full enterprise resource planning (ERP), human capital management (HCM), customer experience and/or supply chain opportunities to drive higher revenue and secure more of those larger deals.  But there is a problem with that.  Sometimes this approach dilutes the value of CPM, which is definitely not ideal.

De-Emphasising CPM Dilutes Finance Transformation

De-emphasising CPM ultimately has a negative effect.  The result?  The dilution of Finance Transformation.  Specifically, what has transpired is the collapse of the lines between ERP and CPM businesses as a result of reallocating investments away from delivering true innovation.  Instead, the focus has been on aligning the look and feel of the ERP and CPM solutions, creating a perception that CPM and ERP are the same, or at least interchangeable.

Legacy vendors are also willing to further dilute the value of CPM/EPM by heavily discounting CPM into multi-million-dollar ERP, HCM and supply chain software deals.  While this approach might work for IT groups intent on using a single vendor, potential consequences abound.  Here are just a few ways de-emphasising CPM impacts Finance teams:

While preparing for the next step in the transformation journey, Finance leaders must, must, must understand the key differences between ERP and CPM.  And for organizations preparing to evaluate new software for Finance Transformation, understanding ERP and CPM is especially critical.

ERP Systems Run the Business

Transactional systems such as ERP are best used to ‘run’ the organisation.  Any number of these systems can be present in a global organisation and can come from multiple suppliers.

While the term was first used in the 1990s by the Gartner Group, ERP systems actually have deep roots in the manufacturing industry and can trace their history back to the 1960s.  At that time, manufacturers needed a better way to manage, track and control inventory.

Today, ERP is generally referred to as a category of business management software – and typically a suite of integrated applications – that an organization can use to collect, store, manage and interpret data from many business activities.  Here are some examples of the business activities ERP systems help automate and track:

CPM Systems Manage the Business

The CPM or EPM solution (see Figure 1) is the management layer above all transaction systems.  CPM software provides a level of agility and visibility which is now critical for any organisation that wants to successfully handle the complexities of growth and change.  With an effective management layer in place, organisations can upgrade or replace underlying ERP/GL systems.  And it can be done without disrupting critical management processes, such as planning and reporting, during the transition period.

cpm v erp
Figure 1 – CPM vs. ERP

Essentially, CPM systems monitor performance across the enterprise with a key goal at the centre of it all: improving business performance.  A CPM system integrates and analyses data from many sources, including from applications across the organization such as the front-office, e-commerce systems, back-office, data warehouses and external data sources.  Here are a few of the key management processes supported by CPM:

CPM Investments Are Agnostic to M&A Strategy

During a recent customer conversation, the customer explained how a OneStream CPM investment was a key part of his organisation’s M&A strategy.  The company recently made a very large acquisition and had very little time or information to integrate the financial systems.  To integrate or consolidate systems at the transactional ERP layer would take months or even years, not to mention cause major disruptions in day-to-day business operations.  Comparatively, integrating the acquired company into OneStream can take just a matter of hours to a few days depending on the company size.

The Next Generation CPM Emerges

OneStream entered the CPM market to offer something completely different to the fragmented CPM systems acquired and developed by mega-vendors.  To offer something better – a single unified platform to bring together all the key CPM processes and analytics in one place (see Figure 2).

The strength of the OneStream platform takes organisations to an entirely new level of CPM, one where they can move away from only viewing key data and ratios at the month end to receiving weekly or even daily signals.  As a result, action can be taken at the speed of the organisation.  OneStream is therefore empowering its customers to “lead at speed.”

With OneStream, multiple integrations down to source systems to feed each CPM process are not necessary.  Instead, the intuitive workflow ensures data is loaded from ERPs only once and then becomes immediately available in any required process, such as planning and financial consolidation.

Intelligent Finance Platform
Figure 2: OneStream’s Intelligent Finance Platform

Thanks to OneStream’s ability to re-use core components of dimensionality, different hierarchies/business structures – which previously often resulted in separate CPM instances – can now be accommodated in a single platform.

That’s why over 700 organisations have chosen to convert from multiple legacy CPM products to OneStream’s Intelligent Finance platform – and they’ve never looked back.  These organisations have achieved abundant benefits.  Here are just a few:

Conclusion

When it comes to CPM vs. ERP, leaving CPM behind for an ERP system is not a great move for any medium to large organisation.  A CPM solution is a critical investment for such organisations – one that ensures an effective management layer is in place.  CPM solutions deliver key information and reporting relating not only to the performance of the business but also to how to manage effectively and take the right decisions going forward.  In other words, CPM complements and integrates with transactional systems such as ERPs, which are key to running the business – true Finance Transformation relies on both CPM and ERP systems working together.

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To learn more, click here to read about how our customer Xylem facilitates better, faster business decisions using OneStream.

One question that often comes up as enterprises are considering modernizing their financial systems is what should they upgrade first – their GL/ERP or corporate performance management (CPM) software? This reminds me of the old chicken and the egg question.

The answer is often “it depends.”

It depends on what? The dependencies can include the pain points or challenges an organization is facing, IT budgets and resources, compelling events that may be driving a system upgrade, as well as other factors. For example, according to 2020 research note published by Gartner1 , “In the current environment (as impacted by COVID-19), organizations are more likely to opt for projects with significantly less change management risk offer a quick time-to-value approach without the significant change management requirements associated with migrating to the latest generation cloud core financial management suites.”

Here’s a quick summary of the roles GL/ERP systems play vs. CPM solutions and some considerations to keep in mind as you plan your organization’s upgrade strategy.

GL/ERPs Run the Business

ERP systems focus on helping organizations run operational processes. The term first came into use in the 1990’s to extend the capabilities of manufacturing resource planning (MRP/MRP II) and to reflect the evolution of application integration beyond just manufacturing.

Today, ERP is generally referred to as a category of business software — and typically a suite of integrated applications—that an organization uses to collect, store, manage and interpret data from these many business activities. Examples of the business activities ERP systems help automate and track include:

The objective of ERP systems is to automate and integrate these processes across the enterprise to drive accuracy and efficiency in day-to-day transaction processing and operations.

CPM Manages the Business

CPM Processes

CPM (or EPM systems) focus on helping organizations improve management processes. CPM software systems help organizations achieve their financial objectives by linking corporate strategy to plans and execution.  It includes the process of collecting and integrating data from many systems across the enterprise (e.g., ERP, CRM, HCM) to plan, monitor and manage performance. Examples of the key processes EPM/CPM systems help automate include:

From a software standpoint, a small enterprise may start out using Microsoft Excel for budgeting.  Then as the enterprise grows it may implement a basic CPM software solution for budgeting, planning, and management reporting.  Then as the organization grows and expands in complexity, with multiple subsidiaries transacting with each other, international operations with multiple currencies, joint ventures and partial ownership interests – they may upgrade to an enterprise-class CPM software solution with more robust financial consolidation, reporting, planning, forecasting and analysis capabilities.

Which to Upgrade First – ERP or CPM?

If an enterprise already has both ERP and CPM software solutions in place, and if their ERP system is no longer meeting their needs and is hindering operations, there may be a good reason to focus on the ERP implementation first, then upgrade the CPM software after the ERP upgrade is complete.

However, in a larger enterprise, an ERP upgrade or re-implementation can be a major project that takes several years, costs millions, and can be very disruptive to the business.  One strategy that organizations will often use to minimize the disruption is to upgrade or implement a new CPM solution before the ERP upgrade project, or to unify data from multiple ERPs. 

Why CPM first? Here are several reasons upgrading your CPM system first makes sense:

OneStream Bridge

This “bridging” approach not only minimizes disruption during the ERP transition, but it also provides a flexible environment for supporting future changes – such as integrating acquired companies, new systems, organizational changes, or addressing new regulatory and management reporting requirements.

Unifying Multiple ERPs with OneStream

Headquartered in Mexico City, Grupo Traxión started through acquisitions of several logistics and transportation companies. These companies had their own ERPs, including SAP and Oracle systems, each with a different chart of accounts, philosophy of work and APIs. Grupo Traxión was using Excel® spreadsheets for financial consolidation and reporting, but inconsistencies in data collection from each entity created a long and inefficient month-end close process.

traxion-logo

In addition, senior management lacked visibility into the individual business segments, which limited their ability to perform detailed analysis and strategic decision-making. Grupo Traxión selected OneStream to strengthen internal controls over financial information with a unified platform for financial consolidation, internal and external reports, comparatives and analysis.

Grupo Traxión initially focused their OneStream project on financial close and consolidation, which was successfully implemented within a swift six-month period. The build included a multi-consolidation process for financial and management data. Data integrations are also in place between the data sources and OneStream’s Cloud platform, which enables Traxión’s 65 users to drillback to the transactions for deeper insights into financial data.

The company later extended their OneStream solution with operational analytics, then budgeting and forecasting.   With Excel® the close process was five days but has now been shortened to two to three days with OneStream. This gives Grupo Traxión the opportunity to spend more time reviewing and analyzing results rather than preparing reports.

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Grupo Traxión  is just one example of the speed of implementation and value a unified CPM platform can provide in integrating data from multiple ERP systems to create a flexible platform for consolidation, reporting, planning and analysis.  To learn more, visit the customer testimonials on our web site and contact OneStream if you thinking about an ERP upgrade but need a bridge to the future that can help minimize the disruption to you organization.

 

1 3 Ways to Flatten the Finance Record-to-Report Curve in Times of Crisis and Opportunity, Gartner, 17 July 2020.

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Corporate Performance Management (CPM) Systems help companies handle financial and operational planning, financial consolidation and close, intercompany elimination, account reconciliation, reporting and analysis and other finance processes. Gartner first recognized the CPM software category in the early 2000s, when the sector was dominated by independent vendors like Hyperion, Cognos, and OutlookSoft. Over time, many of these CPM systems were acquired by larger software companies, and in many cases became “features” of or add-ons to ERP platforms.

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The software industry is chock-full of buzzwords and terms that get broadly adopted and sometimes taken for granted.  One of the most over-used terms in the past 20 years or so is undoubtedly the word “integrated.”  This term has been used across several software product segments and hasn’t always meant the same thing.  

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While the terms ERP and EPM/CPM have been part of the Finance and IT nomenclature for over 15 years, there is sometimes confusion about these terms and their fit in an overall IT systems strategy. Here’s a short primer to set the record straight.

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Data integration is one of the most critical aspects of CPM solutions. Why?  Because the effectiveness of your budgeting, planning, consolidation and reporting processes is fully dependent on getting timely and accurate data from GL/ERP, HCM and other systems.

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