EPM’s Value Amid Economic Uncertainty
When the economy is booming, successful profitable businesses rarely see a need to refine processes, but to weather oncoming storms, organizations must actively prepare for the future. Rather than getting caught off guard by unexpected or volatile changes in the market, leaders must “future-proof” their organizations and re-evaluate the programs supporting financial performance and business planning. Too many companies across all sectors lack proactivity, waiting for disaster to strike before enacting necessary changes. Enterprises preparing for the worst—such as a looming recession or downturn in the market—should consider how implementing an Enterprise Performance Management (EPM) system could enable greater agility and offer a streamlined approach to their operations.
EPM refers to the software that assists with budgeting, forecasting, consolidation, tax management and financial reporting. This tool allocates and analyzes costs to show paths to profitability and provide valuable insights into operations. As a software, EPM goes above and beyond to solve real business problems, positively impacting the bottom line.
Why Do I Need to Future Proof?
Too often organization neglect to find trends in past data, missing the market indicators that would help them anticipate what the coming months may bring. The predictive power of EPM provides the flexibility to make decisions today that will sustain a company during changing times and support budgeting and forecasting goals.
By understanding the full scope of processes and correctly allocating costs, businesses are better able to optimize their profitability and make strategic spending decisions. Organizations receive a sound understanding of the factors contributing or detracting from their bottom line, giving them the confidence to invest in the right workforce volume and best materials.
For example, an organization with a healthy and robust pipeline might hire 20 workers to meet their current demands, but their technology stack doesn’t forecast future conditions. Three months later, the organization finds themselves in a lull. Suddenly, there’s not enough work or funds to justify maintaining the company’s larger workforce. EPM helps organizations predict what their pipeline and work orders will look like in the coming months, preventing these types of situations and providing a solid foundation for thorough planning, tactful budgeting, and strategic forecasting.
How Does EPM Bolster Supply Chain and Mitigate the Effect of Inflation?
Over the last few years, the U.S. inflation rate has risen to new heights, climbing to 8.3 percent in 2022 compared to 1.4 percent in 2020. The U.S. is not alone. In the first quarter of 2022, 37 out of 44 advanced nations had an average annual inflation rate 2x greater than the inflation rate of the same time period in 2020. This dramatic shift is being mirrored in rising costs of goods and materials, leading companies to analyze current supply chain processes for places to save. EPM offers an opportunity to measure and allocate revenue and expenses down to a very granular level and analyze which product line or channel provide the most profitable opportunities. Data is a powerful tool. EPM tools can provide insights, to ensure companies make sound financial decisions.
How Do I Future Proof my Organization and Move Beyond Legacy Systems?
When planning for the coming year, companies need to make sure their leaders and employees have the knowledge and data to direct business decisions. Data is a valuable tool for creating an action plan for financial growth. Many corporations are unaware of how using older tools stalls processes. These programs are hindering growth whereas enhance solutions accelerate processes and increase efficiencies.
Modern EPM tools provide full visibility into current operations, as well as forecasting future performance and needs While some companies are hesitant to transition due to the initial, upfront cost, investing in a modern EPM solution provides a greater ROI for business than old legacy systems or manual processes, saving organizations time and turning data into actionable insights.
What are My Next Steps?
Expansive tools such as EPM are often underutilized, especially when an organization has not identified its specific needs. Investing in the right partner ensures a company is using tools to the best of their abilities. Apps Associates assists organizations in preparing for the future by providing guidance to align corporate strategy with the right EPM technology.
Organizations that are interested in EPM should begin with an audit of their existing challenges and inefficiency followed by an inspection of their current tools, applications, and processes. Many organizations also bring in a partner to provide formal recommendations on how to improve business performance and implement existing and new technology to its full capacity.
Conclusion
Whether the coming months bring an upturn or downturn in the market, today’s organizations must actively prepare for the future. Companies should consider if the programs aiding their financial performance and business planning provide the insights they need to future-proof decisions. EPM systems can enable greater agility and offer a streamlined approach to budgeting, forecasting, consolidation, tax management and financial reporting, positively impacting the bottom line.