Businesses have a lot going on at any given time.
From keeping up with day-to-day tasks like accounting, project management and supply chain operations, to planning for the future, there are a lot of moving parts to manage and maintain. And to manage all these critical processes, you need the right tools in your arsenal.
That’s where your enterprise resource planning (ERP) platform comes in. But it’s also where your corporate performance management (CPM) software solution fits as well.
Both ERP and CPM software solutions play critical roles in the ongoing success of your business. But what are those roles, exactly, and how do they fit together? And do you even need both software solutions, or will one do?
This blog will examine both ERP and CPM solutions, what they are and how they compare—examining the unique role each fills in your organization. Let’s get started.
What is a CPM: A CPM empowers the methodologies, metrics, processes and systems that make up corporate performance management, automating reporting and analysis, optimizing performance and ensuring accuracy and consistency.
What is an ERP: An ERP automates transactional information to ensure accuracy and consistency across multiple business functions—including administration, sales and operations, accounting, project management and supply chain operations.
Having a CPM in place can aid your ERP implementation process, providing robust financial and operational planning, reporting and analysis that helps smooth the transition between ERPs and mitigates many risks.
First of all, what is a CPM system, exactly?
Your CPM software solution is a tool designed to empower the methodologies, metrics, processes and systems that make up corporate performance management. It allows you to automate your reporting and analysis, ensuring accuracy and consistency of data at the management level.
It does all of this by:
Connecting data sources and creating a single source of truth
Allowing you to report easily on key performance indicators (KPIs)
Streamlining business processes and automating manual tasks and workflows
Enabling better collaboration between your finance department and the stakeholders you support
All of that, in turn, helps you improve your business performance and focus your strategic goals, integrating data from across source systems—including your ERP—to standardize and streamline processes.
Ultimately, this makes your FP&A team more agile and collaborative, while ensuring data is accurate and trustworthy. And, it gives you a better view of performance to enhance strategic decision-making while adding efficiencies to the processes you have in place.
So what is an ERP system, then?
An ERP solution’s focus is on enabling operational effectiveness and day-to-day transactional processing. It automates your transactional information to ensure accuracy and consistency across multiple business functions—including administration, sales, operations, accounting, project management and supply chain operations.
It does this by:
Tying together business processes for more streamlined operations
Helping data flow between processes
Collecting transactional data from across source systems
Providing transparency into business processes and workflows
By doing all of that, your ERP platform plays a critical role in your organization, letting you optimize, digitize and automate business-wide processes and share data across the organization.
From the descriptions above, it’s clear that both ERP and CPM solutions connect data and enable key processes within a business. So how do they differ, exactly?
The biggest difference is that your ERP platform manages operational processes—transactions, for instance, or your general ledger. Meanwhile, your CPM platform manages strategic processes, like budgeting, forecasting and planning.
To understand what makes each of them stand out, think of your ERP platform as the central nervous system of your business, and your CPM solution as the brain.
As a further example, here’s a list of some of the different use cases each solution manages:
|
ERP Use Cases |
CPM Use Cases |
|
Inventory management |
Performance management |
|
Supply chain management |
Risk management |
|
Purchasing |
Reporting and analysis |
|
Human resources management |
Scenario planning |
|
Project management |
Forecasting |
From this list, it’s obvious that each software solution plays a different—but no less critical—role in the success of your business. Your ERP solution is used to run the organization’s day-to-day functions, and your CPM system is used to make critical decisions that help fuel its future success.
In fact, these two functions aren’t just different, but they complement each other in the way they work together—empowering all levels of your organization, both operational and strategic.
Together, they can help you transform your business. What’s more, a CPM can also help you when transitioning to a new ERP empowering you to get more from both software solutions.
Once you’ve made the decision to implement both an ERP solution and a CPM solution, the question becomes: which should come first? Should you wait until you’ve transitioned to your new ERP platform before you implement a CPM solution or not?
The answer is: you don’t need to wait until your ERP is in place to implement a CPM. In fact, it can help you if you don’t.
After all, a transition or upgrade to a new ERP system can be challenging, exposing your company to a range of risks—including financial reporting and compliance issues, operational interruptions and disruptions to your user community. Having a CPM solution in place during that process will provide robust financial and operational planning, reporting and analysis. This can help smooth the transition between ERPs and mitigate many of these risks.
And since a CPM offers quicker time to value than an ERP—four to 10 weeks, for instance, compared to up to a year for an ERP—you can benefit from it a lot quicker, helping you move your business forward faster.
A CPM can help your ERP transition in a multitude of ways, ultimately empowering you to get more from both solutions. With a CPM in place as you implement your ERP, you can benefit in the following ways:
An ERP implementation, update or transition often includes changes to Chart of Account segments and other data structures. The right CPM can help facilitate this, allowing you to easily model different data structures, reporting structures and hierarchies to help you decide what is optimal for your business. It can also:
Help automate your data mapping from old structures to new structures, quickly letting business users iterate through different scenarios—often with no IT support.
Allow you to test and iterate different reporting structures before committing to a new ERP.
With a CPM in place to aid your ERP implementation, data can be automatically integrated from both the new and old ERP environments to expedite data validation and activities. You can:
Quickly configure financial reports, showing side-by-side variances of old and new data sets to swiftly reconcile them.
Apply data- and transaction-matching logic to automatically identify data in need of reconciling.
A stable reporting environment can minimize the disruption your end users feel through your ERP transition, creating a consistent end user experience and minimizing the risk of slow or misguided decisions. The right CPM can help facilitate that by:
Easily integrating data from any source and providing a stable single source of truth while the new ERP is being implemented.
Allowing users to apply audit trails to easily track where each data point came from, facilitating transparent reporting and analysis.
Creating a repository for historical data, data structures and reporting that may not be migrated into your new ERP, giving your users peace of mind when you finally turn off your previous ERP.
With that data history living in your CPM system, you may find you don’t need to migrate it into the new ERP at all, helping you save time and resources by reducing the scope of your implementation.
An ERP platform can help you integrate operational processes and data from across the organization, creating a strong foundation for your business. But ERP solutions themselves often are not strong at providing reporting or analytics, and do not facilitate any forward-looking planning processes. By leveraging a CPM platform, you can:
Introduce planning, analysis and reporting on top of your ERP, and use your ERP for what it’s meant to be used for—ultimately increasing your user adoption for both your ERP and your CRM.
Provide a familiar and cohesive environment through your ERP transition, to minimize the learning curve associated with your new ERP.
And all of that helps your business get the most from both solution sets.
Find out more about the thousands of integrations Vena enables across source systems, including your ERP and accounting tools.