Just like agile principles enable developers to produce better software faster, EPM enables the enterprise to produce better financial results faster by becoming more agile.
Three things need to happen quickly and consistently for companies to produce great results. First, people need enough accurate information. Second, they need to make the right decisions. And third, they need to translate those decisions into action. However, none of these three things matters in isolation. It’s not even enough to do things quickly (not if you’re doing the wrong thing).
That’s why EPM is such a powerful tool. It does for enterprise performance management what the agile methodology does for software development. It gives highly motivated individuals the environment and support they need to deliver valuable results early and continuously. For developers using agile, the results are high quality code that works. For business people using EPM, the results are superior financial returns. In both realms high performance results from the three things that count most:
- Rapid access to complete information
- Rapid insight from the information to drive rapid decision making
- Quickly turning decisions into concrete actions
To understand why EPM is “agile for the enterprise” and why that is a good thing, it helps to understand how agile overcomes three key obstacles to effective action: departmentalized information, lack of collaboration, and a propensity to plan instead of respond to change. In fact, how software was developed pre-agile is a lot like how many companies are managed pre-EPM — and with similar outcomes. In each case, the process takes so long and is so uninformed that results are too often out of sync with constantly changing business requirements.
Pre-agile software designers, developers, and testers acted as if on an assembly line. They didn’t collaborate much — with each other or with users — except to share deliverables “for inspection” when “done.” Likewise, pre-EPM financial and operational teams often work off different data using different tools that are difficult to integrate so decisions are often late and based on incomplete information.
On the software side agile attacked this problem by bringing people together early and often to review each piece of working code while it’s still being developed. (In agile, teams iterate working code, not a plan, so iterations finish faster.) Frequent collaboration across silos means requirements and software stay in sync and that the software is updated quickly in response to new information (like that a function needs some tweaking). Errors are reduced and valuable software is produced continuously on a very short timescale.
EPM has the same agile effect on the enterprise as a whole. An agile enterprise is one that:
- Enables rapid access to all relevant information across silos by all relevant stakeholders
- Undertakes and updates strategic initiatives (like entering a new market or undertaking a merger) quickly in response to change
- Enables easy and fast synthesis and correlation of financial and operational data from diverse sources across silos for rapid meaningful insights
- Easily forms new teams and organizational structures as needs change
- Fosters day-to-day interaction of relevant stakeholders regardless of where they sit in the company geographically or organizationally
- Easily and rapidly turns decisions into direct actions
Walk into an agile enterprise and it feels a lot like walking into an agile software group. There’s a lot of virtual white boarding, a lot of chat, a lot of self-organizing, a lot of direct customer engagement, and a lot of value being created. What you don’t see is a lot of planning just to stay busy.
How EPM Enables Agility
EPM provides integrated enterprise data and built-in capabilities across the enterprise to analyze, understand, and report on business performance. Applications range from the tactical (e.g., deciding which vendor to pay first) to operational (e.g., account reconciliations) to strategic (e.g., mergers and acquisitions). Users range from the CFO and finance teams to functional areas like HR, sales, marketing, and IT.
Agility is enhanced both by everyone working off the same data and by the power of built-in capabilities like automation, artificial intelligence, and visualization. Automation of error-prone tasks such as account reconciliation speeds up processes and reduces mistakes while also freeing up managers to focus on analysis and decision-making. (Account reconciliation is the number one cause of non-data-related delays in the financial close.) Artificial intelligence detects hidden patterns and insights in historic data — thereby also improving the quality of decisions and closing the gap between analysis and action. Highly visual dashboards and reports meanwhile help collaborators share insights more effectively with colleagues.
All of which unblocks the obstacles to the agile enterprise: departmentalized information, lack of collaboration, and propensity to plan versus responding to change. Throughout the company, people can now act decisively in real time because they have the insights and collaborative support they need when they need it.