Enterprise Performance Management and digitalization: Chance for improvement!

The digital transformation of Enterprise Performance Management (EPM) is a chance not a threat! Better integration of processes and data, usage of cloud based solutions and predictive models provide room for improvement. One way to take advantage of the rapid development is the combination of on-premise installations with cloud applications in a hybrid approach. In this blog I want to show why.

Trends and challenges in digitalization of EPM

The digitalization of EPM becomes more and more important for international corporations as well as for small and medium enterprises. Looking at EPM we identify three main topics currently receiving a lot of awareness: integration of processes, introduction of predictive models as well as usage of cloud based solutions.

Integration of EPM processes is seen as one of the biggest challenges today by many companies. Data is only valuable for companies if it is available for performant analysis at the right time and in the right quality. Availability of consistent and comprehensive data enables companies to take sound decisions. Not only the availability of huge amounts of data, but intelligent usage of data is crucial to realize a competitive advantage. Hence fast access to information und timely reactions on changing market conditions are key driver in the digitalization of EPM processes. As a result, the integration of EPM processes like planning, reporting and analysis in integrated software solutions are on top of the strategic agenda of many companies.

More access to data and integration of additional data to planning and reporting offers new opportunities but means more effort for the workforce involved in the production of reports and plans. This downside can be reduced by automation of EPM processes and the usage of predictive analytics. So, it is not surprising that predictive analytics is another hot topic within EPM. The quality and comparability of results can be increased as well because results of automated predictions are unbiased. However, manual adjustment will still be required to react on changing conditions.

The need for fast access to data and increasing data volumes require agility and flexibility of EPM solutions. Since cloud solutions offer such advantages, cloud based applications getting more and more interesting for EPM as well. Especially companies with decentral, globally distributed locations and many users could benefit from cloud solutions. Nevertheless, cloud based EPM solutions are rarely used, instead on-premise solutions are predominantly used. The more critical an application is considered by the management the more companies tend to use on-premise solutions. High strategic value of financial data and the high security requirements of EPM systems lead to strong concerns regarding usage of cloud based solutions.

The question rises how companies could gain advantages between innovative cloud based solutions without giving away control over strategically important data?

Combined usage of on-premise and cloud solutions as approach

The combination of on-premise EPM systems with cloud based applications could enable companies to keep advantages of established implementations and realize fast reactions on a changing environment.

Typical reporting cycles in enterprise performance management includes data acquisition, consolidation and reporting.

Data acquisition, preparation and validation from distributed entities is a time-consuming process and requires access to the EPM system from many workplaces. As a result, the maintenance effort is high. Mergers and acquisitions or changes in corporate structures lead to challenges in each reporting cycle. Mastering such challenges efficiently could be realized by exploitation of the advantages from cloud applications.

Processing acquired data with established on-premise installations provides companies with the option to keep full control over sensitive data. Furthermore, requirements regarding financial reporting standards are not strongly affected from constant changes. From this point of view on-premise installations can be beneficial.

Publishing the results of central planning and consolidation to a distributed audience and providing the option for deeper analysis is again a challenge that could be mastered by cloud solutions as well. Distributed entities can collaborate on analysis and share insights without limitations and boundaries of local installations.

But how does it work in practice?

After evaluating benefits of the combination of on-premise and cloud solutions, I wanted to find out how the hybrid architecture works today:

In my scenario I set up SAP BPC 11 on BW/4 and connected it to SAP Analytics Cloud (SAC) via Cloud Connector. Read in my next blog how I set it up and what my findings are.