EPM vs FPM: What’s the difference?

Prophix ImageProphix Apr 16, 2024, 8:00:00 AM

There’s a lot of acronyms in the finance space – EPM, FPM, CPM, and BPM.

But what do they all mean? And how can these acronyms help you decide what processes and software to prioritize?

In this blog, we’ll dive into the differences between Financial Performance Management (FPM) and Enterprise Performance Management (EPM), and why you should choose one over the other. We’ll cover:

After reading this article, you’ll understand the key differences between Financial Performance Management (FPM) and Enterprise Performance Management (EPM), and how to choose the best software for your business.

What is Enterprise Performance Management (EPM)?

Enterprise Performance Management (EPM) refers to methodologies, metrics, processes, and systems used to manage and monitor an enterprise company’s business performance. EPM includes processes such as budgeting, planning, reporting, and forecasting, which all have the goal of evaluating a company’s financial health. However, EPM isn't limited strictly to financial performance; it also involves operational performance measures that can impact financial outcomes.

The term EPM is also used to refer to finance software, geared specifically to enterprises. This type of software is commonly used by finance leaders and the Office of the CFO to connect financial data to operational plans, and integrate with other data sources (e.g., Enterprise Resource Planning software (ERPs)), for a more holistic view of performance.

However, there has been a subtle shift by some vendors towards using the term Financial Performance Management (FPM) instead of EPM, indicating a wider range of functionality beyond traditional enterprise-level financial planning and analysis, and aiming to serve a broader market including mid-sized and smaller companies.

Was ist Financial Performance Management (FPM)?

Like EPM, Financial Performance Management (FPM) refers to the methodologies, metrics, processes, and systems used to manage and monitor a company’s financial performance. FPM includes a wide range of processes including account reconciliation, intercompany management, financial consolidation and close, integrated business planning, budgeting, planning, reporting, forecasting, and more. And much like EPM, FPM aims to connect operational data with financial metrics to evaluate a company’s health.

The term FPM is also used to refer to finance software that simplifies and streamlines processes for faster strategic decision-making. Many FPM solutions are platforms, which can be used by the Office of the CFO, as well as other internal and external stakeholders, to achieve their financial objectives and optimize resource use.

For many vendors, FPM reflects a distinct shift in the finance software space, to an approach that aims to empower finance leaders with the next generation of technology.

What’s the difference? Financial Performance Management vs. Enterprise Performance Management

Now that we’ve defined EPM and FPM, let’s look at the key differences between the two. As we mentioned above, EPM, which can refer to both finance processes and software, is primarily geared towards enterprise organizations. Enterprise organizations are commonly defined as companies with more than 250 employees that operate on an international scale with highly specialized departments.

In contrast, FPM has been specifically developed to support companies of all sizes, including enterprises, and incorporates a broader range of processes, including both finance and accounting functions.

Another difference is that FPM focuses mainly on the financial aspects of performance for finance teams, whereas EPM can often be extended beyond finance to sales, human resources, marketing, and more. And while FPM focuses primarily on finance, many vendors have begun expanding their use cases to include a broader range of operational processes.

FPM stands out for its agility, ease of implementation, and potential cost advantages, particularly for small to medium-sized enterprises. With the addition of cutting-edge analytics, artificial intelligence, and machine learning capabilities, FPM positions itself at the forefront of innovation, ready to empower data-driven decision-making across a variety of business contexts.

Financial Performance Management (FPM) vs. Enterprise Performance Management (EPM)

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FPM vs EPM: Which one is for me?

It's worth noting that some vendors use EPM and FPM interchangeably, as both can refer to the processes and software required to support an organization’s financial and operational health. As time goes on, the line between EPM and FPM blurs, as both types of software are evolving to offer more integrated functionalities that encompass a wider range of business processes beyond traditional financial tasks.

When it comes to choosing what’s best for you, overall, you should choose a solution based on your specific organizational needs—rather than strictly by definitions. Consider the scale of your operations, the complexity of your business processes, and your strategic aspirations. For those seeking a solution that not only meets current financial management requirements but also anticipates future challenges with flexibility and foresight, FPM is a compelling choice.

The benefits of Financial Performance Platforms

Many vendors refer to their Financial Performance Management software as a Financial Performance Platform, encompassing a broad range of applications beyond traditional finance and accounting processes. There are many distinct advantages to Financial Performance Platforms, including:

Improved financial performance management

  • Increase forecast accuracy with AI-driven predictive forecasting.
  • Detect anomalies and validate data to control financial outcomes.
  • Streamline disclosure management and reduce human error.
  • Stay compliant with evolving ESG regulations via extensive data integrations and ESG reporting.
  • Speed up regulatory filings with XBRL/iXBRL technology.

Agility and adaptability through workflow automation

  • One platform eliminates the need for disparate tools, enhancing security and efficiency.
  • Collaborative workflows improve forecast and month-end close timelines.
  • Real-time updates foster stakeholder engagement and ensure on-time process completion.
  • Accelerates data exchange and provides organizational visibility.

Operational excellence and acceleration

  • Manage volatility with personalized dashboards and KPIs for informed decision-making.
  • Integrate the Office of the CFO with operational planning to boost forecasting accuracy and minimize variances.

Nahtlose Datenintegration und -zentralisierung

  • Simplifies data exchange with ERP, CRM, HRIS, enhancing financial visibility.
  • User-friendly interface facilitates easy navigation and cross-company financial planning.

Comprehensive security on a unified platform

  • Security-first approach with rigorous audits and industry-standard compliance.
  • Cloud technology ensures scalable, secure management of financial data.
  • Accessible from any device, offering secure and convenient financial performance management.

By consolidating financial and operational data into actionable insights, a Financial Performance Platform can empower you to make more informed decisions that align with your company's long-term goals. This strategic advantage complements the operational benefits by linking financial performance management directly to business outcomes, reinforcing Financial Performance Platform's value as a critical tool for organizational growth.

Conclusion: EPM or FPM – stay informed to choose the best software for your business

In wrapping up, the choice between EPM and FPM hinges on understanding your business's unique needs. However, for finance leaders seeking agility, innovation, and comprehensive solutions that grow with you, FPM stands out as the clear frontrunner. It's not just about managing finances; it's about driving your business forward with confidence and clarity.

Want to learn more about Financial Performance Platforms? Check out Prophix One here.

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Ehrgeizige Finance-Teams setzen auf Prophix, um den Fortschritt voranzutreiben und ihre beste Arbeit zu leisten. Mit Prophix One, einer Financial Performance-Plattform, können Finance-Teams die Geschwindigkeit und Genauigkeit ihrer Entscheidungsfindung verbessern und sich somit zukunftssicher positionieren.

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