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23 June 2022 | EN News

Many people associate CPM system (Corporate Performance Management) with such acronyms as BMP (Business Performance Management) and EPM (Enterprise Performance Management) All those terms are connected with software used to manage organization performance (of a company or corporation). Due to large variety of such solutions on the market it is difficult to determine the borderline between a comprehensive CPM and an ERP system. What is CPM and what processes does it manage? How does it differ from ERP? This article answers those and many other questions.

What is CPM?

A dozen years ago enterprise performance was controlled by a series of tools, such as Outlook Soft, Hyperion, Cognos and Cartesis. They generated a lot of problems related to integration of tools which are now incorporated by three major providers (SAP, Oracle and IBM). The CPM system’s role is mainly to monitor performance across the enterprise. Integration of data from various sources, e.g. ERP applications, e-commerce systems. Back-office and front-office, facilitates reliable forecasting. The main task of CPM is to improve financial performance which is monitored using custom KPIs.

How does CPM differ from ERP?

ERP systems usually comprise a lot of applications whose task is to automate recurring and time consuming processes in a given department. An example of such solution could be programs to register working time, monitor warehouse stock, manage finance or implement and train new team members.  Compared to ERP CPM system is in the first place functional, broader, safer and more precise. In majority of middle size and large enterprises ERP applications are used on lower to medium levels. They are useful in everyday work but do not offer complete enterprise performance management. Professional CPM system will be appreciated by people responsible mainly for analysing, planning and taking strategic decisions.

How to transform finance with CPM systems?

The boarder between the systems is very often vague on the market. Great number and variety of available solutions results mainly from continually growing demand. Older software suppliers often downgrade CPM systems to multimillion transactions related to HCM (Human Capital Management), supply chain or ERP. However, it is not possible to conduct finance transformation without CPM systems.

How does using systems affect financial teams?

For many companies investments in ERP can prevail over CPM. Unfortunately, this very often implies that implementation and management of changes is much more time consuming. Thanks to CPM IT groups are able to encourage financial teams to include factors such as risk or forecast. These activities guarantee continuous and unhampered growth. One of the greatest advantages of CPM systems is their capability to analyse data in real time. One should remember that this is a layer to manage which prevails over all transactional systems. That is why the this solution is popular with senior functions that have great impact on the enterprise’s future. Making proper business decisions is not an easy task if you do not have access to reliable and comprehensive information.

What processes can be managed thanks to CPM?

Corporate Performance Management software is particularly useful in processes such as:

– strategic planning

– analysing

– budgeting and forecasting

– modelling scenarios

– developing global and local strategies

– financial closing and consolidation

– monitoring profitability

– calculating amortization of subsidies

– consolidating currencies

– sharing and reporting personal income tax

– statutory and managerial reporting

– detecting errors and irregularities

Dedicated systems can guarantee transparency of all the processes above. This is very important for enterprise’s growth and security. The biggest advantage here is the aspect of minimizing the risk of abuse by dishonest employees. The possibility of quick error detection and tracking historical changes or flow of documents are only some of the advantages offered by state-of-the-art CPM system.

Is it worth investing in generic ERP systems?

Generic ERP applications and modules are the working tools that to the great extent limit creativity and performance of the tools. Low price of non-customized solutions may cause that you forget about lack of necessary functionalities. A lot of generic software suppliers spend too much time on issues related to adjusting appearance or style. Such activities in an artificial way increase the cost of implementation and extend the time of implementation.

For this reason investment in generic software may turn out to be much more expensive than one could expect. The main problem here is making the enterprise dependent on the external software supplier that in his business model focuses on quantity not quality. Investment in professional and tailored CPM system is much more reasonable because it does not hinder in an artificial way enterprise’s growth.