The comparison of performance management (BPM, CPM, EPM)
Nurislamova N.1
1 Московский государственный технический университет им. Н.Э. Баумана, Россия, Москва
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Информатизация в цифровой экономике (РИНЦ, ВАК)
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Том 3, Номер 3 (Июль-сентябрь 2022)
Эта статья проиндексирована РИНЦ, см. https://elibrary.ru/item.asp?id=49867856
Introduction
Over the past few years, company leaders have shown a high interest in issues related to business performance management. Automation of business processes and rational personnel management (objective evaluation of results, increased involvement and motivation) can mobilize a huge potential for internal efficiency of enterprises (Umit – Paladino 2007). It is wise and highly advised to solve these tactical tasks in the context of the chosen business strategy. It would not be an exaggeration to say that the weak point of most companies is the implementation of an already created strategy, and this is directly related to the issues of personnel efficiency at each individual workplace and automation as a tool to support the existing management system (Bogatyreva 2020 – Umnova 2020).
In this work the concepts of business, corporate and enterprise performance management and the differences between them. A lot of people mistakenly assume that there is no difference between these three terms.
The concept of BPM
Business performance management includes business processes like: budgeting, planning, and forecasting, business modeling, dashboarding, scorecards, consolidation, financial, statutory and management reporting, compliance, corporate governance, and internal controls, risk management and business and predictive analytics.
Business performance management is important, it conducts to better business decisions. When it comes to decision making, the more financial information you’re privy to, the more calculated your decisions will be. As a bonus, when stakeholders can see how financial information interrelates across departments, they get a 360-degree view of the financial impact that decision will have. Business performance management makes staff more efficient. Business performance management software is built to streamline financial processes. The software automates processes like data collection and reporting. By using tools that have features like a single set of data, collaboration tools, built-in workflow, dashboards and pre-built templates, the users of performance data are able to complete financial processes faster. Business performance management promotes alignment across departments, branches, and divisions. Business performance management software provides users with a look into financial data at every level of granularity, from a high level to the minutiae. While regional users can access the information that pertains to them, global users can get a bird’s eye view of the trends happening across the organization and then better prioritize budgets, plans and action. Business performance management helps management identify risks. With frequent monitoring using tools like performance dashboards and real-time updates to KPIs, management can identify risks and respond in a timelier manner.
To improve business performance management several steps should be done. Firstly, deploy a single BPM solution across your entire organization. Additionally, use a single BPM solution to manage all financial processes from close to disclosure. Connect all applications and systems that house performance data to a single data source.
Overall, BPM is more important for those who are looking to reframe their organization budget, shrink the cost incurred on production, improve their financial planning process, take their organization strategy to the next level and better align KPIs.
The concept of CPM
Corporate performance management is to understand and evaluate a business or organization’s current situation with best practices and identify opportunities and means of performance improvement. Corporate performance management is a specialized area of Business Intelligence (BI) that involves governing and managing overall organization performance, according to the key performance indicators (KPIs) revenue, return over investments (ROI), overhead, and operational costs. It can be said that CPM assists an organization in achieving its long-term goals. To be more precise to say, corporate performance management involves the following management processes like setting the long-term goal of an organization and framing an effective and appealing business model that will receive more traction. Also, useful in budgeting, planning, and prophesying the corporate future. It helps in informing all the stakeholders of the company, whether they are internal stakeholders or external. Informing about the overall performance and prospects of the company as a whole. Analyzing the performance of an organization vs. the company’s plans, performance of the company in the previous years, across divisions or products. Then modeling again – creating what-if scenarios.
All in all, CPM refers to a specialized solution designed for corporate use. CPM is crucial for every organization, whether it lies in the small and medium enterprises (SMEs) category, large scale manufacturing category, or any other category.
The concept of EPM
Enterprise performance management specializes in budgeting, forecasting, and financial management. It provides data analytics, reporting, and forecast modeling so organizations can analyze, understand, and plan strategically for the business. With EPM, companies can align business strategy with business execution. The technology uses feedback drawn from data generated from systems, processes, and activities across the organization. The resulting analytics help to identify business drivers and other insights. Companies can assess new opportunities, augment profitability in existing business, and respond with greater agility in the face of unexpected change and disruption.
The EPM process includes access data across all business units. Leverage the agility of the cloud to access financial and operational data from business units across the organization, including IT, marketing, HR, operations, and sales. Data can be sourced from e-commerce systems, front- and back-office applications, data warehouses, and external data sources. Make more confident decisions and respond to disruptions faster with complete, accurate data. Creation of a strategic plan – using EPM data analytics to build forecast models and ad hoc simulations across multiple dimensions. Make data-driven decisions that maximize profitability, performance, and drive alignment with your strategic plan. Budget – working collaboratively across lines of business to crowdsource plans and build flexible budgets. Leverage automated workflows for a clean and efficient process. Track and report – using real-time data to assess performance across the enterprise and determine if adjustments are required. Prepare reports that align with corporate and regulatory guidance. Assess and analyze – reviewing performance and profitability against the strategic plan. Identify new areas of opportunity, resolve areas of underperformance, and use the intelligence to inform the next cycle of strategic planning.
In the end, enterprise performance management helps inform future decisions, drive efficiencies, and improve the financial and operational performance of the company. The most benefits of an EPM are profitability, integrated business strategy, modern, automated financial processes, regulatory oversight, faster reconciliation of accounts.
Comparison
The differences between business performance management (BPM) and corporate performance management (CPM) and enterprise performance management (EPM). In many circles, these terms are used interchangeably to describe software that identifies key metrics and seeks to achieve goals by tracking, measuring and improving processes in business strategy, forecasting, financial management and in the supply chain. For those who distinguish between BPM and CPM, the differences are slight and inconsistent. BPM tends to have a more general focus that covers a company's basic operations, their effect on the bottom line and the strategy needed to exceed common objectives. CPM, on the other hand, focuses more on the larger picture – overall financial standing and organizational culture geared primarily toward the executive team. EPM focuses more broadly on the performance of the entire enterprise, extending beyond the finance departments to sales, marketing, supply chain and more.
Conclusion
Thus, we have considered three concepts of performance management. We figured out that performance management covers the entire range of tasks in the field of strategic, financial, marketing and operational management of a company and includes the use of such management technologies as strategy modeling, balanced scorecards, process-oriented planning and functional cost analysis, budgeting and business modeling, consolidated management reporting and analysis, monitoring of key performance indicators related to the strategy. And as we have noticed, all the concepts of performance management include three main activities (in all areas of management without exception): setting goals, analyzing the values of indicators that characterize the achievement of the organization's goals, managing the impact of managers based on the results of the analysis, aimed at improving the future activities of the organization to achieve the set goals.
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