With digital transformation a top priority for businesses today, using the right software to extract value from data is more important than ever before. The technological jargon can, however, make it difficult to know which software or platform you should use to fulfil your business needs. For example, what is the difference between enterprise resource planning (ERP) and enterprise performance management (EPM)? You might not know it yet, but SAP S/4HANA and SAP Business Consolidation and Planning are examples of ERP and EPM, and in this article we will dissect both solutions to help you decide which one is better suited to your needs.
WHAT IS ERP?
Enterprise Resource Planning, or simply ERP, is a software platform that processes and analyses transactional and operational data to help organisations coordinate and optimise business resources and day-to-day operations. ERP capabilities span lines of business, from finance, supply chain, and manufacturing to sales, distribution, and more.
ERP helps organisations gain clear visibility and complete control over every aspect of their business and capture critical information for immediate access and use it company-wide. ERP includes a general ledger which summarises all of the details from other modules like purchasing, accounts payable, and accounts receivable. And it can perform some actual vs. budget reporting, so it does overlap EPM software in some areas of financial planning and decision making.
WHAT IS EPM?
Enterprise Performance Management, or simply EPM, is an application suite that helps streamline company-wide management processes. EPM is in charge of modeling, planning, consolidation, and reporting data obtained by a single or multiple ERP systems to improve business decisions. Mostly used in the finance department, EPM is used to improve profits, and performance.
WHAT IS THE DIFFERENCE BETWEEN ERP AND EPM?
As you can see, there is some overlap in functionality between ERP and EPM, although fundamentally, ERP is for processing and managing daily transactional data and EPM is for modeling that same data for performance planning optimisation.
Smaller businesses tend to opt for an ERP system to manage daily transactions, and excel spreadsheets to manage EPM processes, such as budgeting, forecasting and financial reporting. However, as companies grow, the need for EPM software grows. The most optimal solution is to implement an ERP integrated with an EPM system to ensure you have a robust transactional processing system and a stable reporting and planning system working together.
WHAT IS SAP BUSINESS PLANNING AND CONSOLIDATION?
The SAP Business Planning and Consolidation (SAP BPC) application is an EPM that delivers planning, budgeting, forecasting, and financial consolidation capabilities, so you can easily adjust plans and forecasts, speed up budget and closing cycles, and ensure compliance with financial reporting standards.
SAP BPC FEATURES
- On-premise or cloud deployment
- Integration of SAP and non-SAP data
- Real-time access to data in SAP S/4HANA
- Hybrid deployment with SAP Analytics Cloud
- Versions available for SAP BW/4HANA, SAP NetWeaver, or the Microsoft platform
SAP BPC BENEFITS
- Make better decisions
- Base decisions on what-if analyses and scenario planning for better outcomes.
- Improve collaboration
- Use collaboration tools to improve accountability and planning accuracy.
- Increase efficiency
- Shrink cycle times, close the books faster, and align your plans with strategic goals.
WHAT IS SAP S/4HANA?
SAP S/4HANA is often referred to as the next generation of ERP, giving organisations a greatly simplified software solution that enables them to cover and control their daily processes - from marketing and accounting, to logistics, human resources and procurement - with always-on access to business-critical data in real time.
SAP S/4HANA FEATURES
- Industry-specific capabilities and best practices
- Capabilities span lines of business, from finance, supply chain, and manufacturing to sales, distribution, and more
- Machine learning-enabled processes
- Deploy artificial intelligence, machine learning, robotic process automation, and situation handling quickly for a fast ROI
- Real-time, embedded analytics
- Get 100 times faster reporting for resilient, agile decision-making.
- Flexible deployment options
- Available in public/private cloud, hybrid, and on-premise deployments.
HOW DO SAP BPC AND SAP S/4HANA WORK TOGETHER?
SAP BPC Optimised for S/4HANA runs directly on the S/4HANA platform to increase efficiency and eliminate data replication in SAP BPC. This real-time integration with the ERP layer means that no Extraction, Transformation and Load (ETL) processes are needed to replicate data for SAP BPC. Data is consolidated in one environment, making real-time access to data possible.
The advantages of integrating BPC and S/4HANA are particularly useful from a financial perspective because it allows for continuous accounting - real-time consolidations, budgeting, forecasting and reporting from one platform.
In terms of optimising and analysing business performance, SAP BPC on S/4HANA helps businesses measure the effects of business activities and makes them more resilient to change by running “what-if” scenarios.
- BPC Optimised for S/4HANA supports drill-down features to the General Ledger to check for account details.
- Processing time to perform complex calculations is reduced since calculations are performed directly in the database layer, not the application layer.
- The real-time data access and shared master and transactional data eliminates any data replication within BPC, securing data governance.