Skip to main content

ERP vs BI vs EPM- WHAT IS WHAT, AND HOW TO CHOOSE THE RIGHT FINANCIAL REPORTING SOFTWARE?

By


With the rapid digitisation of our world, the role of CFO has drastically evolved over the last few years. Most CFOs today have significant impact on boardroom decisions, which in turn demands that finance teams make faster, smarter and fact based decisions.

Most organizations report that they have dedicated teams that spend all their time preparing management and statutory financial reports. In more than 85% of the organisations, financial reporting activity is largely manual and spread-sheet driven.

It is no surprise then, that financial report preparation is the top frustration for today’s CFO.

It is clear to the CFO that they need to automate the reporting process. What is not clear to them though, is how?

  •        Should they upgrade their ERP?
  •         Should they invest in a BI tool?
  •         Should they invest in EPM?


ERP or Enterprise Resource Planning tools are transaction management systems that are designed to solve the various transaction processes in an organisation, be it procurement, manufacturing, purchase, book keeping etc. While it also provides some reporting features around transactional data, it is not designed to solve the ‘reporting’ problem.

BI tools are effective in pivoting information from multiple sources, and help you visualize and analyse business performance. This is especially useful with large volumes of operational and other business data.

Financial reporting, unlike operational data analytics comes with its own set of challenges. The process involves getting the data ready before it can be visualized. The most common activities performed by financial analysts as part of report preparation include: defining a standardised grouping structure for reports, regrouping of chart of accounts to the suit the reporting structure, repeating this activity across companies in case of multi-entity organisations, handling currency conversions, reclassification of accounts, consolidated adjustments & eliminations, allocation of indirect costs, dimensional grouping of business segments amongst many other things.

If there are multiple stake-holders who need different types of reports, the whole process has to be repeated for each such reporting requirement. For e.g. management/investor reporting varies significantly from statutory financial reporting. Some of our clients prepare monthly management reports, quarterly investor reports, risk reports, dashboards, and quarterly statutory reports as per IFRS, INDAS, USGAAP & other local statutory reporting formats.

These are concerns that are neither addressed by ERP tools, nor by BI tools. Reason: they are not designed to address them.

EPM (Enterprise performance management) tools are designed to solve the financial consolidation and reporting problem. EPM’s help improve the business processes that are necessary for managing and improving an enterprise’s performance. It helps business users with the processes that are required for them to seamlessly close their books, consolidate the numbers, report the numbers as required by various stake-holders, and analyse the information against budgets, past periods etc. It is evident that EPM provides the over-arching framework and financial processes that finally lead to reporting. The visualization/BI component is only a part of the overall solution.

Many CFO’s have treaded the path of upgrading their ERP or investing in BI solutions to automate financial reporting, and most such initiatives have failed. Finding the right EPM tool and putting together a good change management process internally will yield great results. CFOs have reported much faster close cycles, smoother consolidations, higher productivity and better quality reporting and analytics after implementing the right EPM solutions.

Choose once, but choose wisely.


Labels

Labels:

Comments

Post a Comment

Popular posts from this blog

The Mission to Make the CFO's life Easier

By
In today’s business context, life of a CFO is that of the radar as well as the captain of a moving ship. Today’s CFO is expected to contribute well beyond the traditional role of cost management and operational controls. The CFO needs to play a delicate balancing act across multiple dimensions, some of which include: Impact of globalization: having an effective finance function that can account for the increasing complexities of running a global business Regulatory adherence: Global regulatory requirements are constantly changing and continually increasing, and CFOs have a personal stake in regulatory adherence Risk management: the nature of risks that an organization faces keep changing Reporting requirements: managing the ever broadening and often burdensome reporting requirements The CFO needs to do all this, while also keeping a keen eye on rigorous ongoing cost management and operational efficiencies to fuel profitability and strategic reinvestment. All this under...
Post a Comment
Read more

Why you should automate your statutory financial reporting

By
Visit : https://finalyzer.beyondsquare.com   ||  https://xbrl.beyondsquare.com Statutory reporting consumes a significant amount of time, effort and cost. The statutory reporting function is constantly evolving as organizations look to further streamline their finance function through technology transformation and other cost-cutting initiatives. Manually prepared reports present challenges around data inaccuracy, inconsistency, lack of audit trail. They are time consuming and subject to significant operational risk. If consolidation is involved, there are a whole new set of challenges to deal with – standardisation of account grouping, forex translation, elimination, minority interests etc. Incorrect reporting due to manual errors and omissions can be quite costly. Hundreds of companies are routinely investigated and penalised each year for violating disclosure norms. Organizations are looking at technology solutions to ease out and streamline the regulatory reporting...
Post a Comment
Read more

5 Tips to make your KPI tracking initiatives effective

By
EVERYTHING is measurable in today's increasingly digital world. Clearly, businesses with a strong analytics program in place have significant advantage over those that don't. The right tracking initiatives help them effectively identify what is working and what is not, and to know whether they are making the right decisions . An effective KPI should be able to reflect, and relate directly to the business' goals. It should be quantitative and quantifiable, and linked directly to the measurement of your business' success. So, are you being S.M.A.R.T. about it? When you create KPIs, you should be able to answer these five questions known as the S.M.A.R.T. tips to help you identify the effective ones. ·    1.          Specific : Is this KPI too broad, or is it clearly defined and identified?       2.       Measurable : Can I easily quantify this measure?     3 .      Attainable ...
Post a Comment
Read more