ERP vs. EPM: Which should you choose?

ERP and EPM differ in several ways. Learn how the individual systems work alone, how they complement each other and how they can increase an organization's efficiency.

While the acronyms ERP and EPM are similar, the two systems serve different purposes, and company leaders should learn about each to determine if their organization should purchase enterprise performance management software in addition to their enterprise resource planning platform.

An ERP system helps a company manage its business and integrates multiple processes and systems. For example, ERP software can automate financial approvals and reporting. Meanwhile, an EPM's reports and dashboards are much more comprehensive than those from an ERP, and EPM software enables a deeper level of analysis.

Here's more about each software type and the situations in which companies may find it useful to purchase EPM software to use in conjunction with their ERP system.

What is ERP?

ERP software helps companies manage data across multiple departments, such as finance, purchasing and HR. Using an ERP enables an organization to automate and standardize processes, and an ERP stores data from multiple business functions in one location.

Once used primarily by large organizations, ERP systems are now used by many companies of all sizes. Organizations sometimes add modules to make sure their business needs are met. For example, a company might choose to include a supply chain management module.

What is EPM?

EPM software provides a deeper analysis of the information from ERP software and other systems. A company uses EPM software to gain a richer understanding of how the organization is performing and to make plans for the future.

For example, a company could use EPM software to analyze multiple potential outcomes of a business situation, carrying out more complex planning than is possible with an ERP system alone.

However, EPM software can't capture data on its own, so it relies on data from external systems.

When should companies implement EPM software?

An organization's typical path would begin with purchasing an ERP system. However, after an ERP implementation, users may find the organization's current ERP system is not meeting their needs.

For example, a multinational company might find that it requires EPM software to carry out financial planning with multiple currencies, or it might need to carry out more complicated budget analysis than its ERP software can perform. Using an EPM platform would also help users who want to create a report using data from multiple systems, such as their ERP software and their warehouse management system.

An EPM system can help users conduct more thorough analysis of various processes, potentially improving overall business performance.

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