Applying Enterprise Performance Management in an SMB Company

EPM is an integrated enterprise-wide capability and discipline, enabled by technology, that provides needed insight to translate strategy into action.  Further 40% of “mature” EPM companies have > 10% revenue growth, compared to 17% of “less mature” EPM companies. And 13% of “mature” EPM mature companies have > 20% revenue growth, compared to 3% of “less mature” EPM companies.  As a leader of a SMB company focused on growth, ensuring that SPC is a mature EPM company is critically important.  

Change is the new normal and execution will make all the difference.  As noted in a recent presentation from KPMG’s Mark Kasmerski, execution requires five key priority areas, three of which are providing analytical insight into business drivers, making regulatory burden a competitive advantage and driving technology and innovation/digital transformation.

“Growth is critical to our business,” says Randy Frapart, CFO/COO of Senior PsychCare. “We become more profitable as we grow, as our top line revenue grows at a faster rate than our SGA while our gross margin remains relatively constant.” When planning the business, the company should link financial budgets and forecasting to business drivers to improve accuracy and flexibility. Senior PsychCare has made it a priority to focus on growth.

PsychCare’s financial forecasting model is driven on financial and non-financial data.  The main driver in revenue growth is provider count.  Each provider type generates a certain cost and corresponding revenue amount for the company.  Other drivers are weekly patient visit volume.  Non-financial data assessing provider engagement in the nursing homes is in the early stage of being developed.

The company’s forecasting model aligns behaviors and actions with strategy objectives.  In othe case of PsychCare, the company aligns number of provider targets in each of their three markets with the visit volume targets and engagement of nursing homes by providers.  

Iterate and be agile, but do not forget the “E” in EPM.  An effective “Enterprise” structure establishes the framework to have the data structure and quality to enable EPM insights and analytics.  Carrying the EPM throughout the organization, to the finance, IT and data analytics functions and to the reporting to the Board, is critical to keeping the organization on track to achieving its growth and profitability goals. “All these EPM concepts, when integrated, makes working at a company more fulfilling,” commented Randy Frapart.  “Employees that are fulfilled translates to an organization that achieves greater retention of employees.”