EPM for Government Contractors:
Fueling Finance Transformation
How to streamline finances, boost efficiency, and ensure compliance with a cloud-based EPM for government contractors.
What is EPM (Enterprise Performance Management)?
EPM (Enterprise Performance Management) software is a suite of tools that help leaders analyze and interpret their business performance to plan strategically for the future.
An EPM suite typically includes planning and budgeting, forecasting, financial management, data analytics, and reporting tools.
Think of it as a command center for your business finances and operations reporting. EPM helps you see the big picture by collecting and analyzing data from various sources like ERP systems and data warehouses to provide insights into things like:
- Profitability
- Efficiency
- Regulatory compliance
- Resource allocation
Best EPM Tools for Government Contractors
While EPM software offers a wide range of functionalities, some core features particularly useful for government contractors include:
- Planning and Budgeting: Build accurate budgets, manage resources effectively, and maintain healthy cash flow to win bids and execute successful projects.
- Close and Consolidation: Close your books faster, gain a clear view of finances, and automate reporting to ensure compliance with regulations like FAR and DFARS.
- Reporting and Analytics: Transform complex data into clear, actionable insights and generate easy-to-understand reports for stakeholders and government agencies.
As your organization invests in its EPM solution, you can build upon these core tools, introducing additional functionalities like account reconciliation and narrative reporting to continue improving your financial performance and productivity.
Benefits of EPM for Government Contractors: Boost Efficiency, Gain Visibility
EPM software is the driving force of finance transformation. It allows your finance team to step into more impactful roles as strategic leaders and decision-makers by automating manual tasks and generating reports faster. And powerful planning and analysis tools make financial modeling a breeze, giving you instant access to invaluable data insights.
These are the key EPM benefits driving success for gov con finance teams:
- Ensure DCAA Compliance: EPM centralizes data, automates processes, and provides tools for accurate cost allocation and reporting making it easier to meet compliance.
- Maintain Competitive Advantage: EPM simplifies scenario and rate modeling of organization and rate structure changes to assess the impact on project profitability.
- Strengthen Pipeline Forecasting: EPM offers financial planning tools to forecast revenues, costs, profitability, and pipeline performance with visual dashboards and reports.
- Manage Risk Proactively: EPM provides real-time visibility into financial performance, enabling early detection of issues and scenario planning to mitigate threats.
This untapped efficiency and financial control are fueling the increase of digital transformation initiatives, with the EPM market leading the growth with a projected CAGR of 8.5% from 2024 to 2030.
With competition in the government contracting industry at an all-time high (and rising) technology proficiency is increasingly important to government agencies who want to work with contractors who can demonstrate efficiency and adaptability.
ERP vs EPM for Government Contractors
While the acronyms may sound similar, ERPs and EPMs are two very different beasts. ERP systems are workhorses for daily tasks and reporting past financial performance. However, they struggle with future planning or integrating complex M&A activities. An EPM system bridges this gap, offering forward-looking tools and streamlined integration for measurable benefits.
Many organizations often overlook (or delay) the significant benefits of an EPM system, but it’s critical for growth. Let’s look at the differences between ERP and EPM.
| Enterprise Resource Planning (ERP) | Enterprise Performance Management (EPM) | |
|---|---|---|
| Focus Area | Operational systems that handle core business processes daily. | Strategic systems that analyze vast data to bolster/unify financial performance. |
| Functionality | Automates departmental tasks, improves efficiency, reduces business process errors. | Provides advanced analytics for financial modeling, what-if scenarios, and deeper insights. |
| Implementation | Complex and time-consuming | Faster and less resource-intensive |
| Reporting | Primarily used for internal management and compliance purposes | Used for strategic decision-making, performance analysis, and financial planning. |
| Scalability | Modular designs allow for adding functionalities as the business evolves. | Integrates with multiple ERPs and other systems to provide a comprehensive view of financial performance. |
| TL;DR | Single source of truth for daily operations | Financial insights for better decision-making |
In short, EPM builds upon your existing ERP by helping you understand your data. This translates to faster decision-making and accurate forecasts and budgets that extend far beyond the current year.
Imagine eliminating error-prone Excel spreadsheets and streamlining the integration of new acquisitions efficiently. Cloud EPM empowers your team to adapt quickly to business events, changing business needs, and reporting requirement, creating a truly nimble financial platform for your office of the CFO.
Common Gov Con Challenges an EPM Solves
EPM provides government contractors with the financial and operational tools necessary to seamlessly navigate common business events and challenges. If you’re experiencing any of these events, it’s likely time for an EPM cloud implementation:
CHALLENGE #1
Mergers and Acquisitions
Pain Point: After M&A activity, integrating financial data from disparate systems is often done with Excel-based manual consolidation processes that are time-consuming and error-prone.
How EPM Helps: EPM’s close and consolidation system streamlines data collection and consolidation for acquired companies.
- Enable consolidated reporting immediately by simply mapping the new company’s trial balance into the EPM system
- Eliminate delays from full ERP integration or manual spreadsheet consolidation and speed up reporting
CHALLENGE #2
Complex Ownership Structures
Pain Point: Consolidating financial data proportionately across complex ownership structures can be laborious and error-prone, often requiring various consolidation methods based on their stake in other companies.
How EPM Helps: EPM systems tackle complex ownership structures with pre-built functionality.
- Define multiple consolidation methods and elimination rules based on ownership percentages
- Configure rules at individual company levels (parent/child)
- Adjust rules over time to reflect changes in ownership
CHALLENGE #3
Direct Project Planning
Pain Point: It’s excessively time consuming to compile detailed project data or apply indirect rates across a project portfolio (project type, end customer, etc) in Excel spreadsheets. This makes it hard to see how each project contributes to revenue and gross margins.
How EPM Helps: Enterprise planning and budgeting systems streamline how government contractors forecast revenue and expenses for the current year and future projections.
- Plan the project or Estimated at Completion (EAC) throughout the performance period easily
- Accurately assess project profitability with a complete view of project costs, including indirect costs (fully burdened view)
CHALLENGE #4
Workforce Planning
Pain Point: Accurately planning indirect expenses, especially labor costs, is difficult and time consuming. Businesses often resort to a more consolidated approach, sacrificing accuracy for efficiency.
How EPM Helps: EPM leverages automation and planning capabilities to align with your project’s needs and reduce staffing gaps.
- Seamlessly integrate with HR systems and ERP software to provide employee data and employee labor expenses automatically
- Plan at the employee level for more accurate forecasting even faster
CHALLENGE #5
Indirect Rates (FPR) Planning
Pain Point: Are you frustrated by the tedious task of building forward pricing and provisional rates in Excel? Relying on spreadsheets means long hours spent weeding through complex data and supplementary schedules to ensure compliance and audit readiness.
How EPM Helps: EPM provides tools for detail planning and tracking, ensuring your projects stay within budget and comply with government accounting standards—saving you time and money.
- Automate data collection and allocation for calculating forward pricing, rate schedules, and incurred cost submissions
- Analyze how changes in business structure, allocation methods, or pool structures impact your indirect rates
CHALLENGE #6
Capital Programming & Cash Management
Pain Point: Managing capital project budgets amidst rising costs is a time-consuming nightmare. Outdated spreadsheets struggle to integrate data from multiple sources, leaving you with inflexible budgeting processes that can’t adapt quickly. This is a headache for companies exceeding $10 million in annual capital expenditures or experiencing acquisition growth.
How EPM Helps: An EPM system saves you hours (or days) of work tracking monthly spend by project.
- Automate data feeds from project approvals (think ServiceNow) and general ledgers
- Conduct driver-based capital planning using metrics like NPV, IRR, Payback period, and ROI for greater efficiency.
- Seamlessly integrate with your existing P&L, balance sheet, and cash flow planning to keep everything in one place
Selecting an EPM Software
Selecting the right EPM software is one of the most important decisions in financial transformation. Decisions of such magnitude are no easy task—there’s a lot on the line, and tons of choices (this is why many orgs bring in a third-party expert to help them make the final call). Here are our 4 strategies to find the perfect software fit for your business.
4 Key Software Selection Strategies
- Get Executive Buy-in First: Interview key leaders to get their wish-list of features and functionalities, and use this list to guide every decision.
- Make Informed Choices, Not Guesses: Document all requirements and use an objective scoring system to rate them. Prioritize ruthlessly, but allow room for discussion to balance needs and preferences.
- Obtain Estimates Early: This will make the process much more efficient, even if they are ballpark estimates. You can quickly eliminate over-budget products or vendors to avoid dangling a shiny, unaffordable toy in front of stakeholders.
- Go Beyond a Software Demo: Ask for at least two customer references that utilize your desired functionality and conduct the call without the software vendor on the line. Don’t be afraid to ask questions! Peers are often more than willing to share information to help you make an informed decision.
OneStream vs Oracle: Which one is right for you?
| Software | Best For | Government Features |
| OneStream | Unified Platform (Consolidation, Reporting, Planning, Forecasting) | Compliance (FAR, DFARS, CAS), Cost Management (Labor, Materials, Overhead), Flexible Architecture (Complex Data Handling) |
| Oracle | Existing SAP users seeking a comprehensive EPM solution | Compliance (Government Regulations), Cost Management, Proposal Management, Contract Management, Data Security |
| Workday | Integrated financial management with HCM (Workday users) | Compliance (Government Regulations), Cost Management, Integrated Proposal Management, Integrated Contract Management, Workforce Planning |
Our Approach to EPM Implementation
We collaborate closely with clients to develop tailored data models that align with their business objectives and KPIs. Our focus is on implementing effective data collection, cleansing, and presentation methods. By prioritizing business requirements and measurable goals, we ensure the adoption and usability of our solutions. Our scalable and customizable approach allows us to meet the evolving needs of our clients throughout the entire project lifecycle.
While our services are always customized to the needs of each client, the model below represents our high-level approach to financial transformation:
Integrate and Automate Data
Prioritize data integrity while reducing manual, redundant processes and creating business unit alignment.
Establish a Business Data Warehouse
Unify disparate data sources to create a single, reliable source of truth for financial and operational data, enabling data modeling and fostering AI readiness.
Implement a Sophisticated Financial EPM Solution
Consolidate and analyze data for centralized, dynamic forecasting and budgeting, delivering real-time what-if analysis for informed decision-making.
Deploy Comprehensive Analytics
Provide a centralized, interactive dashboard for key metrics and KPIs, offering detailed financial insights and self-service analytics.
Getting the Most Out of Your EPM Implementation Immediately
We recommend implementing the two EPM functionalities with the highest return first:
These two tools focus on financial accuracy, regulatory compliance, and strategic project management—critical qualities for government contractors to win bids and complete successful projects.
EPM software is best-known for its ability to translate data. Therefore, we also recommend implementing data visualization and analytics tools. A solid data strategy is necessary to ensure accurate reports and insights.
These three key features will provide the fastest ROI for government contractors. Once they’re up and running, you can start introducing additional functionalities to ensure you’re getting the most out of your EPM investment.
EPM TOOL
Close & Consolidation
Gain a clear view of your business’s financial health and integrate new acquisitions faster (especially when M&A activity is high in the govcon industry) with an EPM close and consolidation tool. Benefits include:
- Faster, More Accurate M&A Integration: Instead of waiting to merge into one ERP or manually combining spreadsheets, the new company’s trial balance details can be easily mapped into the consolidated chart of accounts for streamlined reporting.
- Better Visibility and Control: Gain a consolidated view of finances, allowing for better decision-making and resource allocation.
- Easier Compliance: Ensure adherence to FAR, DFARS, and other regulations by automating processes and compliance reports.
- Reduced Audit Risk: Streamlined closing and clear audit trails minimize errors and simplify audit procedures.
How to Get Started
When implementing both consolidation and planning solutions, we recommend starting with the consolidation solution to set the foundational reporting structures and begin the process of collecting actual data that will be required to facilitate the budgeting and forecasting solution.
EPM TOOL
Planning & Budgeting
Win bids and avoid cost overruns by building accurate budgets at lightning speed (while factoring in the complex reporting requirements of government projects). Benefits include:
- Allocate resources effectively: Analyze resource needs across different projects instantly, ensuring enough manpower and materials are available for each project while avoiding redundancies.
- Improve cash flow management: Forecast cash inflows and outflows easily to prevent disruptions, dynamically adjusting budgets in response to changing project demands or economic conditions.
- Create realistic “Should-Cost” analysis: Analyze historical data and industry benchmarks to create credible cost estimates, strengthening your negotiation position
How to Get Started
We recommend a two-phased approach for government contractors implementing a budgeting and planning solution with an indirect rate model.
This phase focuses on collecting the data needed for indirect rate planning, like types of indirect costs and their corresponding direct expense bases.
Direct Expense, Indirect Expense, Workforce/Labor Planning, and Financials
- Direct Expense Planning including labor, ODC’s and indirect cost burdening by Project.
- Planning multiple contract types, including cost-reimbursable, T&M, and fixed price contracts.
- Pipeline and new business opportunity planning, integrated from the CRM system, and that aligns with the processes for existing projects.
- Project Summary Reporting at the project, business unit, and segment levels.
- Planning of indirect expense across corporate and business unit indirect functions.
- Workforce planning by employee across direct contracts and indirect functions.
- P&L, Balance Sheet, and Cash Flow planning.
This phase uses the information from Phase 1 to create a complete waterfall system for allocating indirect costs.
Indirect Rates Allocations, Calculations, and What-if Modeling
- Modeling cost pool structures and buildup of pool cost based a mapping of indirect functions to pools.
- Integration of base data from the direct project planning model developed in Phase 1.
- Detailed waterfall allocation of corporate, overhead, and service center cost to end state cost pools.
- Calculation of indirect rates in final cost pools based on planned indirect costs, allocated costs, and assigned allocation base.
- Automated generation of the reporting for Forward Pricing Rate Packages for compliance submissions.
EPM TOOL
Data Visualization and Analytics
Government contractors face a unique challenge: translating complex financial data into clear and actionable insights for themselves and government agencies. Data visualization and analytics tools act as a translator that simplifies complex information and empowers contractors in several ways:
- Make better business decisions: Convert raw data into visualizations that make it easier to see trends and make data-driven decisions about projects and bids.
- Track performance easily: Clear dashboards show how projects are performing and progressing, allowing for quick adjustments to stay on track.
- Spot problems early: Data analytics helps identify potential issues like cost overruns before they become catastrophic.
How to Get Started
Cloud EPM offers a goldmine of data, but is it valuable if you can’t verify that it’s accurate? An effective data strategy helps you define what data is most valuable, collect it accurately, and analyze it faster—making your EPM investment work even harder for you. And it’s critical to have your data strategy in place before implementing a data analytics and visualization tool.
Working with a skilled business intelligence and data analytics partner can help you build a solid data strategy with big benefits:
- Integrate and unify your data: Strop struggling to collect your data from different sources. Establishing a single source of truth ensures unified, accurate data is fed seamlessly into your EPM.
- Automate repetitive tasks: Free up your team to focus on higher-value tasks with AI and Robotic Process Automation (RPA). Harnessing AI and automation for complex business processes is growing in popularity, with 34% of government contractors citing AI/ML as their top areas for tech investment.
- Manage compliance: Capture, store, and manage your data according to government regulations to reduce the risk of audits and penalties.
Implement Your EPM Solution with SC&H
EPM is powerful software, but it’s only as good as your implementation. Avoid wasting resources and maximize your investment with SC&H. With 3 decades of implementing EPM for government contractors, we are uniquely familiar with your industry’s challenges and understand how to optimize the technology to better meet your needs.
- Holistic, end-to-end support from our first meeting to final delivery (and we offer post-implementation support for long-term success)
- 100% US-based, in-house team that speaks your language and works on your schedule
- Dedicated team throughout the project, always going the extra mile to deliver the perfect product
- Decades of government contracting expertise means we understand how to do the heavy lifting so you can stay focused on growth
