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What’s Next in Business Performance Management for the Office of Finance?

Originally published June 13, 2007

With the recent wave of mergers and acquisitions in the performance management and business intelligence (BI) category, there is a not-so-subtle shift taking place that could have profound effects on how the “business-side” of companies will buy and manage performance management applications.

Since the mid ‘90s, senior finance personnel were targeted by entrepreneurial software companies that developed products with “financial intelligence” to support their budgeting, planning, reporting and financial consolidation initiatives. Companies such as Cartesis, Comshare, Hyperion, INEA, OutlookSoft and SRC Software developed specific product offerings that were targeted to business decision makers, rather than following the traditional route of sale through the information technology (IT) department. Although these applications would require some infrastructure support from IT, the decision to invest in them was largely in the hands of the finance department or specific lines of business, with the support and maintenance of those same applications provided largely by finance staff.

All the companies mentioned have been acquired by IT-leaning business intelligence or transactional system providers – Business Objects, Infor, Oracle and SAPSAS, one of the few remaining “independent” industry leaders, has been working hard to supplement its IT-centric background with business solutions that target operational business units. In addition, Microsoft is looming backstage, ready to aggressively launch a strong business intelligence platform with the PerformancePoint initiative.  Now, with a few exceptions, the larger players in this category are IT-oriented vendors.

Thus, there appears to be an opportunity for these exceptions. Cognos, with roots that are also in business intelligence, has had a play for the office of finance over the last decade. Applix, Clarity Systems and Longview all continue to do business with strong success working directly with finance. The remnants of Cartesis, Geac, Hyperion and OutlookSoft, if they remain intact and truly focus on the office of finance, can also have an impact. But, in these latter cases, there is the messy business of company integration – which has proven to take 12-36 months in similar situations. The test will be whether they can (or want to) maintain product, sales and support focus for the business-oriented organizations that would rather not be fully dependent upon IT for the successful deployment of their performance management solutions.

What’s Next?

As mentioned, the five newly structured BI/transactional vendors will claim “business as usual” and initially maintain parallel focus on IT and finance. Some will focus on fully integrating the offerings, “sunsetting” a few less promising or overlapping products and turn their efforts in the short term into cross-selling existing clients. A few will try to be all things to all people, but that will become a challenge during the first poor financial quarter, when they will likely go back to the products and markets they know best. The remaining will strive and succeed with an expanded product offering to both the business and IT decision makers, and will go to market with some form of a matrix sales/support organization to meet the diverse needs of a burgeoning market. The challenge lies in watching these leading vendors closely over the next 12 months to see which can effectively execute on their plans – assuming they are committing to the third alternative listed.

The remaining finance-oriented players – Applix, Clarity Systems, Cognos, Longview and SAS – will continue to increase their investment in this area to take advantage of the distractions occupying their long-time competitors before the acquisition flurry. Further investment in functionally rich second-phase performance management applications, with a concentration on business-oriented decision makers, will be their focus. We can expect the largest amount of innovation and aggressive commercial positioning to come from this group.

A few upstarts – Adaptive Planning, KCI and Tagetik – will take this opportunity to aggressively refocus their efforts with a business-oriented approach that differentiates their offerings. Adaptive Planning is promoting the easiness of adopting their hosted planning and reporting solution, initially targeting small and medium businesses (SMBs), but now expanding to departmental solutions of large enterprises. KCI continues to offer a unified application for budgeting, planning, reporting and financial consolidations, building upon their experience with Fortune 500 organizations. Tagetik, a financially complete Italian-based company, will continue its launch into the North American market with an offering that promotes new levels of financial intelligence.

The mid-market/SMB will have its own ecosystem with Adaptive Planning, Bitam, Centage, Host Analytics, Prophix and Satori Group (to name a few) all jockeying for position with various combinations of packaged applications at cost-effective price points. In addition to Adaptive Planning, Host Analytics promotes a less IT-dependent hosted application. Bitam offers a full suite of BI and reporting capabilities at a fraction of the cost of their competitors. Centage has an attractively packaged planning offering that can be deployed from a single desktop, as well as across many departments, for the small to mid-market companies looking for a migration path away from historic spreadsheet models. Prophix offers a full suite of performance management capabilities for the mid-market as well as departments of larger organizations. The refocused Satori Group is part of a new breed of players that have chosen very specific vertical markets (in Satori’s case – legal and professional services) and offers both a product suite and support network to be a full-range BI/performance management player for these organizations.

What Should BPM Buyers Do Differently?

First, ask lots of questions about product development and integration plans from some of the newly merged vendors. If a vendor ties in a “product future” as part of their sale, assure that you have it mentioned in your contract with aggressive commercial penalty clauses if they do not deliver. Think hard about your maintenance and support requirements – both for your internal IT support as well as hotline/implementation/product update support from your chosen vendor. If you are actively tracking research on this category, you will have read about the landscape shift underway as performance management continues to move into its second stage.  With these shifts, it is even more important to assure that you get requirements clear and do a more careful job in the vendor selection process. Remember that typical performance management projects have a life of 5-7 years. That is a long time to be working with a suboptimal solution, while your competitors are moving ahead more effectively with stronger systems.

In conclusion, the core reason for M&A activity in this category is due to the fundamental value companies are achieving with an improved business performance focus. The capabilities will be even more compelling over time – you just need to remember that your business requirements should drive the initiative, with technology in support – not the other way around.

  • John ColbertJohn Colbert
    John, Vice President of Research and Analysis at BPM Partners, is responsible for market trend analysis, services development and technology vendor relationships at BPM Partners, the leading independent authority on business performance management (BPM) solutions. Prior to BPM Partners, John was Senior Director, Product Marketing at Hyperion Software, responsible for directing Hyperion's OLAP Business Analysis financial software products. Earlier in his career, John was an end user of performance management solutions while a product manager at Raychem Corporation, a Fortune 500 company that has since been acquired by Tyco. John has contributed to many publications including the New York Times, BPM Magazine, Information Week, Business Finance and eWeek, and he is a regular presenter at performance management related conferences and web seminars.

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