Oracle, SAP and IBM were the leaders in this year's Magic Quadrant for Corporate Performance Management (CPM) Suites, published by Stamford, Conn.-based consultancy Gartner. In part two of this Q&A, Chris Iervolino, Gartner research director and one of the report's authors, explains how business intelligence (BI) capabilities are impacting the CPM software market, and details where CPM and BI products might overlap. He also describes the benefits of new tax provisioning capabilities within CPM software, and gives tips for buyers evaluating the CPM market.
The report mentions that many CPM vendors are adding BI capabilities to their products. So do organizations need to invest in a separate BI product if they already have a CPM system?
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Chris Iervolino: It's a good question. In a way, CPM is BI for finance. If you look at the vendors [included in the CPM Magic Quadrant] half of them are BI vendors as well. You'll see them on Gartner's BI Magic Quadrant and oftentimes they'll have a different rating [there], because that report rates their overall BI capabilities, versus the CPM MQ that's rating their BI capabilities for finance and their ability to support CPM processes. Bitam, Board International, IBM, Oracle, SAS Institute and SAP all appear in the BI and Analytics Magic Quadrant report -- they provide separate BI solutions.
CPM products provide BI primarily for the finance area, but there's some overlap. For instance, profitability modeling and optimization, strategy management, dashboards and other functionality are largely traditional BI capabilities. Within these vendor's CPM suites they're customized for use within the office of finance.
According to the CPM Magic Quadrant, Host Analytics is the only true cloud multi-tenant system in the CPM market. What do users need to be aware of in terms of how hosted cloud options will differ from a true SaaS approach?
Iervolino: There are a number of factors that differentiate hosted from SaaS solutions, such as the need for a special infrastructure versus a zero footprint, the degree of scalability, elasticity and availability of metered usage, control over software updates [and] changes, etc. What's important is that prospective CPM cloud customers evaluate a range of solutions and map their requirements against these offerings.
So as a cloud option, is hosted "good enough," or should clients investigate a true multi-tenant system?
Iervolino: It really depends on what they're looking for. Hosted certainly may be enough, [but] it depends on how the vendor can leverage their cloud capabilities to provide unique functionality that the customer needs.
You mention in the report that tax provisioning capabilities are now being added to CPM suites. What's the upshot for users?
Iervolino: The upshot is coordination between tax and finance. The report describes tax as being underserved, technology-wise. Certainly, there's always been a tax component to CPM projects and oftentimes these projects have partially supported the tax department's needs, such as with data collection and reporting. These tax provisioning capabilities take it one step further, and [they're] able to provide [the] tax [function] more of what they require within the financial reporting process because tax is a component of [that] process. So it provides the same type of efficiency and control that was brought to the financial consolidation and close process. They help manage CPM-tax integration issues, multiple tax data sources and multijurisdictional reporting challenges.
For buyers evaluating CPM systems, are there any functions they should be looking for in particular?
Iervolino: I think the improved financial analytics [and] BI capabilities within a CPM solution is something that provides value. The more an organization can use the information they have, the better insights they can gain from the data, and the more effective and competitive they'll be. So as far as CPM solutions go, those that provide improved financial analytics, enhanced analytic insights and performance management capabilities can benefit the organization as a whole.
What other trends do you think will affect the CPM market over the next few years?
Iervolino: I think that the cloud will be an area of additional movement, and I think we'll see more vendors embrace different cloud-based solutions. Mobile is an area in which we'll see additional functionality for both BI and enhanced process collaboration. I think we'll continue to see more capable financial analytics within these products as well, especially for enhanced planning and forecasting purposes.
Read part one of this Q&A to discover the difference between tactical and strategic CPM, and find out how in-memory computing is enabling financial analytics.
Emma Snider is the associate site editor for SearchFinancialApplications.com. Follow her on Twitter: @emmajs24.
This was first published in March 2013