Choosing an EPM software vendor: Know what questions to ask

The two-part buyer's guide concludes with advice on key variables to look for in enterprise performance management software and vendors.

In the second and final part of this buyers guide, analyst Barry Wilderman explains the most important questions to ask before choosing an enterprise performance management (EPM) software vendor and product. Part one explains what EPM software does and provides tips on aligning product features with an organization's financial reporting and strategy needs.

While there are many factors to consider when evaluating enterprise performance management software, the most important ones revolve around feature breadth and depth, and support for business intelligence (BI).

Breadth. There are eight to 10 major functions in EPM, most of which fall into the categories of budgeting and planning; strategy; and financial close, reporting and disclosure. Determine exactly what each vendor offers and which combination best matches what you need.

Depth. Make sure to understand the quality and capabilities of the software features that support each EPM function. For example, does the budget package have workflow features? If your company is interested in strategy management, does the EPM software have hooks into project management tools?

Interoperability. Will the EPM software interface easily with other business applications in your environment?

Extensibility. Can you add custom business functions to the EPM software? How easy is this to do?

Business intelligence. How good are the reporting, querying, dashboard and scorecard features in the EPM software product? Can you use your own BI tools on data that comes out of the product, and if so, how easy is it? Does the EPM software let you create data marts (aggregated financial data) to make analysis easier?

Cloud. Does the vendor offer a cloud version of the product, assuming your company wants this option to be available?

References. Can the vendor provide several positive references from companies in your industry?

Choosing an EPM software vendor

The product-selection committee should work to create a shortlist of target EPM software vendors, winnowing the list to the smallest possible number (two vendors are better than three, for example). The committee should ask each shortlisted vendor to build a working example of the application. This is also the point to double-check references.

One cannot overemphasize the importance of checking the vendor's financial stability. Even if the vendor is a private company, you must examine its last two audited financial statements. After that, go through the exercise of projecting what the first six months will be like working with the vendor. Will implementation be a breeze? Is extra help available if needed? Careful reference checks will provide some of these answers.

Here are other important questions to ask before choosing an EPM software vendor:

  • What is the vendor's financial stability?
  • How experienced is its executive team?
  • Does the vendor have a published set of tutorials and implementation guides?
  • How strong is the vendor's professional services team?
  • Does the vendor have relationships with third-party professional services, application or BI providers?
  • Can the vendor provide worksheets to help estimate total cost of ownership, time to benefit and quantifiable benefits so you can calculate ROI?

By following the advice above, you should be in a good position to create a shortlist of vendors to consider.

The vendors you'll encounter fall into several broad categories that also conveniently describe what each one specializes in.

First are the BI megavendors: three companies that offer all the major budgeting, planning, strategy, revenue and cost management, and financial disclosure components of EPM. One caveat: When analyzing these vendors, take special care to understand how much BI they deliver with their EPM products and how much must be bought separately.

IBM, Oracle and SAP became sophisticated EPM vendors after each made acquisitions in the BI space. As a result, all three provide comprehensive EPM suites, with capabilities in numerous countries and vertical industries. While these software giants will not be the least expensive to deal with, all three are highly capable.

Two other large companies compete in the EPM software industry. Infor claims to be the third-largest ERP vendor (after SAP and Oracle) and has acquired many ERP companies over the years, including Lawson and Extensity. It offers a reasonably complete set of EPM functions, though organizations that already own an Infor EPM system should take the time to scrutinize how well it integrates with the EPM offerings.

SAS also provides a broad range of EPM capabilities and has specialized offerings for IT, human capital management, customer management and supplier management.

More on choosing an EPM software vendor

Read part one of this EPM buyers guide

Learn about SAP EPM OnDemand

See what one Gartner analyst says about strategic EPM

Considered together, the products sold by the five biggest vendors provide every core EPM function, along with some useful horizontal and vertical ones. Other vendors generally sell less-comprehensive EPM software products.

One category offers budgeting and related functions but not strategy, though most support driver-based planning and rolling forecasts. This large group includes A3 Solutions, Adaptive Planning, Alight Planning, Arcplan, Centage, Host Analytics, Longview Solutions, Prodacapo, Prevero, Prophix Software, Tagetik and Tidemark.

In contrast, Active Strategy, ClearPoint Strategy and Corporater offer strategy tools but not budgeting.

Another small group of vendors claiming to support both budgeting and strategy includes axiomEPM, Bitam, Board International and KCI Corp.

Approximately a dozen more vendors, among them Anaplan, Quantrix and WebFilings, emphasize narrower slices of the EPM pie, such as planning, financial modeling and disclosure management.

About the author:
Barry Wilderman has more than 30 years of experience as an industry analyst, researcher and consultant at such companies as META Group, Lawson Software, SalesOps Analytics, and McKinsey and Company. He is currently president of Wilderman Associates. Contact him at Barry@WildermanAssociates.com and on Twitter at @BarryWilderman.

This was first published in May 2013

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