Gartner Magic Quadrant for CPM suites underscores cloud momentum

Although the vendor rankings in the 2014 Gartner Magic Quadrant for CPM Suites aren't too different from last year, the market is evolving.

When comparing the 2013 and 2014 Gartner Magic Quadrants for corporate performance management suites, it would seem not much has changed. Besides the addition of three new vendors -- Adaptive Insights, Axiom EPM and Solver -- the positioning of vendors has stayed fairly consistent.

But just because the quadrant doesn't look radically different doesn't mean the technology space is static.

"This is a market where things aren't swinging hard one direction or another, but there are definitely some changes happening," said Christopher Iervolino, a research director at Stamford, Conn.-based Gartner and co-author of the 2014 CPM Suites Magic Quadrant.

For instance, Iervolino pointed to cloud and analytics as forces driving innovation in corporate performance management (CPM) suites. Integration issues and industry-specific capabilities are additional areas of focus in this year's report, while last-mile-of-finance tools (LMOF) have fallen somewhat out of the spotlight since last year.

"Although the initial momentum around disclosure management and other [last-mile-of-finance] offerings, such as account reconciliation, has decreased, these solutions continue to grow, but at more moderate levels," the report states.

Hosted cloud and SaaS CPM deployment options growing

"Cloud traction in the space is accelerating," according to the report. "Growth continues to be high for pure-play public SaaS [Software as a Service] vendors, and they continued to attract investors in 2013."

The majority of respondents surveyed for the quadrant currently use on-premises CPM suites, but acceptance of cloud technology in other areas is shifting attitudes within the CPM market. Iervolino has witnessed this greater interest in and acceptance of cloud technology firsthand.

"If I look back on conversations I've had with organizations two years ago as opposed to one year ago, the character has changed," he said. "Two years ago, in particular, large organizations were kicking the tires as related to cloud -- 'Is it real, is it ready, who's using it?'" Today, more organizations come to the table already viewing cloud as a viable option, and their questions now focus more on the strategic use and goals of cloud technology, Iervolino added.

In addition to pure SaaS vendors and offerings, the report notes there are an increasing amount of hosted cloud options available -- and both forms of CPM system cloud deployment are catching on.

Also, the decision between cloud and on-premises doesn't have to be either/or, the report points out. "Large organizations may be able to use CPM cloud solutions to complement on-premises solutions for planning, analytics and data collection, especially when project time frames are short and consulting resources are limited," it states. "Given the appropriate use cases, a hybrid on-premises/cloud approach could be a viable option."

SaaS vendor Adaptive Insights, formerly Adaptive Planning, made its debut this year in the Visionaries quadrant. Iervolino explained that the vendor wasn't included in previous years because it didn't meet the minimum functional requirements for financial consolidation and close. With the addition of a financial consolidation module, the platform now contains all components of a Gartner-defined CPM suite. Besides consolidation and close, the other four functions that comprise a CPM suite are financial and management reporting and disclosure; financial budgeting, planning and forecasting; strategic planning and forecasting; and profitability modeling and optimization.

Collaborative financial and operational planning calls for better integration

While hybrid cloud/on-premises methods of CPM software deployment raise the need for quality integration, the report notes that the issue is popping up in other areas as well, such as integration between CPM and enterprise resource planning systems, and between CPM and operational planning.

To the latter point, the report states, "Bridging the gap between operational and financial performance management is a cultural and technical challenge; however, CPM solutions are increasingly embedding IMC [in-memory computing], cloud, mobile and social computing capabilities to support more integrated financial planning."

Iervolino pointed out that speed of data is particularly important when integrating financial and operational planning. "Operational planning requires more timely data, so the integration has to be closer to real time," he said. "Whereas finance is more periodic -- monthly, quarterly, annual -- operational is going to be a much more frequent planning process, so that makes integration more of a factor."

Industry-specific capabilities of CPM suites can also help companies better integrate financial planning with other types of critical planning, such as workforce or capital planning, Iervolino said. The report highlights several vendors that currently have or are in the process of developing industry-specific capabilities, including Axiom EPM for healthcare and financial services, Infor for healthcare, Prevero for utilities and airports, and Tagetik for insurance and banking.

Improvements are needed in regard to analytics.

"CPM application users require access to more detailed operational data to investigate critical issues or to employ forecasting algorithms that require highly granular, timely data," the report states. "There continues to be a growing need for user-friendly analytics within CPM solutions."

However, vendors are making progress on this front, with many adding advanced analytics, data discovery, and collaboration capabilities to their products, according to the quadrant.

Megavendors top CPM suites Magic Quadrant

As in previous years, the market is dominated by three megavendors: Oracle, IBM and SAP. These three companies are the sole occupants of the Leaders quadrant in the 2014 report.

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While a mid-2013 Nucleus Research CPM Technology Value Matrix positioned Oracle lower than SAP and IBM, claiming the vendor lagged behind its competitors on strategic CPM adoption, Oracle is the foremost vendor in Gartner's Magic Quadrant, although by a more narrow margin than last year. "Strategic CPM capability, enabled by cloud, in-memory computing and analytics, is having an increased impact on the market. The different CPM investment strategies of the mega vendors [Oracle, SAP and IBM] will have a more dramatic impact as associated market adoption characteristics develop in 2014," Iervolino said in response to the idea that Oracle is falling behind.

As in 2013, SAS and Infor are positioned within the Challengers box. Niche Players include Prophix, Bitam and KCI Computing, and new entrants Axiom EPM and Solver. In addition to Adaptive Insights, the Visionaries quadrant contains Host Analytics, Tagetik, Longview Solutions, Board International and Prevero. The latter two vendors moved to the right this year after being labeled as Niche Players in last year's quadrant.

Emma Snider is the associate editor for SearchFinancialApplications. Follow her on Twitter @emmajs24 and the site @SearchFinApps.

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