Planning, Analysis, And Reporting Solutions Drive Financial Performance Management

Transcription

1 For: Application Development & Delivery professionals Planning, Analysis, And Reporting Solutions Drive Financial Performance Management by paul D. Hamerman, January 23, 2013 key TakeaWays Quality and Timeliness enrich Business performance information Finance professionals need to accelerate financial management reporting processes while improving quality and efficiency. Timely information delivers higher value to business stakeholders, who can no longer rely on latent batch processes to manage business performance. Firms solve Financial process Challenges With FpM solutions Planning, financial reporting, and analytical applications comprise the FPM software category. These applications help organizations manage financial and business information for past, present, and future time frames. Technology is Transforming The FpM vendor Landscape Technology innovation, particularly around SaaS and big data, opens opportunities for smaller vendors to disrupt the balance of power in FPM. Customers can benefit from new levels of flexibility, rapid deployment, and real-time analytics by replacing older products. Forrester research, inc., 60 Acorn park Drive, cambridge, ma usa tel: Fax:

2 January 23, 2013 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management Market Landscape: Financial Performance Management by Paul D. Hamerman with Mike Gilpin and Vivian Brown Why Read This Report This report enables application development and delivery professionals and their finance stakeholders to understand the changing vendor landscape for financial performance management (FPM). Complex businesses, and those subject to securities and industry regulation, require agile and robust capabilities to plan, analyze, report, and disclose financial information in near real time rather than relying on periodic reports. The FPM market is quite mature, with significant customer adoption and a substantial presence for megavendors like IBM, Infor, Oracle, SAP, and SAS Institute. New technologies like big data and deployment models such as software-as-a-service (SaaS), however, are spawning upstart competitors to the incumbents, enabling process flexibility, rapid deployment, and embedded analytics. Understanding the market landscape for FPM will enable you to optimize and innovate processes that drive business performance and compliance. Table Of Contents FPM Solutions Span The Past, Present, And Future Market Maturity, Business Needs, And Technology Drive Change The Current FPM Landscape Pits Tech Giants Against Focused Players recommendations Optimize Financial Performance Processes With Advanced Technology WHAT IT MEANS Architectural Transformation Alters The FPM Landscape Notes & Resources Forrester based this research on dozens of client inquiries as well as in-depth discussions with leading vendors in the market, including Adaptive Planning, Anaplan, Host Analytics, IBM, Oracle, Prophix Software, SAS Institute, SAP, Tagetik Software, and Tidemark Systems. Related Research Documents Align Financial Processes And Systems For Better Business Value And Compliance August 18, 2011 The Forrester Wave : Business Performance Solutions, Q November 19, 2009 Business Performance Solutions: Clash Of The Titans January 20, , Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please clientsupport@forrester.com. For additional information, go to

3 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 2 FPM Solutions Span The Past, Present, and Future The recent recession and the ongoing volatility in financial markets have increased the need for more frequent planning cycles and more timely performance insight from financial processes. Business leaders need financial processes and reporting capabilities that meet an increasing range of requirements for compliance and control yet also provide value in setting strategy, managing business performance results, and keeping plans and forecasts up to date (see Figure 1). The financial performance management (FPM) software category is comprised of a set of planning, reporting, and analytical applications that help organizations manage financial and business information for the past, present, and future (see Figure 2). 1 Using FPM, firms can: Document the past with financial reporting, consolidation, and disclosure. Financial management is governed by complex accounting procedures and regulations that dictate how financial results are captured, controlled, and reported. Financial consolidation software supports a compliance-driven reporting process and is a must-have for firms with multiple lines of business, legal entities, and international operations. Disclosure management solutions a newer category help public companies compose and deliver complex regulatory reports and electronic filings. Understand the present state with performance measurement and management reporting. Companies require timely information to monitor and measure business performance and analyze profitability. Firms use FPM solutions to monitor key performance indicators (KPIs), create complex cost allocation models to assess the profitability of products and customers, and set strategies and track progress in executing their strategic goals and initiatives. Performance information is enhanced with graphical visualizations, mobile apps, and powerful in-memory analytics platforms. See into the future with planning, budgeting, and forecasting (PBF). Forward-looking plans, forecasts, and budgets enable organizations to manage financial resources, chart strategies, and anticipate change. These capabilities are increasingly important in the fragile and volatile global economic environment. With the inherent modeling flexibility in PBF solutions, firms can create plans, budgets, and forecasts with a variety of time horizons, calculation methods, and collaborative inputs.

4 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 3 Figure 1 Finance Delivers Business Performance Value On Multiple Levels Key responsibilities Business goals Stakeholders Reporting to shareholders Disclosing results to external parties Complying with regulations Accountability and transparency Shareholders and regulatory authorities Setting strategies and goals Assessing business opportunities Measuring corporate performance Managing profitability and costs Strategic insight and guidance Executive team and board Measuring LOB performance Controlling costs Analyzing business trends Tracking initiatives Operational effectiveness Lines of business Planning, budgeting, forecasting Accounting and financial reporting Managing cash and assets Risk and compliance Efficiency, accuracy, controls, and compliance CFO Source: Forrester Research, Inc. Figure 2 The Functional Scope Of Financial Performance Management Financial reporting, consolidations, and disclosure Accounting close Financial consolidation Financial statement preparation Regulatory filings XBRL Performance measurement and management reporting Cost and profitability analyses Key performance indicators Internal reporting to board and executives Scorecards and metrics Strategy and initiatives Planning, budgeting, and forecasting Strategic planning Setting goals and targets Budgeting Rolling and collaborative forecasting Predictive modeling Scenario planning Past Present Future Source: Forrester Research, Inc.

5 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 4 Financial Information Challenges Include Complexity And Process Bottlenecks Finance has a complex array of business processes that challenge most firms in achieving process automation, speed, integration, and efficiency. In an age where real-time information is possible, finance processes play out in relatively slow motion, driven more by control and accountability than by business performance. Firms attempting to deliver timely and relevant financial and business performance information face these challenges: System complexity lengthens the process of closing the books. One of the biggest challenges firms face is that too many systems need to feed the core accounting (general ledger) systems, such as procurement, inventory, fixed assets, and accounts receivable. These feeds often occur periodically as batch updates. In addition, most large firms and many medium-size ones don t have a single accounting system; rather, they have several sets of books that they need to consolidate. Having too many moving parts adds delay and complexity to the process of summarizing transactions and closing the books. Financial reporting regulation and compliance is burdensome. Businesses that trade securities on public exchanges, as well as those in regulated industries and the government sector, face complex and changing regulations for financial reporting. Taxes, currencies, international and localized regulations, and internal control requirements like Sarbanes-Oxley add to the challenge. Technology requirements for regulatory filing are also mandated, as with the US Securities and Exchange Commission s (SEC) requirement to file in a standardized file format (XBRL). Compliance needs conflict with performance analysis. Accounting and financial reporting systems traditionally rely upon periodic processes that are a function of the retrospective and controlled discipline of accounting. Transactional system interfaces typically rely on batch plumbing, which may be adequate for accounting needs. Managing business performance, however, requires actionable and immediate analytic insights, which is at odds with the compliance-driven processes that are ingrained in the accounting discipline. Firms struggle with budgeting and need more planning agility. Many firms find the traditional budgeting process too inflexible and time-consuming to be sustainable. Planning and forecasting has taken on mission-critical importance in today s volatile economy, requiring faster and more flexible planning cycles than budgeting allows. Relying on spreadsheets to manage the full array of planning processes is increasingly untenable, due to poor data aggregation and data integrity controls. Market Maturity, Business Needs, And TEchnology Drive Change Results from Forrester s Forrsights Software Survey, Q indicate the buying patterns for 2013 and beyond (see Figure 3). Recent discussions with key vendors and end user clients also provided us with useful context to discern buying patterns and the overall levels of utilization of these

6 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 5 products. From the survey data and vendor and buyer context, we conclude that the FPM market enjoys relatively high adoption levels overall, particularly in PBF and financial reporting, but that adoption patterns vary across product subcategories: Planning, budgeting, and forecasting demonstrates both maturity and growth. Enterprises indicate that their levels of adoption and investment in the PBF segment of the market are very healthy: 53% of them have implemented PBF (31% are not expanding that implementation and 22% are expanding or upgrading it). In addition, 12% will implement PBF in the next 12 months, with a further 11% planning to adopt in a year or more. Spreadsheet replacement remains a key driver, as does replacement of older installed PBF products with newer products, including SaaS. Use of PBF products is likely to expand well beyond its current core of finance professionals, as firms make planning and forecasting processes more collaborative beyond finance. Financial reporting and consolidation has strong adoption and continuing investment. Financial reporting and consolidation software has a high level of penetration among firms with global operations, numerous subsidiaries and legal entities, and joint ventures: 61% of enterprises report that they have implemented this technology (35% are not expanding that implementation and 26% are expanding or upgrading it). This is largely a replacement market with a core user base limited to finance, but the installed base of older products foreshadows significant churn: 9% of enterprises reported planning to implement new products in the next 12 months, with a further 11% planning to implement in a year or more. External financial disclosure is a nascent solution segment. Post-consolidation disclosure management activities sometimes referred to as the last mile of finance comprise a newer market with relatively low levels of penetration. The survey data shows substantially less interest in investing in disclosure management software, partly due to a propensity to outsource certain aspects of this function, such as XBRL tagging and SEC filing. Our data may understate actual adoption, as this specialized financial solution often flies beneath IT s radar, especially when delivered as SaaS. 2 Discussions with vendors and buyers indicate that interest in disclosure management is actually materializing very rapidly. Performance management adoption is growing. Interest in performance management, which focuses largely on KPI metrics dashboards, trend analysis, and variance analysis reporting (e.g., actual versus budget), is increasing. The survey data shows that market adoption of these solution components is moderate, with 47% of enterprises having adopted them (23% are not expanding that implementation and 24% are expanding or upgrading it). The category shows a healthy level of new investment: 14% plan to implement it in the next 12 months, with a further 10% planning to implement in a year or more. Cost and profitability has significant adoption but limited growth. Cost and profitability management has seen good levels of adoption: 47% of enterprises have implemented it (27% are not expanding that implementation and 20% are expanding or upgrading it). New

7 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 6 investment, however, appears to be relatively light: 9% of enterprises plan to implement it in the next 12 months, with a further 8% planning to implement in a year or more. This analytical application is a relatively small part of the overall FPM picture in terms of revenue, but has significant adoption in the financial services, utilities and telecom, and healthcare verticals, where firms are using it to assess profitability at the product or customer level and to allocate internal service costs. Figure 3 FPM Adoption And Growth Varies Across Product Subcategories What are your firm s plans to adopt the following business performance solutions? Don t know Not interested Interested but no plans Planning to implement Planning to implement in a year or more in the next 12 months Implemented, not expanding Expanding/upgrading implementation Strategy and performance measurement Financial consolidation and reporting Planning, forecasting, and budgeting Cost and profitability analysis 6% 5% 9% 7% 9% 13% 23% 10% 14% 24% 5% 9% 35% 11% 9% 26% 7% 13% 31% 11% 12% 22% 13% 14% 27% 8% 9% 20% Disclosure management and XBRL 23% 30% 20% 12% 7% 5% 4% Base: 826 packaged application decision-makers from firms with 1,000 or more employees (percentages may not total 100 because of rounding) Source: Forrsights Software Survey, Q Source: Forrester Research, Inc. Compliance And Process Transformation Will Drive Adoption Trends In 2013 and beyond, changes in how firms prefer to use and deploy applications will drive the FPM market. Businesses seeking greater process efficiency, especially where regulatory compliance requirements are extreme, will shape requirements as: Compliance drives higher investment in financial reporting systems. It s not just large multinationals; many small to medium-size firms operate internationally and some are subject to the regulatory oversight of securities regulators such as the SEC. Some firms will view regulatory requirements as a catalyst for investing in core financial systems including general ledger systems and financial reporting and consolidation to add more flexibility and process efficiency.

8 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 7 Close-to-disclose becomes a popular process automation strategy. Firms will increasingly look to automate the entire financial close-to-disclose cycle, tying together processes in accounting, statutory consolidation, and assembly of required disclosure documents like 10- Ks and 10-Qs. Firms should consider the entire close-to-reporting cycle to be a continuous process, from closing the books to generating internal reports and producing external reports for various stakeholders, including tax authorities, regulators, financial institutions, and shareholders. Automating this entire process requires improved systems integration and collaboration orchestration. Business performance information delivery gains velocity. Firms adopting a finance transformation philosophy will achieve the ability to deliver business performance information in real time. Information on demand means transforming processes as well as integration and analytic technologies to support a real-time business. Formats and delivery mechanisms will also change to leverage mobile technology and social collaboration. Firms will use mobile devices, particularly tablets, to access rich graphical information in an interactive mode. Process collaboration will also improve as software incorporates real-time collaboration into finance processes. Product obsolescence and technical debt drives replacements. Even though FPM has been widely adopted, particularly in PBF and financial consolidation, the pace of product replacements is likely to increase. Older products built on inflexible architectures still persist and are gradually being replaced by newer and more flexible solutions. Replacement is often encouraged by technical debt, the investment required to bring systems up to the current version, fed by multiple deferred upgrades and extensive customization. When technical debt accumulates, the cost of upgrading to the latest release can rival the replacement cost, especially when lighter and more flexible solutions are available. New Technologies Increase The Appetite For Process Innovation Firms are showing a growing appetite for SaaS in FPM, which is likely to have a major impact on market activity, accelerating its overall growth. 3 In addition, big data and in-memory computing technologies promise transformational opportunities for planning and analysis scalability and analytics insight related to business performance. 4 Usability and flexibility will further influence buyer choices and the role of IT in managing solutions. In 2013 and beyond, technology evolution will shape the FPM market as: SaaS financial solution adoption accelerates in FPM and financial accounting. SaaS adoption is already mainstream in several application areas, such as human resource management and customer resource management, and is rapidly gaining momentum in the finance arena, including both core financial accounting and FPM. Hundreds of firms have

9 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 8 already made the transition to SaaS or cloud -based FPM systems, and this adoption will continue to accelerate. Proof points of SaaS momentum are clear from observing the high growth of several pure-play SaaS FPM vendors like Adaptive Planning, Host Analytics, and WebFilings. SaaS adoption will increase as legacy on-premises vendors retool for SaaS and as new players gain momentum. Big data opens new possibilities for performance modeling and analysis. Big data platforms like Hadoop and in-memory computing allow the collection, processing, and analysis of huge, multidimensional data sets at lightning speed. In the context of FPM, this technology changes business use cases in terms of the type of data that can be analyzed, and also resets expectations regarding timeliness and the speed of information delivery. External information adds context to planning and performance analysis. Data from the outside world, such as financial metrics, currencies, interest rates, commodity prices, stock market data, economic indicators, weather, and traffic will increasingly be available as information-as-a-service. For example, Host Analytics currently offers external data for use in its applications via its Decision Hub product. FPM buyers place a premium on flexibility, easy upgrades, and usability. As business modeling tools, FPM solutions must continue to emphasize nontechnical modeling and process flexibility. Today s generation of FPM systems are designed to be set up and managed by businesspeople, and updated more frequently (and less disruptively) by the vendors. Usability continues to advance in delivering graphical visualizations of FPM data, although integrated, native Excel will continue to persist as the preferred user interface of finance professionals. The Current FPM Landscape Pits Tech Giants Against Focused Players Buyers of FPM solutions have a variety of choices, ranging from broad solution portfolios offered by behemoth technology vendors to focused solution sets offered by pure plays focusing entirely on FPM and even more specialized vendors offering specific point solution components (see Figure 4).

10 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 9 Figure 4 The Financial Performance Management Vendor Landscape Large software vendors IBM Infor Oracle SAP SAS Institute SaaS pure-plays Adaptive Planning Anaplan Host Analytics Tidemark Financial performance management FPM suite vendors Amelkis Board International Longview Solutions prevero Prophix Software Tagetik Software Point solution specialists Acorn Systems (profit/cost) Prodacapo (profit/cost, scorecarding) Trintech (close-todisclose) WebFilings (disclose) Source: Forrester Research, Inc. Three Large Technology Vendors Control FPM Market Share IBM, Oracle, and SAP dominate FPM market share with broad product portfolios and high penetration into enterprise-class accounts. These three vendors account for roughly two-thirds of the total revenues of a market that Forrester estimates at approximately $3 billion. 5 None of them has yet jumped fully on the SaaS bandwagon for solutions in this category, instead deriving their revenues from licenses and software maintenance. Considering the offerings of these three vendors, we find that: Oracle has the broadest solution portfolio. The Oracle Hyperion family of enterprise performance management (EPM) products spans planning, consolidation, strategic financial modeling, close, disclosure, cost and profitability, financial data quality, management reporting, and other components. The Hyperion Financial Management (HFM) solution for financial consolidation has strong adoption among large multinationals, as does Hyperion Planning. Although historically acquisitive, Oracle has shown a recent propensity to build rather than buy as it grows this solution portfolio.

11 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 10 SAP competes well with a mature portfolio. SAP, which also refers to this product set as EPM, has a portfolio of functionally robust products targeting large accounts, with some product overlaps in planning and consolidations. SAP Business Planning and Consolidation for SAP NetWeaver is the cornerstone of the portfolio; SAP now offers it on the HANA inmemory computing platform to boost scalability and analytic content. IBM is making decisive moves to reclaim its position in the top tier. After becoming less competitive a few years ago with an aging product, IBM is now reaping the benefits of significant investments in its FPM portfolio. In addition to acquiring a market-leading capability in disclosure management (formerly known as Clarity FSR), IBM has invested heavily in its versatile planning solution, Cognos TM1. The solution portfolio also includes Cognos Controller for financial consolidation and has moved beyond finance with the addition of Varicent Sales Performance Management (SPM). In addition to these three large players, two other larger software vendors, Infor and SAS Institute, are also in the mix. Each is privately held, with roughly $3 billion in total revenues, Infor largely in enterprise resource planning (ERP), SAS in analytics and business intelligence (BI). Infor Corporate Performance Management, formerly known as Infor PM10, has significant global adoption in planning and consolidations, which is aligned with Infor s largely midmarket ERP customer base. SAS has seen less adoption in budgeting and consolidations, but has good traction in cost and profitability analysis, predictive forecasting, and strategy management. SaaS Vendors Are Gaining Traction Rapidly While the FPM landscape is mature overall, SaaS adoption is growing very rapidly. The two best established pure-play SaaS FPM vendors are Adaptive Planning and Host Analytics. Forrester estimates that the annual growth rates of these vendors are approaching 100%, which is remarkable given that neither is a startup. 6 Within the past year or so, two new and promising SaaS startups, Anaplan and Tidemark, have entered the market. As the pace of SaaS adoption in FPM accelerates, SaaS vendors are poised to sustain rapid growth, as: Adaptive Planning expands beyond planning. Originally a pure-play PBF vendor serving smaller firms, Adaptive Planning now has more than 1,500 customers. The company added performance analytics via its recent acquisition of mydials and is building out financial consolidation support as it moves its focus further upmarket. Host Analytics provides an integrated FPM suite in the cloud. With accelerating revenue growth and increasing customer size, Host Analytics is gaining traction with enterprise customers looking for an integrated suite for planning, consolidations, external and management reporting, and performance analysis. The vendor also has a differentiated cloud data service, Decision Hub, which enables firms to leverage external data into planning models.

12 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 11 Tidemark comes to market with advanced technology. Tidemark s planning and analytics offerings feature an in-memory calculation engine, a mobile-first design philosophy using HTML5, and signature embedded analytics. Tidemark has launched its financial planning, operational planning, and metrics management applications, and is building out applications to span the full FPM category footprint. Anaplan focuses on flexible planning solutions. Anaplan is a SaaS planning vendor that uses a proprietary in-memory data store and calculation engine and is making rapid progress in acquiring new customers. Anaplan focuses solely on planning applications for finance, sales, and operations. Financial Performance Suite Vendors Target Medium-Size And Large Enterprises There are several best-of-breed vendors in the FPM competitive landscape that are not exclusively SaaS but have significant traction. This group has a strong international flavor, consisting of Amelkis (France), Board International (Switzerland), Longview Solutions (the Canadian subsidiary of the Dutch ERP vendor Exact), prevero (Germany), Prophix Software (Canada), and Tagetik Software (Italy). Sizing up this group of vendors, we find that: Tagetik s enterprise solution has deep financial performance capability. Tagetik is winning deals against the large FPM vendors with a unified platform that is flexible and scalable. Tagetik is laser-focused on financial processes and offers robust planning, consolidation, and reporting capabilities that attract customers in Europe and North America with very complex needs. Prophix appeals to midmarket customers with a full FPM suite. The company offers a full suite of financial performance applications for medium-size firms leveraging a Microsoft technology stack. Longview Solutions targets high complexity accounts. Longview offers a suite of FPM applications along with a tax planning and provisioning solution. 7 The company has replaced its legacy Khalix platform with Longview 7, which targets customers with complex and sophisticated requirements. The company is an independent subsidiary of Exact, a global midmarket ERP vendor. Board offers a combined BI and corporate performance platform. Board offers a flexible business intelligence toolkit featuring a visual modeling composition environment as its core product, with lightweight apps delivered as solutions. The company delivers primarily through an extensive partner reseller network with skills to build out customized solutions. Board has more than 2,500 customers worldwide.

13 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 12 Amelkis and prevero focus on country-specific opportunities. Amelkis sells a financial reporting, consolidation, and budgeting suite called Opera primarily to clients within its home territory of France, on a licensed or SaaS basis. The German vendor prevero offers two planning solutions, enterprise P7 and professional planner, the latter from its recent merger with Austrian firm Winterheller Software. The company has a significant market presence in Germany, Austria, and Switzerland, with about 4,500 customers overall. Point Solutions Fill Specific Needs Most FPM vendors go to market with a suite of products that may or may not be architecturally harmonious. Nevertheless, most firms buy solutions to fill specific business needs, so the market is still accessible to specialized point solution vendors, although many of the point solution vendors in FPM have been acquired and rolled into larger portfolios. Two remaining point solution vendors focus on close-to-disclose management: WebFilings proves trusted financial data and is compatible with the cloud. A SaaS disclosure management vendor, WebFilings has achieved remarkable traction with its SEC reporting solution, which was launched in March The company lists hundreds of firms using the solution and claims that it is used by 51% of the Fortune 500. Trintech Group spans close-to-disclose with integrated product suite. Trintech is known for its high-volume reconciliation software as well as its last mile of finance close-todisclose management suite. The vendor recently announced Cadency, a financial compliance suite spanning record-to-report, including journal entries, reconciliation, close, controls management, and disclosure. 8 Two other notable point solution vendors include Acorn Systems and Prodacapo, both of which offer cost and profitability solutions. M&A Will Continue As Vendors Fill Out Portfolios By Adding The Missing Pieces The FPM vendor landscape has undergone significant consolidation in the past decade, rolling up pure-play FPM vendors into the hands of BI vendors like Business Objects, Cognos, and Hyperion, which in turn were subsumed by larger technology vendors like IBM, Oracle, and SAP. 9 The merger and acquisition activity within the past few years, however, has been less dramatic and limited to point solution add-ons: IBM acquired Clarity Systems for disclosure management. IBM s acquisition of Clarity Systems in October 2010 was driven by the need to add a financial disclosure management solution (Clarity FSR) to its FPM portfolio, effectively taking the Clarity planning and consolidation capabilities out of the competitive landscape. IBM also acquired Varicent for sales performance management, expanding its portfolio beyond the finance domain.

14 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 13 SAP followed with the acquisition of disclosure software from cundus. SAP acquired disclosure management capabilities in December 2010 from German firm cundus by carving out the solution capability intellectual property rather than acquiring the entire firm. Adaptive Planning added graphical visualization with mydials. Adaptive Planning acquired mydials, a cloud-based data visualization company, in September 2012 to fill out its solution portfolio with rich graphical capabilities for management reporting and analysis. Acquisitions will continue to play a role in the evolution of this market landscape, with continued point solution add-ons. For larger vendors struggling to get to SaaS, acquisition provides an alternative to building or rearchitecting, but targets are limited. Vendors will also continue to pursue technology (rather than application) tuck-in acquisitions, such as big data engines, mobile analytics, and cloud-based integration platforms. Recommendations Optimize Financial Performance Processes With Advanced Technology SaaS, mobile applications, and big data in-memory platforms provide unprecedented opportunities to deploy FPM applications rapidly and sustainably, drive extended user access and accessibility, and deliver performance information that keeps pace with the business. Consider the following strategies to transform your financial performance processes and solutions: Assess your current financial performance applications and processes. This health check means taking inventory of your current applications and processes, paying attention to gaps that are filled with spreadsheets. Assess support and obsolescence risks where your software versions are substantially behind the latest versions being delivered by your incumbent software vendor. Automate compliance processes to drive efficiency in close-to-disclose. For accounting and financial reporting processes, carefully document the process flows, frequency, and integration points from the periodic accounting close to external reporting. Look for opportunities to automate these processes on a platform that improves controls, efficiency, speed, and compliance. Integrate financial information across the past, present, and future. To maximize the value of the management information for executives and lines of business leaders, optimize the timeliness of integration. Move away from batch file transfers to more frequent integration methods that make financial and business performance information more current and actionable by business stakeholders.

15 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 14 Prototype mobile delivery use cases for management reporting. Before building out mobile apps for financial information delivery, work with selected business users to determine usability preferences. Enable individual users to select graphical preferences that make sense to them, or to define report format (numerical) patterns if that s their preference. Incorporate external data into planning and analytical processes. Look to FPM vendors and consultants, as well as external content providers, to deliver relevant external data like economic indicators, currencies, market price data, and peer financial results to add context to planning, forecasting, and analytical models. What It Means Architectural Transformation Alters The FPM Landscape Conventional wisdom suggests that you shouldn t put your trusted financial data into the cloud. Yet hundreds of firms currently deliver regulated and time-sensitive SEC disclosures via a SaaS platform, WebFilings. As perceived objections to SaaS, such as security, flexibility, and integration, continue to fall by the wayside, more and more companies will move to SaaS solutions for financial planning, reporting, analysis, and transactional systems like accounting. SaaS adoption drivers include cost transparency, relief from labor-intensive patching and upgrade cycles, rapid deployment, and improved business flexibility. It s only a matter of time months, not years before the big FPM players (IBM, Oracle, and SAP) legitimize SaaS in FPM by committing to it. Oracle, in fact, has already announced the preview availability of Oracle Planning and Budgeting Cloud Service with subscription pricing. 10 Ultimately, FPM solutions architected for cloud delivery will offer higher levels of modeling flexibility, as well as powerful in-memory platforms to handle big data and complex planning models. Endnotes 1 Financial performance management is also commonly referred to as enterprise performance management (EPM), corporate performance management (CPM), and other names. In prior research, Forrester has referred to this product category as business performance solutions (BPSes). We believe that the financial descriptor is more aligned with the actual customer adoption and business process capabilities of the products. 2 The Forrsights Software Survey is aimed primarily at IT buyers, who may not have visibility into the use of narrowly focused SaaS business solutions like financial disclosure. 3 Interviews with SaaS FPM vendors indicate significant increases in sales pipelines in the past year, as well as accelerating revenues. 4 One-third (32%) of respondents to a Forrester survey on big data indicated that they are analyzing finance

16 Planning, Analysis, And Reporting Solutions Drive Financial Performance Management 15 data; 47% of respondents indicated that they measure the overall success of big data initiatives using business performance metrics. See the September 20, 2011, How Forrester Clients Are Using Big Data report. 5 Forrester estimated that the BPS market would grow from $2 billion in 2009 to $3.2 billion by The impact of the recession has held down growth to some extent, but we believe that the market is approaching $3 billion as of the end of This report does not include a market sizing analysis. See the January 20, 2009, Business Performance Solutions: Clash Of The Titans report. 6 Host Analytics was founded in 2000 and Adaptive Planning was founded in Source: Host Analytics ( and Adaptive Planning ( company-overview/). 7 Tax planning and provisioning falls outside of the scope of Forrester s definition of financial performance management, competing with products from vendors not covered in this report. 8 Trintech s Cadency suite does not include general ledger accounting, consolidations, or planning. 9 The genealogy of the rampant merger and acquisitions activity from 2002 to 2008 is described in a previous Forrester report. See the January 20, 2009, Business Performance Solutions: Clash Of The Titans report. 10 Source: Oracle Unveils Expanded Oracle Cloud Services Portfolio, Oracle press release, October 2, 2012 (

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