Vendor Classification

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1 Markets, L. Geishecker, F. Buytendijk Research Note 2 October 2002 Introducing the CPM Suites Magic Quadrant Vendors are developing a wide range of new functionality for corporate performance management. With no leaders, you should review business intelligence and enterprise resource planning strategies before choosing a vendor. Core Topic Business Intelligence and Data Warehousing: Business Intelligence Markets, Technologies and Techniques Key Issue How can enterprises leverage business intelligence as a cornerstone of an e- business initiative? Strategic Planning Assumption Fewer than 10 percent of enterprises will have implemented CPM by YE02; however, 40 percent will adopt it by 2005 (0.7 probability). Corporate performance management (CPM) is an umbrella term that describes the methodologies, metrics, processes and systems used to monitor and manage an enterprise's business performance. Many enterprises are looking to CPM to improve their planning and control cycles (see "Corporate Performance Management: BI Collides With ERP"). Fewer than 10 percent of enterprises will have implemented CPM by YE02; however, 40 percent will adopt it by 2005 (0.7 probability). The reasons for large enterprises to do so include the following: To increase the speed, quality and accuracy of decision making To increase the quality of the management reports To increase the agility of the planning process in moreturbulent environments To create the necessary organizational alignment for tight strategy execution To facilitate corporate transparency (that is, to provide regulators, board of directors, shareholders and other external parties with insight into the enterprise's operations) Vendor Classification Many vendors are "jumping on the bandwagon" and offering CPM software suites. Coming from various starting points, there are four types of vendors in this market. Integrated business application suite vendors (including Oracle, PeopleSoft and SAP) already "own" the transactional environment. CPM is a logical next step to reach a different user Gartner Entire contents 2002 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 audience by also supporting management processes. These vendors have developed a business intelligence (BI) framework in addition to their traditional transactional processing. Their CPM suites are usually connected to their transactional applications, but lack strong non-application or non-suite capabilities to source data from other vendors or in-house-developed transactional applications. They have a great deal of domain knowledge, but typically do not play outside their established user bases. BI vendors (such as Cognos, Hyperion Solutions and SAS Institute) see CPM as an area in which their packaged BI applications might catch on. Not only do they create and distribute integrated management reports, they also support management processes, such as consolidation, reporting and planning. Their CPM suites are usually connected with their BI platform or enterprise BI suite. These suites are usually strong in connecting to multiple data sources, but specific domain knowledge is often a problem. Best-of-breed vendors (such as Cartesis, Closedloop Solutions and OutlookSoft) typically support one or more specific CPM tasks with closely related applications. Usually, there is no strong technology foundation, and other third-party tools and platforms are used, for example, Microsoft's SQL Server. Hybrid vendors (which include Comshare, CorVu and LongView Solutions) offer products that typically support a broader range of CPM functionality than the best-of-breed vendors' offerings. Hybrids often have their own technology foundation; however, these BI engines do not have the market acceptance of the BI vendors, such as Cognos, Hyperion and Microsoft. The integrated business application suite vendors and BI vendors have the best chance of sustaining a position in the CPM market (see Figure 1) by being in an optimal position to satisfy user requirements. Best-of-breed and hybrid vendors will have more challenges escaping a niche position. Enterprises should look at their investments in BI and enterprise resource planning (ERP) and choose a CPM suite that complements what they already have. If there is no ERP or BI strategy, best-ofbreed or hybrid tools are justifiable alternatives. 2 October

3 Figure 1 The Initial CPM Magic Quadrant Challengers Leaders SAP PeopleSoft Ability to Execute Oracle Hyperion Coda SAS Cognos CorVu LongView Closedloop Comshare OutlookSoft Cartesis As of September 2002 Niche Players Visionaries Completeness of Vision Source: Gartner Research The position of the CPM vendors on the Magic Quadrant is based on a number of criteria (see "Corporate Performance Management MQ Criteria"). Enterprise Application Vendors Oracle has many CPM suite components available; however, they are scattered and somewhat unintegrated. The Oracle Financial Analyzer (OFA) is based on a different technology platform than the other components of the suite. The Oracle Balanced Scorecard is the result of an acquisition. Oracle is working on integrating these products as part of its e-business suite. The Enterprise Planning and Budgeting (EPB) software which is a successor to, among others, OFA is in the making and is expected in SAP's Strategic Enterprise Management (SEM) and PeopleSoft's Enterprise Performance Management (EPM) suites are relatively complete CPM solutions that are deployed on top of their respective ERP data warehouses. Both vendors have moved their budgeting and consolidation capacities from their ERP suites to their CPM suites and have added modules for balanced scorecards and other performance measurement methodologies. PeopleSoft slightly leads SAP in terms of completeness; 2 October

4 however, SAP displays an interesting vision with its focus on shareholder relationship management as part of CPM. Oracle, PeopleSoft and SAP all display the right vision; however, it will be hard for them to reach the Leaders quadrant, as their vision involves tight integration with their transactional applications. This means they will compete only slightly outside that user base and hardly compete with each other. However, they have a high chance of success in their user base, where multiple instances and multiple vendor solutions exist (for example, as a result of merger and acquisition activity). Enterprises should opt for an enterprise application vendor when they have a considerable investment in these systems. These CPM suites are optimized for use with the underlying enterprise applications. Only enterprises that strategically deploy CPM should consider these suites, as they are quite comprehensive and may take more effort and resources to implement from both the IT and business perspectives. BI Vendors Hyperion has a long history of CPM applications with its financial BI applications. Recently, Hyperion's Performance Scorecard and Business Modeler were added. Hyperion has, potentially, the best starting position of the BI vendors, but it suffers from a highly disparate R&D strategy during the last few years. It will take Hyperion well into 2003 before these integration problems have been solved. Cognos is aiming almost all of its marketing at CPM, and all of its BI application investments are addressing CPM. The company sees CPM as a proposition that distinguishes it from key BI competitors such as Business Objects and Crystal Decisions. Its CPM components (Analytic Applications, Cognos Finance and KPI Business Pack) are not yet integrated, but Cognos is addressing this shortcoming with a new generation of products, which are expected in With its current and future products, Cognos is hitting its usual "sweet spot": They are practical, and the functionality is not too complex. SAS is close to Cognos and Hyperion in CPM functionality and more complete in some respects. Its latest addition involves the acquisition of ABC Technologies. However, SAS is suffering from its own strong position in the data warehouse and analytic tools arena. Market acceptance for SAS applications to be deployed outside a total SAS environment is still low. When deploying CPM, enterprises should opt for a BI vendor if they already have an investment in BI suites from that vendor. 2 October

5 Enterprises should also use Gartner's BI Magic Quadrants to evaluate these vendors from a BI perspective. Enterprises should avoid packages that heavily compete with what they already have in place as part of their BI strategies. Best-of-Breed and Hybrid Vendors Vendors such as Cartesis, Closedloop and OutlookSoft often have a more innovative approach than the BI or ERP vendors; however, their vision is not very complete, as they focus on just a few aspects of CPM. As for their limited Completeness of Vision and small size, it will be hard for them to escape the positions they currently occupy in the Magic Quadrant. Unlike LongView, hybrid vendors Comshare and CorVu started out as BI vendors; however, their technology did not make it to a leadership position. They then found themselves in a strong niche, concentrating on a number of BI applications (within the realm of CPM), where they would compete more with their applications than with their technology. With strong BI vendors entering this space, they will face stiff competition, making it unlikely that they will dominate the market. Acronym Key BI Business intelligence CPM Corporate performance management ERP Enterprise resource planning Bottom Line: CPM has received a good deal of attention from software vendors. User enterprises will adopt CPM at a relatively slow rate. The cultural changes required for enterprises to adopt and adapt to CPM account for this slower rate. Enterprises should look at their investments in ERP and BI and consider a CPM suite that complements what they already have. If they have no ERP or BI strategy, best-of-breed or hybrid tools are justifiable alternatives. 2 October