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Acronyms and Initialisms
A&D Aerospace and defense
ABC Activity-based costing
BI Business intelligence
CPM Corporate performance management DDSN Demand-driven supply network
EDW Enterprise data warehousing
EIM Enterprise information management EMEA Europe, Middle East, and Africa EPM
Enterprise performance management ERM Enterprise risk management
ERP Enterprise resource planning
GRC Governance, risk management, and compliance
IDM Integrated data model
IFRS International nancial reporting standards ILDM Industry logical data models
M&A Merger and acquisition
MDM Master data management
OEM Original equipment manufacturer
OLAP Online analytical processing
PBF Planning, budgeting, and forecasting
PM Performance management
SaaS Software as a service
SOA Service-oriented architecture
SOX Sarbanes-Oxley Act
XBRL Extensible business reporting language
© Copyright 2007 by AMR Research, Inc.
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is is printed on 100% post-consumer recycled ber. It is manufactured entirely with wind-generated
electricity and in accordance with a Forest Stewardship Council (FSC) pilot program that certi es
products made with high percentages of post-consumer reclaimed materials. CPM Market Landscape: O ce of the CFO
Is Hot Again
by John Hagerty and Koppel Verma M&A activity, coupled with new product introductions and emerging partnerships,
has reshaped the landscape for corporate performance management (CPM)
applications. With so much upheaval, buyers need a playbook to better understand
their current options. Executive Summary
service providers rediscovered something over the past few years: selling a
departmental application within the con nes of the broader enterprise can mine
untapped users and solidify allegiances in powerful sectors of the business.
And so the o ce of the CFO is hot yet again. Much of the 2007 M&A activity in
the business intelligence (BI) and performance management (PM) market centered
on targeted applications for the nance department. In rapid succession, Oracle
bought Hyperion, SAP acquired OutlookSoft, Business Objects purchased
Cartesis, and Cognos bid for Applix. Along with Microsoft’s expected delivery in
4Q07 of PerformancePoint Server—its initial foray into the nance world—these
acquisitions create a convergence of conditions that results in signi cant upheaval in
the market for CPM applications and related services.
In this Report, we discuss the externally in uenced trends driving transformation in
the market, the fundamental reshaping of the provider landscape, and the e ect
these changes have on the go-to-market sales, marketing, and product strategies of
market competitors. Takeaways CPM equals finance. Emphasis shifts from product to role: the office of the CFO. CPM is part of a pervasive PM strategy. M&A has reshaped the CPM landscape. CPM functionality coverage is comparable to pre-M&A, but some competitive
posi- tions are now significantly strengthened. Understanding vendor strategies is critical to current and future buying plans.
Knowledge and Performance Management Report | 2007 Technology and Vendor Landscape Series The Bottom Line
Vendors featured in this Report: Acorn Systems Actuate
Applix
Business Objects Clarity Systems Cognos
Infor
Lawson
Longview Solutions Microsoft
Oracle
SAP
SAS Institute Teradata As the disruption wrought by the passage of the Sarbanes-Oxley Act (SOX)
transitioned from initial panic to acceptance and good business practice, many
thought the new era of the CFO that came with SOX would naturally subside. But
technology vendors and
© 2007 AMR Research, Inc. 1 CPM equals finance
Performance management is not a new topic; we’ve been writing about it for nearly
10 years. Over that time, acronyms have come and gone, yet a couple of de nitions
have survived. Buyers identify CPM as the category most closely associated with
nancial data. So we’ve settled on CPM as the go-forward category for applications
and tech- nologies that address nancial performance management requirements
typically driven by corporate nance out into nancial operations across divisions of
the organization. The CPM product footprint
CPM applications comprise a well-established buyer category with many vendors
deliv- ering products and services focused largely on nancial data and tailored to
meet the demands of nance. Here are the products and/or processes encompassed
in CPM: Planning, budgeting, and forecasting (PBF)—Contribution, aggregation,
manipu- lation, and approval of the financial plan on a periodic or continual
basis Financial consolidations and reporting—Legal and statutory
consolidation sys- tems along with more generalized financial statement
generation capabilities Financial analytics and dashboards—Profitability applications, rolespecific dash- boards, metrics, and specific financial analytics for detailed
financial processes Financial governance, risk management, and compliance (GRC)—
Governance and control requirements that include national and/or
international regulations, such as SOX or International Financial Reporting
Standards (IFRS) Scorecards and strategy—Methodology-based scorecards (such as The
Balanced Scorecard) and strategy management applications
See Figure 1 for a graphical presentation of CPM components. ese categories
will be used later in the Report to evaluate CPM market participants. Figure 1: Components of a CPM suite
Scorecards and Strategy
Planning, Budgeting, and Forecasting
Financial Consolidations and Reporting
Financial Analytics and Dashboards
Financial GRC
2 © 2007 AMR Research, Inc. Knowledge and Performance Management Report | 2007 Technology and Vendor Landscape Series Source: AMR Research, 2007 Emphasis shifts from product to role: the office of
the CFO
As stated above, CPM is a suite of products with speci c nancial focus. Successful
CPM suppliers have primarily marketed their applications to speci c roles in the business, such as controller, VP of nance, and budget director, while addressing the
needs and concerns of IT in a parallel e ort. But rst and foremost, they were selling a
departmental application to business decision makers.
e enterprise suite and technology providers generally approached prospects
through IT, downplaying functionality in lieu of architectural consistency and
enterprise rela- tionship. While they didn’t ignore business users, they weren’t the
primary audience. ough sometimes successful, these providers rarely captured the
hearts and minds of the business user.
For CPM, the philosophy of “If you build it, they will buy” has not proven true. e gold
standard for functionality and user acceptance belongs to the best-in-class camp,
hence the recent urry of M&A activity. If you can’t beat ’em, join ’em
Selling directly to the o ce of the CFO ared in prominence shortly after SOX captured the attention of executives and boards of directors. Fear of noncompliance
(i.e., material gaps in the control of nancial processes) continues to drive enormous
spend- ing ve years after the law passed. In fact, we estimate that companies will
spend over $32B through 2008 to establish rock-solid risk and control frameworks
for nancial governance (see “SOX: A Six-Year, $32B Compliance E ort” for more
details). But the initial panic that drove big spending has now transitioned to
acceptance and good busi- ness practice.
Many thought this new era of the CFO would naturally subside, but technology
vendors and service providers rediscovered something over the past few years: selling a departmental application within the con nes of the broader enterprise can
mine untapped users and solidify allegiances in powerful sectors of the business. e
o ce of the CFO has grown as a buying center, and vendors that adopt this rolecentric approach will be the most successful over time.
e market also now realizes the CFO’s team is concerned with more than just budgeting and reporting. GRC remains a priority. Financial business processes in general
are also in the mix. Vendor strategies for the o ce of the CFO will certainly use
available assets to address these business processes.
Knowledge and Performance Management Report | 2007 Technology and Vendor Landscape Series
© 2007 AMR Research, Inc. 3 The link between GRC and performance management
In a lot of firms, the CFO is the de facto risk and compliance officer. While an increasing
number of organizations dedicate staff and/or executives to these roles, the office of the CFO
will continue to be integral in managing risk and compliance throughout the business.
We define each component of GRC as follows:
• Governanceistheoversightroleandessentialtosettingstrategicobjectives.
• Riskmanagementevaluatesallrelevantbusinessandregulatoryriskstocontroland monitor
mitigation actions in a structured way.
• Complianceistheexecutionoftheseobjectivesbasedonrisktolerance. Four stages of GRC maturity
The four steps of GRC maturity have specific attributes and characteristics. Step 1 is
inherently tactical. The higher the level of maturity, the more strategic GRC becomes and
the stronger the link to performance management. Here’s how we describe each step: Step 1: Reacting—The most common responses to regulations resulting in
compliance mandates have been anger, disbelief, panic, and even denial. Once assessed, the situation is managed as a discrete activity, initially addressed in
isolation, and staffed with whatever resources are necessary. Step 2: Anticipating—Companies and individuals accept that change coming from
internal or external compliance initiatives is not a passing fad, but rather something
now part and parcel of standard operating procedure. Plans move from just getting
the job done to performing activities efficiently. Step 3: Collaborating—With multiple programs in play and a longer term
architectural plan forming to address current and anticipated future requirements,
attention turns from tactical concerns to strategic exposure. Risk management
becomes more than a philosophical discussion and rapidly expands from compliance
risk to business risk. Step 4: Orchestrating—The firm operates and manages in unison. Strategies
are clearly articulated and mapped directly to operating models. Enterprise risk
management (ERM) is done formally, with all manner of risk identified, categorized,
assessed, and prioritized. With a strong connection to performance management,
visibility into key performance and risk indicators fuses into one cohesive
management system.
In our opinion, the highest level of GRC adoption incorporates many of the attributes
of a mature PM system. While CPM is part of the overall PM story, the CFO’s role
crossing both makes them two sides of the same coin. 4 © 2007 AMR Research, Inc. Knowledge and Performance Management Report | 2007 Technology and Vendor Landscape Series CPM is part of a pervasive-PM strategy
Traditionally, nancial analytic applications have been treated as separate but equal
from other operational BI initiatives. is inside-out view limited each group’s vision
of enterprise-wide performance management. As organizations take an outside-in
per- spective of organizational execution by connecting the dots between
operational and nancial performance and value creation, they soon recognize the
next logical step is
to establish a pervasive-PM strategy that encompasses the entire organization
along with its value network (see Figure 2). For more information on this topic, see
“Pervasive Performance Management: What It Is and How To Prepare.” Figure 2: The performance management continuum Pervasive PM
EPM
CPM
BI/PM Technology Platform
Knowledge and Performance Management Report | 2007 Technology and Vendor Landscape Series © 2007 AMR Research, Inc. 5 Source: AMR Research, 2007
6 © 2007 AMR Research, Inc. Knowledge and Performance Management Report | 2007 Technology and Vendor Landscape Series M&A has reshaped the CPM landscape
ere’s nothing like some M&A activity to shake up a market. In 2004, BI companies
started to combine, which caused its own earthquake. In 2007, CPM market participants became the targets, with companies large and small in play. Progress was
quick: Oracle announced its intent to acquire Hyperion, a market leader in PBF and
finan- cial consolidations with a significant presence in BI and analytic
infrastructure, on March 1, 2007 (see “Oracle Buys Hyperion for $3.3B: BI/PM
Market Consolidation Begins”). The transaction was finalized in June 2007. In April, Business Objects declared its intent to take a more formative position
in the CPM world with its acquisition of Cartesis, a global consolidations
specialist, for Euro 225M, approximately $300M (see “BI/PM Market
Consolidation Continues: Business Objects To Acquire Cartesis”). The deal
closed in June 2007. In early May, SAP responded by acquiring OutlookSoft to accelerate its
product delivery for PBF and consolidations. The acquisition was also
completed in June 2007 (see “SAP Makes Performance Management Move,
Acquires OutlookSoft To Bolster CPM Product Line”). Earlier in the year, it
acquired Pilot Software, a vet- eran vendor in the scorecard and analytic
application space. On September 5, 2007, Cognos tendered an offer to acquire all shares of
Applix for $339M to bolster its financial performance management product
line. The acquisi- tion is expected to be completed in 4Q07 (see “Cognos To
Acquire Applix and Reset Its Sights on the Office of the CFO”).
Game-changing events weren’t limited to M&A. Starting in 2006, Microsoft
began to pave the path for release of its rst speci c foray into the o ce of the
CFO. At a mid- May 2007 public conference in Seattle, Microsoft launched its
overall BI strategy, with nance-targeted PerformancePoint Server (PPS) a key
part of that message. A recep- tive audience liked what it heard, but PPS was
not scheduled to debut until late 3Q07 at the earliest. Even though the
product is still to be delivered, it is already having
an impact on evaluations (see “Market Outlook: Microsoft’s Looming Impact
on the Business Intelligence and Performance Management Market”). CPM evolved from M&A and partnership activities
Many vendors currently active in the CPM market were either built through
acquisi- tion or participate in partnerships that extend their reaches (see the
Table 1). We have included acquisitions and/or partnerships if the product or
company is a fundamental part of the overall CPM footprint.
Even though M&As and partnerships have been hallmarks of the CPM market for
years, participants not part of recent actions haven’t been frozen out of ongoing or
new evaluations. Some acquired products are now perceived to be locked up by big
suite providers. A number of those outside the acquisition fray report an increasing
number of invitations to compete for new business during this time of competitive
uncertainty. We see this trend in inquiries from buyers as well. It’s now in their
hands to capitalize on opportunities presented during this time of change.
The CPM family tree Table 1:
Vendor
Most Recent CPM Acquisitions
Prior Generation of CPM Acquisitions
Partnerships for Vendor’s CPM Position
Acorn Systems
n/a
n/a
n/a
Actuate
Performancesoft (2006)— scorecarding and strategy
n/a
n/a
Applix
n/a
n/a
n/a Business Objects
SRC Software (2005)—PBF
ALG Software (2007)— pro tability analysis
Cartesis (2007)— consolidations, PBF, GRC
Cartesis acquired INEA— PBF
BWise—GRC
Clarity Systems
n/a
n/a
Oracle/Hyperion Essbase—infrastructure
Cognos
Lex2000 (2000)— consolidations
Adaytum (2003)—PBF
Frango (2004)— consolidations
Celequest (2007)— nancial analytics
n/a
Acorn Systems— pro tability analysis ( nancial services)
pVelocity—pro tability (manufacturing)
Pilbara—pro tability (public sector)
IBM—pro tability ( nancial services)
Infor
Extensity (2006) Systems Union (2006)
Extensity (formerly Geac) previously acquired Comshare—PBF, consolidations
Systems Union previ- ously acquired MIS AG— nancial analytics
Cognos— nancial analytics Lawson
Closedloop Solutions (2004)—PBF
n/a
Business Objects, OEM— nancial analytics
Knowledge and Performance Management Report | 2007 Technology and Vendor Landscape Series
© 2007 AMR Research, Inc. 7 Source: AMR Research, 2007 Table 1:
Vendor
Most Recent CPM Acquisitions
Prior Generation of CPM Acquisitions
Partnerships for Vendor’s CPM Position
Longview Solutions
n/a
n/a
Information Builders— dashboards/scorecards, nancial analytics
Microsoft
ProClarity (2006)— nancial analytics
Microsoft Dynamics acquired FRx (2001)— nancial reporting
n/a
Oracle
PeopleSoft (2005)—EPM Suite
Siebel (2006)
Sunopsis (2006)—analytic infrastructure
Hyperion (2007) Siebel acquired nQuire (2001)—BI foundation
Hyperion Solutions formed from merger
of Arbor Software and Hyperion Software (2000) Brio (2003)—BI and
dashboards The Alcar Group
(2003)—strategic
nance Razza (2005)—MDM UpStream (2006)—
MDM Crystal Ball (2007)—
risk management Informatica for ETL for Oracle BI applications
SAP
Virsa Systems (2006)— GRC
OutlookSoft (2007)—PBF, consolidations
Pilot Software (2007)— strategy management and scorecards
n/a
Acorn Systems— pro tability management
Microsoft SQL Server Analysis Services for BPC 5.1—infrastructure
SAS Institute
ABC Technologies (2002)—pro tability
n/a
n/a
Teradata DecisionPoint Software (2005)— nancial analytics
n/a
Oracle/Hyperion for ana- lytic infrastructure and BI
The CPM family tree (continued)
8 © 2007 AMR Research, Inc. Knowledge and Performance Management Report | 2007 Technology and Vendor Landscape Series Source: AMR Research, 2007 CPM functionality coverage is comparable to preM&A, but some competitive positions are now
significantly strengthened
If you evaluated the market participants’ CPM footprints before M&A activity, it
looked similar to how it does now after the acquisitions. e major change lies in the
competitive footprint of a handful of powerful vendors: Business Objects, Microsoft,
Oracle, and SAP. ey are far stronger than before.
In Table 2, we indicate the vendors that provide dedicated software components for
the ve CPM categories: Planning, budgeting, and forecasting Financial consolidations and reporting
Financial analytics and dashboards
Financial GRC
Scorecards and strategy If a vendor partially delivers in a CPM category, Table 2 will show the category as
covered.
CPM coverage map by vendor and component Table 2:
Vendor
Planning, Budgeting, and Forecasting
Financial Consolidations and Reporting
Financial Analytics and Dashboards
Financial GRC Scorecards and Strategy
Acorn Systems
n/a
n/a
√
n/a
n/a
Actuate
n/a
n/a
n/a
n/a
√
Applix
√
√
√
n/a
n/a
Business Objects
√
√
√
√, P
√ Clarity Systems
√
√
√
n/a
√
Cognos
√
√
√, P
n/a
√
Infor
√
√
√
n/a
√
Lawson
√
n/a
√
n/a
√
Longview Solutions √
√
√
n/a
n/a
Microsoft
√*
√*
√
n/a
√
Oracle
√
√
√
√
√
SAP
√
√
√, P
√
√
SAS Institute
√ √
√
n/a
√
Teradata
n/a
n/a
√, P
n/a
n/a √ = Vendor has coverage Source: AMR Research, 2007 P = Partnership with another vendor
* Available 4Q07 Knowledge and Performance Management Report | 2007 Technology and Vendor Landscape Series © 2007 AMR Research, Inc. 9 Understanding vendor strategies is critical to
current and future buying plans
With change comes uncertainty, with recent acquisitions in this market creating signi cant uncertainty for buyers. What products are the long-term best bets? Should
you opt for a best-in-class or enterprise provider? Should all CPM components be
evaluated as tactical buys or strategic bets? Knowing what vendors can sell now
and what they’re planning will better inform any decision. In Table 3, we articulate
business facts about each vendor covered in the Report. A pro le for each company
highlighting their CPM strategies follows, along with our opinion.
Table 3:
Vendor
Public/Private
Total Revenue as of Dec. 31, 2006, in USD
Relative Size of CPM Product Revenue (Estimate)
Industry Specialization Where Applicable
Acorn Systems Private
Less than $50M
100%
Consumer products, manu- facturing, distribution and logistics, retail, nancial services
Actuate
Public NASDAQ: ACTU
$101M to $500M
Less than 10%
Financial services, public sector, and regulated industries
Applix
Public NASDAQ: APLX
$51M to $100M
50% to 75%
Cross-industry
Business Objects
Public NASDAQ: BOBJ
$1B to $5B
10% to 25%
Cross-industry
Clarity Systems
Private
Less than $50M
100%
Financial services, retail, manufacturing, airlines, and legal
Cognos* Public
NASDAQ: COGN
$500M to $1B
25% to 50%
Cross-industry
Infor
Private
$1B to $5B
Less than 10%
Manufacturing
Lawson
Public NASDAQ: LWSN
$500M to $1B
Less than 10%
Healthcare
CPM vendor facts and gures
* Total revenue as of February 28, 2007
Note: There were no di erentiators in the target customer size among all vendors.
Source: AMR Research, 2007
10 © 2007 AMR Research, Inc. Knowledge and Performance Management Report
| 2007 Technology and Vendor Landscape Series Table 3: CPM vendor facts and gures (continued) Vendor Total
Public/Privat Revenue as
e
of Dec. 31,
2006, in USD Relative Size of
CPM Product
Industry Specialization
Revenue
Where Applicable
(Estimate) Longview
Private
Solutions Less than
$50M Public
Microsoft*
NASDAQ:
*
MSFT More than $5B Less than 10% Cross-industry 75% to 99% Manufacturing Oracle*** Public
NASDAQ:
ORCL More than $5B 10% to 25% Cross-industry SAP**** Public NYSE:
SAP More than $5B Less than 10% Cross-industry SAS
Institute Private $1B to $5B Less than 10% Financial services, government, and manufacturing Teradata Private
Division of
NCR Less than 10% Retail, consumer products,
nancial services, manufacturing, transportation, and
communications $1B to $5B ** Total revenue as of June 30, 2007 *** Includes Hyperion revenue
**** Includes OutlookSoft revenue
Note: There were no di erentiators in the target customer size among all vendors. Vendor profiles
Criteria for inclusion in this Report
We included vendors that deliver speci c functional components of the CPM landscape. ose with products that can be con gured to support CPM capabilities, such as
nancial reporting, dashboards, scorecards, and analytics, were not included. Also,
GRC-only vendors are not part of this evaluation, but a GRC landscape is scheduled
for early 2008.
Source: AMR Research, 2007
Knowledge and Performance Management Report | 2007 Technology and Vendor Landscape Series
© 2007 AMR Research, Inc. 11 12 © 2007 AMR Research, Inc. Knowledge and Performance Management Report | 2007 Technology and Vendor Landscape Series Acorn Systems
Acorn Systems is an expert provider of activity based management and pro tability
software and related services. In addition to selling directly to customers cross
industry, the company has established partnerships—Cognos, SAP, and SunGard
BancWare— where its brand of pro t analysis augments capabilities of the partner.
Acorn particu- larly emphasizes two broad market segments: supply-chain-oriented
companies in manufacturing, retail, distribution, and logistics, as well as service
companies, with a strong penetration of nancial services rms.
Strategy Continue development on its core Performance Analyzer platform to maintain
best- in-class position for performance measurement and analytics for
revenue, costs, profitability, and capacity/utilization. As a Microsoft SQLbased application, the company will also continue integration and
interoperability work with Microsoft’s BI and CPM products. Develop stronger integration and interoperability between the content
generated in SAP Business Profitability Management by Acorn and SAP’s
business applications and CPM suite. Further develop the Acorn Universal Connector and Acorn Analytics
components for prepackaged integration and templates for a variety of data
sources (input to Acorn) and BI applications (output from Acorn). Develop additional targeted applications for business decision makers.
Opinion
Pro tability analysis is nally taking o . Rather than an esoteric activity-based
costing (ABC) exercise for small pockets of the company, it is used
aggressively by the o ce
of the CFO as well as operational management to understand what drives pro
t and changes business activities to increase pro t. Acorn is smart to take a
strong partner approach; baking pro tability into as many applications a...
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