Corporate Performance Management (“CPM“) and Enterprise Performance Management (“EPM“) solutions are cornerstone tools for Finance and Accounting teams to better understand their organization’s financial performance and help drive future business plans. Though CPM & EPM Solutions have been around since the 1980’s, this type of software only really became mainstream when companies started realizing that it was no longer practical or sustainable to manage financial consolidations and budgets in spreadsheets — ergo the rise of Hyperion and Essbase.
While it is interesting to note that each passing decade has been a distinct evolutionary chapter for CPM & EPM solutions (details here), we noted the below top 4 trends in the current decade (2011 to 2020) that organizations should be mindful of if they are looking to implement a CPM & EPM solution in the near future, or they are determining the future roadmap for their existing CPM & EPM solution footprint:
- CPM & EPM software super titans displaced from leadership position
- Cloud picks up momentum as On-Premise shrinks
- Narrative Performance Reporting takes the spotlight
- Increased focus on Integrated Planning
In part 1 of this article, we will take a closer look at #1 and #2 from above with #3 and #4 covered in part 2.
#1: CPM & EPM software super titans displaced from leadership position
In 2015, Gartner began to split its CPM Magic Quadrant research into Financial Corporate Performance Management (FCPM) and Strategic Corporate Performance Management (SCPM) in recognition of the breadth of capabilities CPM & EPM solutions now covered. Taking a look at these Magic Quadrants year over year (click/ below stacked pictures to toggle between each year), you will notice that:
- IBM (Cognos/TM1) and SAP (BPC) lost their leadership positions in both FCPM and SCPM
- Oracle (Hyperion/Essbase) maintained its leadership position through launch of EPM Cloud
- Blackline and Workiva bolted to the leadership quadrant in FCPM through their focus on financial close and narrative reporting solutions in 2018 (more on this below). Workiva has noticeably lagged behind leaders in 2019 [note: neither of these solutions have core financial consolidation or planning capabilities]
- OneStream Software, a relatively new player with deep roots in this space is accelerating to leadership position in both FCPM (Leader) and SCPM (Visionary) with its modern unified platform that handles both financial consolidations and planning in the same solution and much more.
- CCH Tagetik, founded in Italy, is gaining traction as it extends its European user base into North America. FCPM (Leader) and SCPM (Visionary) in 2019.
Cautionary Note: Though the Gartner Magic Quadrant reports for FCPM (Financial Close) and SCPM (FP&A) Cloud solutions provide a lot of valuable information around vendor products and customer sentiments thereto, factors such as the following could result in significantly different rankings for an evaluating organization:
- Breadth and depth of critical business requirements: e.g., core focus on financial close orchestration or narrative reporting would result in very different rankings and potential inclusion of other market leaders not represented on the Magic Quadrant while core focus on handling complex consolidations would immediately disqualify certain vendors from the running completely.
- One Platform vs Best of Breed: If the organization’s short term financial applications road map targets multiple capability sets within and cross between FCPM and SCPM disciplines, a unified platform will rank higher otherwise, a best-of-breed approach may be more prudent.
- Strength of the Vendor Community: Strength of post-implementation support (e.g., direct vendor support services, vendor partner community, etc.), Voice of Peers (e.g., how many comparable peers use the same product(s), degree of influence the peer community has on product direction or prioritization of bug fixes, etc.), and Self-sufficiency (e.g., availability of skilled workforce for in-house support and enhancements, etc.).
Gartner Financial CPM Magic Quadrant 2015 to 2019
Gartner Strategic CPM Magic Quadrant 2015 to 2019
TGG TIP: When evaluating CPM & EPM solution options, consider the following:
- Compatibility: Some solutions have tighter integration options with your organization’s source data systems (e.g., ERP, HCM, CRM, Operation Systems, etc.).
- User Adoption: Limit the number of different CPM & EPM solutions deployed. Finance and Accounting teams work with very tight deadlines / don’t have time to learn and be adept at multiple tools (e.g., one for financial consolidation, one for budgeting, one for account reconciliations, etc.).
- Avoid Square Pegs in Round Holes: Solutions original built for a specific purpose may not be suitable for others (e.g., fundamentally, a financial consolidation system has more internal controls, checks, and balances and is more aligned with accounting principles than a budgeting solution, etc.).
- Point Solutions vs Platform Solutions: Look ahead — while financial consolidations may be the immediate issue, if there are plans to tackle account reconciliations, budgets, scenario analysis, narrative reporting, etc.) in the near future, a platform solution may be more appropriate.
#2: Cloud picks up momentum as On-Premise shrinks
The rise of cost effective and powerful alternatives to self-hosted data centres (e.g., Amazon AWS, Microsoft Azure, Oracle Cloud, Google Cloud, etc.) have been disruptive to the broader software industry, including CPM & EPM solutions.
Below are viable alternatives to on-premise CPM & EPM solutions:
- Install on-premise software onto a secured cloud infrastructure (e.g, Microsoft Azure, Amazon AWS)
- Subscribe to cloud CPM & EPM solutions (Software-as-a-Service)
- On-premise software hosted on a Virtual Private Cloud
TGG TIP: When evaluating which option is suitable for your organization, it is important to consider the following:
- SaaS Type: Be mindful of whether the solution is Single Tenancy or Multi-Tenancy. Single Tenancy provides subscribing organizations greater flexibility and control over (a) security, and (b) timing of planned service outages for upgrades and patches but may be more costly.
- Business Continuity: Some solutions offer seamless migration (or even same code base) between on-premise and cloud infrastructure. The option to migrate to an on-premise instance provides continuity protection against internet service outages.
- Performance: Some solutions are architected to provide subscribing organizations the flexibility to add computing resources for better performance when required.
- Data Integration: Some solutions offer direct source data integration while others do not.
- Scalability: Some organizations require distinct but integrated data sets (e.g., corporate vs regional data requirements, detailed workforce plan vs enterprise level plan, actual financial results vs budget details, strategic long term plan vs annual budgets, etc.). This can be cost prohibitive and difficult to manage for some solutions.