Yesterday I attended the launch of the results of the IBM Global CFO Study.  The event was attended by a small group of research analysts, IBM clients, and IBMers.  The survey included input from a diverse group of over 1900 CFOs and Finance leaders.  Approximately, 1500 of the participants were directly interviewed in addition to completing the survey.

There is much more information than can be discussed in a blog entry but here are some nuggets from the notes I took during the  session yesterday:

1. 70% of CFOs believe they have advisory or decision making role on the enterprise agenda
2. 55% are dissatisfied with their operational planning and forecasting capabilities
3. 50% lack a common planning platform
4. 50% of finance time is still spent on transaction activities
5. 50% produce operational metrics manually
6. 44% have very limited or no predictive modeling capabilities
7. 40% of organizations produce financial metrics manually

A couple of thoughts on this:
If CFOs want to drive the enterprise agenda they need to reduce the amount of time finance spends on transaction activities. 

Any company that is still doing planning in spreadsheets should be ashamed of themselves.  There are so many packaged planning applications of various shapes, sizes, and price points that it is conscionable to still be doing this in spreadsheets

CFOs who want to be strategic need to get more involved in the development of common and automated performance metrics.  It's OK to start with financial metrics but strategic CFOs realize that financial performance is a lagging indicator and that operational metrics are what drive financial performance.

    

Banning Blogging
Forrester Research recently banned their analysts from blogging about their area of coverage.  This is precipitated by the recent defection of several of their "Rock Star Analysts" who took the brand they created for themselves via their blogs and started up their own boutique firms.  Forrester is not alone in their stance on analyst blogging, they have just been more high profile in their stance.  Gartner, IDC and other firms are also grappling with this issue.  My former colleague at AMR Research, Phil Fersht, wrote an interesting perspective on this in his blog.  In it he makes some very valid points about the impact the social media will have on the large analyst firms.


Paying To Retain Top Talent 
In my opinion this is a defining time for large analyst firms. Will they adapt to the changing environment or try and hold on and hope blogging is a passing fad? Until they find a way to monetize it they will resist.  To me it is a bad move to ban analyst blogging. It creates buzz, establishes credibility and increases the value of the analysts who do it well. It is up to the analyst firms to take advantage of that. Rock stars are worth more than average analysts, clients understand that and are willing to pay a premium for advice from them. The firms need to embrace having rock stars in their stables, demand market prices for them, and compensate them well. This is no different than free agency in sports. If you don't pay market value you will lose your best players. Like the New York Yankees, the big analyst firms can afford to retain their top talent and must do so if they expect to remain on top.

Would You Pay More For A Rock Star Analyst?
There is no doubt that blogging is creating rock star analysts whose reputation and brand has more perceived value than the firm they work for.  Would you be willing to pay a premium to talk with these analysts?  If not, it is not reasonable to expect your analyst firm to retain them and you should expect more defections.  The downside to the client is that to continue to interact with the best analysts you may need to engage several boutique firms.  The days of one-stop shopping for analyst advice may be numbered.

    

The 2010 Gartner Magic Quadrant for CPM Suites is out and pretty much every vendor listed has issued a press release about their placement on the Quadrant.   This is a testament to the level of influence placement on the Magic Quadrant has in the market.  But how much weight should the Quadrant be given?

"...and the winner is..."
I've had more than a few clients tell me that they have made a vendor selection only to have it shot down by management because the vendor was not on, or too low on, the Quadrant.  Clients should remember that this is a generic tool.  Right at the top of the report it says "Users should evaluate vendors carefully, according to business needs and their broader business intelligence and performance management strategies".  The Quadrant is one data point (albeit a high profile one) in the selection process and should be looked at that way.  How a vendor can meet your specific business requirements should be first and foremost.

But the influence of the Quadrant is not the reason I'm blogging about it.  I decided to look back at previous Quadrants and see if anything jumped out at me.  A few things did.

1. There were no "leaders" in the Quadrant in 2004
2. Since 2005 the three leaders have been the same (Oracle/Hyperion, SAP/BOBJ, IBM/Cognos)
3. The movement of the leaders has been minimal since 2005 (in both ability to execute and completeness of vision)
4. 12 of the 17 vendors on the 2004 quadrant were acquired by the end of 2007 (Clarity, Lawson, Oracle, SAP, SAS were not)
5. All of the "visionary" vendors from 2004 have been acquired
6. Five new niche vendors have been added in the the last two years (Bitam, Host Analytics, Prophix, Tagetik, Winterheller)

So what does this mean?
- The leaders need to get back to working on innovation rather than integration
- Non-leader visionary vendors will innovate and put pressure on the leaders to keep up
- Niche vendors will selectively innovate to differentiate themselves
- Several niche vendors will move to the innovator quadrant within a year or two
- A new wave of acquisitions will occur
- New innovative niche vendors will bubble up to fill the void
- The vendor bake-off becomes common-place again

In my opinion we are at a stage in the life cycle of performance management applications that is conducive to rapid innovation similar to what we saw in the years leading up to the major consolidation in this market back in 2007.  All of a sudden there are lots of options for clients to consider and lots of vendors vying for market share.  "Me too" products that don't differentiate from the leaders will not be able to compete in this market (unless strictly on price).  Clients should take a good look at all their options.  The niche vendors should not be eliminated based on Quadrant placement alone, and the leaders should not be eliminated on price alone.  That would be short-sighted and could cost you in the end.

    

As part of my webcast series on BI in a Turbulent Economy for the IBM Cognos Innovation Center for Performance Management I recently presented on the concept of Think Globally, Act Locally when it comes to BI.  What does this mean?  Well, it's about taking a hybrid approach to BI strategy.  


Let's take a look at the two common BI deployment strategies:

1) The Big Bang Approach

The big bang approach is defined by going for an enterprise-wide deployment of BI right out of the gate.  In the big bang approach there is a corporate edict that there will be a unified and consistent approach to BI that will be governed and rolled out globally and governed centrally.   For this approach diverse requirements have to be gathered, compiled, vetted, and prioritized.  With diverse business requirements come diverse data requirements that need to be defined and sourced which requires more IT involvement than the silo approach.

2) The Silo Approach

In the silo approach specific BI needs are dealt with on a case by case basis.  It could be defined as a ‘one-off’ approach to BI.  As needs come up, the specific need is defined and scoped and a product is selected and implemented to meet that specific requirement.  Very often this is done within the business unit without oversight by IT or with any sense of, or communication with, other BI initiatives that may be going on in the organization.   These types of deployments tend to be functionally focused around a specific process, for instance sales analysis or financial analytics, with little if any cross-pollination of data across functional areas.  This approach can be quick to implement but can also result in a proliferation of data marts without common definitions or consistent data sources.

Consider a Hybrid Approach

Think Globally, Act Locally is a hybrid approach that can provide an organization with some of the best of both worlds.   This approach bridges the gaps between the Silo and Big Bang approaches.  Like the silo approach it starts in a division or function and focuses on a specific measurable pain and its scope is limited to resolving that pain but in the context of strategic goals.


For more information about this and other BI topics check out my white papers and webcasts on the IBM Cognos Innovation Center for Performance Management website. 

    

2010 Predictions for Performance Management

It is the time of year when we all reflect on the year that was and speculate on what is in store for the coming year.  In the interest of brevity I've limited my predictions to 5 rather than the customary 10.

First off, I think most of us are happy to bid adieu to 2009.  It was a tough year for many with jobs lost and spending curtailed.  Performance Management was certainly not exempt from the impact of a down economy but I'm optimistic that 2010 will be a better year in general with some significant changes in Performance Management.

When I look into my crystal ball here is what I see:


#1.  Purse Strings Loosen
There has been a backlog of demand for performance management solutions over the last 18 months.  Spending that was approved and earmarked for EPM in 2009 was held back due to spending constraints.  This money will be freed up in 2010.

The due diligence (and even vendor selection in many cases) has already been done which will reduce the cost of sales and compress the sales cycle of these opportunities.  Based on the compressed sales cycle and lower cost of sale, profit margins on EPM revenue will trend higher.


#2.  Mega-vendors Will Have a Big Year by Targeting Pervasive Performance Management
The mega-vendors in EPM (IBM, Oracle, and SAP) will have banner years in selling EPM into their existing client bases and adding EPM into the scope of large technology purchases and strategic initiatives.  These vendors have spent a couple of years integrating acquired EPM products into their platforms and this effort will pay dividends during 2010 as their architecture catches up with their marketecture.

These (and select other vendors) will be successful in expanding the scope of their clients' performance management initiatives to include profitability analytics, strategy management, sales performance, supply chain performance and other operations areas. Pervasive Performance Management is the holy grail for the large vendors as they strive to increase deal size and differentiate their performance management offerings from smaller, niche performance management vendors.  However, due to the sheer size and breadth of these vendors, performance management will remain a small percentage of their revenue when compared to BI and other core product lines.

#3.  Best of Breed Makes a Big Comeback in the Mid-Market
As the mega vendors strive to expand the scope of performance management, many niche vendors are squarely focusing on the traditionally core components of performance management (budgeting, forecasting, and financial reporting).

Many customers (especially in the mid-market) have a significant and specific pain point to address in these areas and are not ready (or able) to expand their scope to a strategic performance management initiative.  Some prefer a smaller vendor that specializes in addressing their key pain rather than a software conglomerate.  They want the attention, responsiveness and "skin in the game" that smaller vendors provide.  In short, some prefer to be a big fish in a small pond.

The last year has seen many smaller vendors pop up to fill the void left by the acquisition of so many best-of-breed vendors.  There will be a "smack-down" between all the new vendors and the mega-vendors in the mid-market.  The increased number of options for mid-market clients will result in the return of the "bake-off" and "dog and pony show" as clients struggle to decipher the differences between the plethora of options.


#4.  The Cloud Gets Bigger But Finance Lags
The impact of the cloud is being felt all over the software industry.  In my opinion the cloud will gain significant traction in 2010 as it moves from the stage of Early Adopters to Early Majority.  The cloud will become a viable option to many, many more organizations this year.

I believe this is true in many areas including Business Intelligence but not for Performance Management.  As we all know finance people tend to be a just a tad risk averse and not quite as cutting-edge as other parts of the organization.

Therefore, I see finance lagging behind the rest of the organization when it comes to embracing the cloud.  While I see the cloud entering the early majority stage of adoption during 2010, those in Finance who embrace it will still be considered innovators.  In my opinion in 2010 Finance should wake up to the fact that the cloud is here and it is here to stay and they should be more open to considering cloud options for performance management.


#5.  There Will Be No Acquisitions in 2010
I'm not saying that Oracle, IBM, SAP and others will not make any acquisitions during 2010 - they will.  But I do not see any performance management vendors being acquired during this year.

The mega-vendors will continue integrating what they have acquired and niche vendors will continue targeting their specific markets and trying to grab additional share in those markets.  I don't expect much turmoil in the performance management vendor landscape this year.

    

BI Remains Top of Mind
BI continues to be the most strategic initiative for the CIO according to research by Gartner, IBM and others.  However, even strategic initiatives struggle to get funding when budgets are tight.  BI competes for limited funding against many other strategic and tactical initiatives that often have compelling ROI cases.

ROI Drives Funding
That is why the IBM Cognos Innovation Center for Performance Management has sponsored a webcast series on building the business case for BI in a turbulent economy.  As part of this series I have delivered several webcasts and related white papers.  Two of these white papers are available for free download (registration required) from the Innovation Center website.
    
    1) Building the Case for Business Intelligence in a Turbulent Economy
    2) Funding for BI: It's All About ROI, ROI, ROI

Both of these papers provide non-vendor specific advice on understanding the challenges of garnering funding for BI and maintaining momentum during difficult times.  The first paper documents six ways to strengthen the business case for BI and the second helps find the balance between tangible and intangible ROI when building a business case for BI investment.  Both are quick reads with practical advice, take a look.


What Do You Want To Hear?

As always, I am interested in your feedback as I continue to evolve my content delivery to provide relevant, valuable, and digestible information to the BI and Performance Management community.

Let me know what you think of my content and what you would like to see next.

    

Jonathan, John Schwarz, Jim Hagerman Snabe, and Vishal Sikka spent the rest of the morning discussing how "this is not your grandmother's SAP" and how SAP is planning to embrace the cloud and continue to exploit analytics to drive growth. They acknowledged that the days of counting on 7-figure deals to drive growth are over and how SAP will deliver higher volume, lower cost solutions to the market place. << MORE >>

Gartner has announced it is acquiring AMR Research for US$64M. There have been rumors for years that AMR would be acquired but most thought it would be Forrester that eventually acquired them.<< MORE >>

Last week SAP announced that BusinessObjects Planning & Consolidations (BPC) is now a Microsoft "preferred solution" for Microsoft customers looking for budgeting, planning, forecasting and financial close solutions.  This makes a lot of sense given the legacy of BPC (Outlooksoft, acquired in 2007) was purposefully designed on Microsoft technology from bottom to top.
Woulda, Shoulda, Coulda...Didn't
In my opinion Microsoft should have acquired Outlooksoft when they had the chance rather than going down the development route with PerformancePoint Server.  Outlooksoft had the right technology, a growing client base, and knew how to sell to the office of the CFO.  I'm not the only one who thought an Outlooksoft/Microsoft marriage would be a good one so I'm sure there were internal dynamics that I don't know about that prevented it from happening.  Regardless of why that acquisition never happened, the natural fit remains and the "preferred solution" relationship should be attractive to Microsoft customers and creates an opportunity for SAP to expand its footprint in "Microsoft shops".

 What Does "Preferred Solution" Mean?  Will They Be Dating Other Vendors?
I found the wording in the press release interesting.  It says: "Microsoft Corporation supports the SAP® BusinessObjects™ Planning and Consolidation application, version for the Microsoft platform, as a preferred solution."  The key word here is "a" rather than "the" preferred solution.  Microsoft will likely continue to work with other vendors who provide planning solutions on Microsoft's technology.  It will be interesting to see how this plays out once SAP and Microsoft have finished "identifying potential targeted go-to-market initiatives to accelerate the adoption of SAP BusinessObjects Planning and Consolidation among the Microsoft user base."   Other vendors have been working with Microsoft to fill the void left when PerformancePoint was shut down.  Will this relationship with SAP supercede the others?

  Is this a tag team against Oracle?  Yes, and More
Both of these mega-vendors see Oracle as the evil empire.  The relationship reminds me of the alliance between the United States and Russia during World War II.  They don't see eye to eye on everything but know that uniting against a common enemy will improve their chances of winning the war.  Together they are looking for ways to prevent Oracle from infiltrating their turf.  This relationship is a way to keep Oracle from using its planning and consolidation products as an entre into SAP or Microsoft strongholds.

I believe this is also targeted at some of the niche players that are beginning to make some headway in the planning and consolidation space.  Vendors like Clarity Systems, Tagetik, Host Analytics and others have been working to fill the void left by PerformancePoint and are aggressively targeting the mid to upper-mid market for planning and consolidation.  While Oracle is the high profile competitor that this arrangement targets it can also help SAP prevent these smaller vendors from establishing a strong foothold in the mid-market.

Reassurance for SAP BPC Customers on the Microsoft version
Another important thing that this arrangement does do is ensure that SAP will continue to support its BPC product on both the Microsoft stack and SAP Netweaver.  This has always been their stance but there have always been rumblings in the market that once the Netweaver version went commercial (which it has), development on the Microsoft version would be phased out or at least diminished.  This very public arrangement with Microsoft should quell any fears that the Microsoft version of BPC is going away.

    

The technology to accomplish Pervasive Performance Management exists today, just take a look at the product innovations of the traditional BI vendors around unstructured data, the guided navigation capabilities from companies like Endeca, and the virtual screen technology shown in this video. But you won't see a combined experience like this tomorrow or even next year. It will take a maturation and marrying of these different technologies and the evolution of business culture to embrace it. But it really is possible. << MORE >>