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.