Corporate Performance Management Heats Up

“The market for corporate performance management (CPM) suites continues to grow rapidly,” declared Gartner in its latest Magic Quadrant for CPM suites. Why? Gartner explains: “because CPM has helped to manage cost optimization efforts and is now increasingly employed in supporting growth-based strategies.”

Budgeting, planning, and forecasting (BP&F) remains the primary use for CPM, although Gartner reports a likely shift to CPM for more strategic purposes, including management and profitability modeling. AAA, for example, expects to use it to identify new places where it might open an office. Gartner also notes a significant uptick in interest from midsize organizations.

CPM addresses issues ranging from budgeting, consolidation, and forecasting to strategy formation. It may encompass balanced scorecards, value-based and metric-driven management, and business intelligence. AAA, for instance, expects to begin building analytic cubes using its CPM tool and do so without having to call on IT for help.

There are a lot of CPM players these days, both licensed on-premise products like Prophix and cloud-based SaaS tools like Host Analytics and Adaptive planning. wiredFINANCE covered CPM almost a year ago. Gartner’s Magic Quadrant identifies about a dozen players, ranging from the big guys like IBM, Oracle, SAP, Infor, and SAS to niche players like Prophix and Tagetik.

Still, nearly 50 percent of large enterprises and 75 percent of midsize businesses continue to use spreadsheets or legacy applications to handle their core management process for the purposes of BP&F, financial consolidations, and financial reporting, according to Gartner. At AAA, BP&F still remains its primary use. Before Prophix, it relied mainly on canned reports from the accounting system and Excel spreadsheets for its basic BP&F.

CPM is becoming quite sophisticated and pricy as the vendors assemble suites and pile on capabilities. Prophix boasts that its CPM product is half the price of its competitors. That certainly won the AAA account. “Cost was the deciding factor,” said Chapman, “but it gave us what we wanted and more.”

Despite the increased capabilities of the latest products, Gartner reports only just starting to notice the expected increased interest in the use of the strategic capabilities, like profitability modeling, that the vendors have been touting. For all the potential sophistication of the CPM tools, “most CPM suite evaluations are still focused on improving the financial functions (primarily BP&F), and less on the strategic aspects of CPM (such as strategy management and profitability modeling),” according to Gartner. But the researchers expect that to change.

The strategic stuff is nice, but if your organization is still relying on Excel for basic financial blocking and tackling, it might pay to adopt CPM either as an on-premise licensed product or SaaS. That itself might be strategic enough. ###