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IT Zone guide to CPM software

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19th Jun 2006
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IT Zone guide to corporate performance management software

Contents
Key features
CPM Software Vendors
ERP and accounting ledger suppliers
CPM and business intelligence for the rest of us

With this guide to corporate performance management, IT Zone is encroaching on the territory mined by market analysts such as Aberdeen Group, META and Gartner. Getting the full service from these technological oracles can cost thousands of pounds - and generate mountains of impenetrable jargon.

We try to avoid that on IT Zone. What follows is a basic introduction to the available applications, starting with the major corporate suppliers but working down to more budget-conscious solutions that claim to support CPM activity. The article is intended as a quick aid to help users shortlist those applications that are suited to their financial and performance management needs. It highlights some key issues and provides background information on vendors' philosophies and product strategies rather than detailing every feature and interface.

For a more theoretical discussion of what CPM is, the companion article, A journey to the heart of CPM looks at some of the different definitions, and discusses features that are common to most CPM environments.

Behind the executive dashboard
With the market estimated to be worth $5bn a year or more, sales of CPM and related analytic applications and business intelligence tools are growing faster than the rest of the financial software market. As a result a lot of suppliers have jumped on the bandwagon.

CPM has strong roots in the balanced scorecard movement. Most of the established suppliers made their reputations with some kind of executive information suite or analytic application. It is worth noting that several companies that have been working towards CPM for several years do not yet claim to have got there.

What really matters is what goes on behind the on-screen dashboard or scorecard. The main factors to consider when assessing them is the level to which the analytical elements tie into the organisation's budgeting, planning and transactional systems; how quickly they can deliver useable data to managers; and how the results are distributed.

Key features - Closed loop integration with financial systems
As defined by the market analysts and long-established suppliers, CPM is a closed-loop system where business modelling and forecasts are used to create plans and budgets, which are calibrated against actual results to direct organisational activity. The progress measures are fed back into the business model to adjust forecasts and establish more realistic goals.

To date, achieving this balanced and seamless infrastructure has required a lot of money to be spent on business consultancy and technical programming to pull in and validate data from a variety of sources. That will continue to be the case, but modern software is making it easier to connect to standard programming interfaces, so the closed loop model is being successfully implemented by suppliers targeting second tier corporate users.

Key features - online analytical processing (OLAP)
For the ultimate in sophisticated analysis, fast data processing and distribution, CPM requires some heavyweight number-crunching. Information needs to be pulled in from multiple sources and cross-related against validation rules and performance criteria. To avoid crippling or corrupting the underlying transactional systems, CPM requires some kind of secondary analysis based around a snapshot of the underlying data. The vast majority of corporate managers appear to use Excel spreadsheets for this purpose, but CPM purists would expect to see the use of online analytical processing (OLAP).

OLAP databases hold the business logic that underpin the CPM model, and regularly update it with feeds from the operational programs. The analysis managers see isn't strictly "real-time", but as close as you can get to this ideal.

Oracle and Microsoft might try to argue the point, but Hyperion currently holds the upper hand in CPM through its ownership of Essbase, the dominant multi-dimensional database used for high-end CPM applications.

When multiple factors are being analysed and compared, indexing and computing the data can create a huge workload, for which Essbase and its main rival Applix TM-1 were designed. Mid-market suppliers would argue that as long as you know what you want to measure, you can define smaller data subsets and manage these in less complicated datamart "cubes". Oracle's relational database, for example, has a companion OLAP application, and Microsoft's SQL Server database includes the Analysis Services module, which as done a lot to popularise CPM applications.

Any CPM needs assessment should identify the amount and quality of data that is going to go into the performance model, and to establish just how much data manipulation is required. Also, never forget the principle of GIGO - garbage in, garbage out. Can the data underlying the analysis be verified and validated? There are also considerable demands on the people who create the business model and performance indicators to ensure that they are properly optimised. As Aberdeen Group warns, if this does not happen, an imbalanced CPM implementation could encourage managers to promote sales of their loss-leaders.

Specialist CPM v ERP add-ons
When CPM bandwagon jumping is mentioned, the phrase will probably be mentioned with mild sneer by a specialist CPM developer. But the suppliers who currently control operational and financial systems are in poll position to offer value-enhancing software to their clients.

SAP, SAS, PeopleSoft and Microsoft Business Solutions in particular can all support the modelling planning, budgeting, consolidation and reporting activities that underpin CPM. And among UK-based suppliers, CODA, OpenAccounts, Access offer varying degrees of business intelligence within their software. The question the specialists all ask is, if these developers have got proper CPM capabilities, how come they haven't been able to deliver them in significant numbers? Too often in the past, large scale ERP implementations took so long that they failed to meet the original objectives, let alone cater for new demands for rapid response management information.

Hyperion chief executive officer Jeff Rodek comments: "All the ERP vendors want to build analytical capabilities into their software, but they are finding that analysis is hard. It's a completely different process than handling transactions." CPM requires absolute flexibility to draw in and deliver data from disparate systems, Rodek argues, and the specialists have a head start over ERP developers.

Key features - Web collection and delivery
Most experts see the Web as THE key development in CPM. The Web provides a low cost infrastructure that allows people across the entire organisation to plug into up-to-date performance measures. If you are working with more than one department in a single location, the Web should play a role in your CPM thinking. Using browser interfaces rather than full PC client software can also reduce software licence fees and upgrade costs. The ability to deliver management information via Web browsers eliminates many of headaches that slowed up client/server ERP installations. A Web-based CPM suite can be constructed and rolled out in a matter of weeks and begin to achieve paybacks within months rather than years, argues Hyperion's Rodek.

CPM Software Vendors

Hyperion
Hyperion established its reputation as a leading supplier of corporate consolidation planning and budgeting software. It captured CPM's high ground in the late 1990s with the acquisition of Essbase, the top OLAP engine for this sort of multi-dimensional application. These elements have been fused into the Hyperion Financial Management suite, with a companion planning application. Hyperion tools support all the boring collection, control and audit trail requirements the finance department wants while also providing the six-step cycle of classic CPM. This structure means Hyperion can rapidly incorporate feedback from different sources (for example business modellers, budgets or performance scorecard measures) to provide a flexible and dynamic management tool. The underlying architecture is also well supported by data import/export tools that make it able to plug into legacy systems. As with any self-respecting enterprise application, Hyperion's products are designed to be Web-deployable, making it relatively painless to provide a one true view for all within the organisation.

Geac Performance Managment (formerly Comshare)
In 2003, Canadian ERP software supplier Geac acquired Comshare, one of the pioneers of CPM. Comshare had close to three decades' experience working with corporate finance departments and its MPC (Management Performance Control) suite covers all the bases you would expect from a full-blown CPM application, from modelling, planning, budgeting, through consolidation to analysis and reporting. Its Overview interface is still one of the best visual management tools around, presenting departmental, regional and segmental information as a graphical tree that can be viewed and interrogated over the Web. Following the takeover, Geac will bundle MPC up with its ERP applications and take CPM to a broader community of companies. Although it had vast experience integrating MPC and other applications with multiple finance and operational systems, Comshare lacked the advantage that Hyperion enjoys of having a market-leading OLAP engine. While Geac gives it MPC one new channel to market, it has also been doing joint marketing with Microsoft to promote SQL Server's Analysis Services module as a CPM tool.

Related material
Comshare's Corporate member pages on AccountingWEB feature the following resources:

  • Case studies
  • Product and service details
  • PressZone - recent news releases

    Cognos/Adaytum
    Cognos has come at CPM from a slightly different direction to Comshare and Hyperion. Until 2002, Cognos was the biggest supplier of "business intelligence" tools on the strength of its PowerPlay and Impromptu tools. With Cognos-Finance, it began to link the analysis tools to transactional systems (and formed a commercial partnership with CODA). But in December 2002, Cognos raised the stakes with the acquisition of planning and budgeting supplier Adaytum. Catering for users with Oracle and Microsoft SQL Server-driven financial systems, Adaytum developed e.Planning, a Web-driven, mid-market planning and budgeting suite with built-in OLAP. By combining the Adaytum software with its own tools, the developer's stated ambition is to achieve leadership of the CPM market by the middle of 2005. The theory sounds good, and the capabilities of the Cognos Enterprise Business Intelligence framework and its Web-based Visualizer reporting tool look very good. But analysts are still waiting to see if Cognos deliver the integration that comes from Hyperion and Comshare.

    Related material

  • Ditch spreadsheets for CPM, urges Cognos - executive interview
  • The Cognos Corporate Member page includes Case studies, a Product overview, recent press releases and other information.

    ALG Software
    ALG is another supplier that plays the integration card. Its path to CPM - or enterprise process optimisation (EPO), as it styles its latest product suite - is through activity-based management software. This heritage is an important element of CPM, since ABM modelling can help construct an accurate picture of the relationships between resources consumed in production and delivery processes. Performance management and improvement has to be based on setting realistic targets. ALG's EPO suite includes business modelling, predictive planning, budgeting and forecasting tools along side a Web-based balanced scorecard module that will alert users when limits are exceeded. ALG chief executive Mike Sherratt has publicly voiced his fear that bandwagon-jumpers would damage the CPM concept. 'Unless you're got a truly integrated solution, you can't create the model, adjust the drivers and parameters and flow the changes through the model to see what impact they will have,' he said. 'We're not all the way to CPM yet, but we're closer than the rest.'

    Related material

  • ALG showcases EPO suite at Softworld
  • An introduction to corporate performance management
  • Integration - the secret of effective CPM

    Business Objects
    Business Objects is acknowledged by market analysts as one of the emerging players in business intelligence applications, but does not have as strong a foothold in corporate finance departments as other companies in this guide. Business Objects is akin to Cognos, but lacks an equivalent planning/budgeting suite to Adaytum. Nevertheless, it has data import tools that can pull data from ERP and customer relationship management applications such as i2, JD Edwards, Oracle, PeopleSoft, SAP, and Siebel. It also acquired Crystal Reports, a standard management reporting tool for financial and business applications, to consolidate its reporting and delivery capabilities (including Web-based reporting).

    Cartesis
    Cartesis has very strong financial credentials, having emerged from PricewaterhouseCoopers' French partnership. In 2002, it took on the development and marketing of PwC's own consolidation and reporting suite, CLIME. These two suites have now been "integrated" within the company's Magnitude CPM suite, targeted at Global 2000 companies (which would include the top 250 UK corporations). Earlier this year, Cartesis signed a strategic alliance with Business Objects subsidiary Crystal Decisions to include the Crystal Enterprise and Crystal Analysis tools within Magnitude. These reporting tools will couple the "closed-loop" Cartesis planning/budgeting, consolidation and KPI suite with Web-based analysis tools to meet customer demands for grown-up, Web-deployable CPM. The alliance is interesting in that with all the consolidation going around, Cartesis and Crystal have established a "best of breed" approach to CPM, where they offer companion tools rather than trying to deliver the whole package.

    Related material

  • Cartesis MD: 'There is no single definition of CPM' - IT Zone interview

    Tate Bramald
    It may seem odd to encounter a UK accounting software reseller among this exalted group, but Richmond-based Tate Bramald claims to have boosted its revenues by close to 25% since introducing its dataGenius Web-based business intelligence suite in 2001. The tools have been linked to SunSystems, Microsoft Great Plains, Sage, Siebel, ACT! and niche industry applications to extract key performance indicators (KPIs). Based around the Analysis Services module in Microsoft's SQL Server, dataGenius builds OLAP cubes with data drawn from operational systems and can deliver the results via the browser-based Executive Viewer, an an easy-to-use reporting and analysis tool. The entry price is closer to £10,000 for a sub-£100m turnover company, compared to the £100,000+ for the top-line corporate systems mentioned above.

    Related material

  • Tate Bramald introduces online business intelligence suite

    ERP and accounting ledger suppliers
    The five 'JBOPS' enterprise resource planning suppliers (JD Edwards, Baan, Oracle, PeopleSoft and SAP) and mid-market rivals such as Microsoft Business Solutions and SAS supply business intelligence, planning/forecasting and budgeting modules to run in tandem with their accounting and operational modules.

    And UK accounting ledger developers have responded quickly to demands from their users for reporting tools to extract key performance indicators from their software. Most organisations looking at CPM will have existing legacy systems, including their core financial software. The main selection decision will be whether to go for an "umbrella" CPM environment that encapsulates the existing set-up, or to go for performance monitoring tools that can be bolted on to what you've got. This quick detour highlights some of the main CPM contenders in the ERP market.

    SAP
    With its rivals currently more concerned with taking each other over, SAP appears to have established a lead among ERP suppliers when it comes to CPM tools. SAP's offerings range from the usual budgeting, planning and forecasting applications to more exotic predictive forecasting and fair value calculation tools to measure intangible assets. Web-based reporting is a given in the current mySAP suite.

    SAS
    SAS is said by analysts such as Aberdeen Group to have one of the strongest business intelligence suites in the financial software market, and signalled its ambitions with the acquisition last year of ABC Technologies. Its Financial Intelligence software encompasses consolidation, reporting, budgeting and planning, activity-based modeling, and "advanced analytics". This suite is touted as one of the most effective solutions for corporations attempting to comply with the rapid reporting requirements of the Sarbanes-Oxley Act. But so powerful are these tools that they appeal more to IT departments than finance teams or line managers. SAS is strongest in its home market across the Atlantic, and has not made a significant impact among recent IT Zone survey respondents.

    PeopleSoft/Oracle
    Taking these two companies together is not intended to prejudge the outcome of Larry Ellison's hostile bid for Oracle's Californian ERP rival. It is more a case of bracketing together two ERP suppliers with broadly similar CPM capabilities. Oracle's Business Intelligence suite is are based around its core relational database management system and Warehouse Builder and OLAP tools. While it has a long track-record within finance departments, Oracle is not rated as a top-notch CPM supplier. PeopleSoft also does "analytics", but until its 2003 acquisition of JD Edwards, was stronger on the HR side than on finance. Maybe the two companies do very well together'

    Microsoft Business Solutions
    Microsoft has it all - several ERP and financial software families, including the FRx reporting planning, budgeting and reporting tools that came with Great Plains, the SQL Server database with its Analysis Services OLAP module, the .NET-based Business Solutions Framework to incorporate third party tools, and even the core tools that most people would use to examine their businesses: Internet Explorer and Excel (with its handy pivot tables). It is now reputed to be the world's biggest supplier of OLAP applications, but the only problem is that all these parts do not yet add up to a coherent CPM strategy. Microsoft tends to throw a lot of tools into the marketplace to see what other people will do with them, and by relying so heavily on local resellers and independent developers, it lacks the front-line, day-to-day contact that helps to refine business applications. To date, the "Power of Two" marketing relationship with Geac/Comshare has been Microsoft's most adventurous foray into CPM. No doubt, however, the time will come when this area becomes a strategic priority for Bill Gates & Co.

    CODA
    Over the course of four or five years, Coda went from being one of several contenders in the UK corporate accounting software market to being a neglected subsidiary of Dutch ERP developer Baan. It was rescued from this traumatic episode by one of its former resellers, and has since transformed itself back into something of software scene-maker market to rival its 1990s heyday. This metamorphosis has included groovy new trends such as Web deployability and CPM. Introduced early in 2002, CODA-Intelligence links the core financials package to CODA budgeting and planning applications, plus an OLAP engine courtesy of an integrated version of Cognos Finance. The result is a "closed-loop" CPM suite for those corporates that have not already fallen into the clutches of the big ERP suppliers. CODA-Intelligence can construct datamarts by drawing data in from a range of financial, CRM, ERP, and administrative systems and support scorecard-based performance indicators and measures, all accessible via the Web and ready for drill-down interrogation and subsequent reanalysis. Just like its big US (and German) rivals, CODA can even deliver "portal" views into the CPM system, where executives are presented with personalised views into real-time performance data via Web browsers.

    CPM and business intelligence for the rest of us

    OpenAccounts
    While not quite as gung-ho as CODA, UK-based accounting software developer OpenAccounts has quietly extended the reach of its application into real-time reporting for line managers. The OpenAccounts Executive Desktop Reporting module is browser-based but shares the same security controls as the core financial modules, so users outside the finance team can have restricted access to relevant accounts data. Delivered as Excel files, the EDR reports include built-in pivot tables to allow further anaysis. Responding to demand for better visibility into financial performance from US clients following the Sarbanes-Oxley Act of 2002, OpenAccounts has even installed its software to consolidate group accounts from different ledger systems.

    Access Accounts
    Access, too, has developed an Executive Desktop module, which features a menu of ready-made key performance indicators (KPIs) drawn from Access accounting software. As well as handling financial KPIs such as sales figures debtor days, the Executive Desktop can be hooked up to more flexible data sources defined in the Dimensions project accounting module.

    Related material

  • Access workshop: Take better control with KPIs

    APS Practice Management
    IT Zone's insistence on focusing on the "corporate" element of CPM drew a rebuke from practice software developer APS: forward looking accountancy practices are just as interested in these interactive management tools as multinational corporations. Time & fee, work in progress and client contact management systems all provide the sort of source data that can be used to monitor progress and profitability. Based around SQL Server's Analysis Services, the Advance Practice IQ system provides all the analysis and reporting capabilities you would expect from a CPM suite for practitioners - including OLAP cubes, a graphical dashboard and HTML delivery so people can view reports through a browser or Outlook.

    Excel tools
    Whisper it quietly around specialist vendors and consultants, but the most popular tool for measuring and analysing corporate performance is Excel, by a huge margin.

    Microsoft enterprise partner Stephen Tassell highlighted the company's approach to CPM: "We want Excel to become the interface; if the users don't even notice there's an enterprise application like MPC running behind it, we've succeeded. With .NET, it will become the front-end for many financial components."

    Strip away the philosophical debates and analytic jargon and you argue that what CPM is trying to do is provide fast and accurate management reporting. To this end, accounting software suppliers including Exchequer, SunSystems and Pegasus have integrated the spreadsheet into their reporting modules. Even if you are not going to invest thousands of pounds in CPM, you can apply some of the concepts yourself, aided by the humble spreadsheet.

    Here are a few entry-level tools available from AccountingWEB that in their own ways tackle the challenge of measuring corporate performance.

    Valuer
    The Valuer is a self-contained analytical program that simplifies the calculation a company's future cash generation potential. The user inputs a basic set of numbers and estimates to generate a valuation. The Valuer is not spreadsheet-based, so the calculations are hidden from the user. Nevertheless, developer John Welford-Costelloe argues that it is is a powerful management and motivation tool. "Used as a business performance indicator, it can demonstrate the direction the business is heading. If the process is undertaken periodically, it can identify when strategy is working on a whole business perspective."

  • The importance of business valuation

    Cashflow Wizard
    "Profit is opinion. Cash is fact," say the developers of Cashflow Wizard, a sophisticated online business modelling service that helps you refine Excel spreadsheets for business forecasting and planning purposes . But if cash is going to be your key performance indicator, here is quick way to ensure you are hitting your targets.

    Business Analyser
    Business Analyser is a tool designed for practitioners to carry out "what if?" modelling on their clients' businesses. Based on an Excel spreadsheet, it has a collection of numerical spinners that illustrate the effects of increasing or decreasing sales, prices and expenses. In effect, it is a rudimentary scorecard, but gives a quick insight into current performance and the financial effects of different changes. A "five-spinner" trial edition is available for £15, while a full operational edition with more spinners and help information costs £225.

    Interested in Pivot Tables? Start here
    All of the suppliers mentioned up to this point would insist that CPM is not a DIY activity. But David Carter would argue that the Pivot Table functions buried within Excel are the management accountant's best friend - and you get them for free. This series of tutorials takes you through a range of budgeting and management analysis tasks with pivot tables. Caution is advised if you plan to construct business-critical management systems with your own personal spreadsheet application, but if you have access to the right data sources, the world of multidimensional management analysis awaits'

    Feedback
    With such a fast-paced technology market, it is impossible to compile a definitive guide of CPM suppliers. If you are aware any inaccuracies in this article, or of companies that have been overlooked, please email your observations to AccountingWEB's editor.

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