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IDC Worldwide Financial Performance And Strategy Management Software 2006 Impact Of Market Consolidation Frenzy (Excerpt), September 2007
IDC Worldwide Financial Performance And Strategy Management Software 2006 Impact Of Market Consolidation Frenzy (Excerpt), September 2007
IDC Worldwide Financial Performance And Strategy Management Software 2006 Impact Of Market Consolidation Frenzy (Excerpt), September 2007
IDC Worldwide Financial Performance And Strategy Management Software 2006 Impact Of Market Consolidation Frenzy (Excerpt), September 2007
IDC Worldwide Financial Performance And Strategy Management Software 2006 Impact Of Market Consolidation Frenzy (Excerpt), September 2007
IDC Worldwide Financial Performance And Strategy Management Software 2006 Impact Of Market Consolidation Frenzy (Excerpt), September 2007
IDC Worldwide Financial Performance And Strategy Management Software 2006 Impact Of Market Consolidation Frenzy (Excerpt), September 2007
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IDC Worldwide Financial Performance And Strategy Management Software 2006 Impact Of Market Consolidation Frenzy (Excerpt), September 2007

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  • 1. Filing Information: September 2007, IDC #209241e, Volume: 1 Special Reports: Excerpt E X C E R P T W o r l d w i d e F i n a n c i a l P e r f o r m a n c e a n d S t r a t e g y M a n a g e m e n t S o f t w a r e 2 0 0 6 V e n d o r S h a r e s : I m p a c t o f M a r k e t C o n s o l i d a t i o n F r e n z y ( E x c e r p t f r o m I D C # 2 0 9 2 4 1 ) Kathleen Wilhide I N T H I S E X C E R P T The content for this excerpt was taken directly from the IDC Competitive Analysis Report, Worldwide Financial Performance and Strategy Management Software 2006 Vendor Shares: Impact of Market Consolidation Frenzy, by Kathleen Wilhide (Doc#209241). All or part of the following sections are included in this excerpt: IDC Opinion, Situation Overview, Learn More, and Synopsis. Also included is Figure 3. I D C O P I N I O N Market consolidation is shrinking the number of vendors in the financial performance and strategy management (FPSM) market, and the top vendors all have a more complete and robust suite of products. FPSM applications are foundational to codifying and automating financial business processes but require the analytic reporting capabilities that broader BI offerings include — hence the consolidation in this space. Strong demand for FPSM applications continues, but acquisitions have changed the landscape of top vendors. More than 65% of the market was formerly represented by 23 vendors; that number has been condensed to five. This new landscape will change the game and redefine the role of ERP and FPSM vendors alike. As end users determine the impact of consolidation, there has been a subtle dampening of the performance of the overall FPSM market, which grew less than IDC expectations in 2006 despite the healthy growth rates of the top vendors. Highlights of FPSM market performance are as follows: The FPSM market grew 10.1% in 2006, less than the forecast growth of 12%, with a total market value of $1.76 billion. Market consolidation has been a disruptive force in 2006 and into 2007, which has slowed market growth, but the market should rebound as consolidation strategies take shape. While FPSM is still a strong market, the ties to BI and more comprehensive performance management needs are becoming increasingly important, spearheading the current wave of consolidation. Finance will continue to look to have its requirements met, and will be a key influencer in the larger scheme of performance management solution selection processes, which include BI reporting and analysis needs as well. GlobalHeadquarters:5SpeenStreetFramingham,MA01701USAP.508.872.8200F.508.935.4015www.idc.com
  • 2. 2 #209241e ©2007 IDC F i n a n c i a l P e r f o r m a n c e a n d S t r a t e g y M a n a g e m e n t A n a l y t i c A p p l i c a t i o n s M a r k e t D e f i n i t i o n Financial performance and strategy management applications consist of applications whose main purpose is to measure, analyze, and optimize financial and business performance and analytic processes in support of enterprisewide initiatives that are typically driven by finance. These include the following application areas: Budgeting and planning Financial consolidation Strategy management Profitability management (including activity-based costing [ABC]) A critical component of a successful FPSM strategy is the underlying BI platform and reporting/dashboard solutions that enable statutory and management reporting. FPSM applications must reflect domain expertise across a range of business processes/subjects/functions, such as accounting, HR, operations, and customer relationship management (CRM), translating key process and information into financial impact. FPSM applications must also meet the criteria for classification as a packaged analytic application: Business process support. This condition relates to packaged applications software that structures and automates a group of tasks pertaining to a repeatable business process. Separation of function. This condition means that the application can function independently of an organization's core transactional applications. (It can be dependent on such applications for data and might send results back to these applications.) Time-oriented, integrated data from multiple sources. The application extracts, transforms, and integrates data from multiple sources (internal or external to the business), supporting a time-based dimension for analysis of past and future trends, or it accesses such a database. Increasingly, however, the infrastructure that supports the management and integration of information that is accessed by these applications is as important as the FPSM applications themselves — and a robust end-user reporting strategy is an important part of the mix. IDC recognizes the convergence across FPSM and BI that continues to affect the definition of the FPSM market, and the resultant market consolidation discussed herein.
  • 3. ©2007 IDC #209241e 3 S I T U A T I O N O V E R V I E W T h e F i n a n c i a l P e r f o r m a n c e a n d S t r a t e g y M a n a g e m e n t A p p l i c a t i o n s M a r k e t i n 2 0 0 6 The market performance of FPSM analytic applications was lower than expected for 2006. The worldwide market for FPSM applications rose to $1.76 billion, a healthy growth of 10.1% over 2005 but less than the forecast 2006 growth of 12%. The market is in a current state of flux as all major vendors have made one or more acquisitions that expand the current product suite and supporting analytic and reporting capabilities. Transactional systems have reached a level of maturity for many organizations. Recent scrutiny of corporate information has revealed information gaps and questionable data quality. The result: Organizations need a better plan for dealing with the volume of information generated from transactional systems. The fallout from information overload and ongoing pressure to achieve process improvement, as well as external pressures such as compliance, have customers ready to invest in initiatives to improve information quality, and they prefer to buy applications as opposed to build them. However, market consolidation is changing the perception of the FPSM "short list," and enterprisewide BI and performance management initiatives are being redefined by vendors and end users alike. Finance still is an important stakeholder in these initiatives, but meeting enterprise needs requires a combination of applications, analytic capabilities, and reporting tools that are usable by operational personnel across the enterprise. Scare tactics aside, compliance initiatives have been key in highlighting the inconsistency of information as well as the inability of organizations to assemble reliable information quickly. However, the multiple benefits of putting in place an information management strategy are realized across both business and IT, and these initiatives are much broader than compliance; they comprise performance management and reporting improvements that include both applications and infrastructure. Reporting systems must function as "systems of record" within the organization, which will require organizations to drive an enterprise-standard solution over time. This evolution will ultimately lead to more strategic initiatives that merge enterprise risk and performance management. Applications such as forecasting and scorecarding will be increasingly used to support a more integrated view of compliance, risk, and performance. And finally, software suites are becoming more important. In IDC's November 2006 AppStats Survey, 81% of the respondents indicated they have adopted in some way the integrated suite paradigm, with the majority having several suites of solutions to address key business processes.
  • 4. 4 #209241e ©2007 IDC Vendor Profiles SAS Institute SAS is a quiet yet powerful force in the FPSM market. The Financial Intelligence suite, including "on demand" financial consolidation as well as integrated planning and budgeting, continues to gain traction and, more important, reflect the market requirement for an integrated data model across FPSM applications. As finance looks to expedite the business processes such as the financial close and budget cycles, SAS has purpose-built these solutions to produce "right time" financial results quickly and accurately through on-demand capabilities that rapidly reflect the most up-to-date results. SAS continues to be one of the strongest vendors in the areas of strategy management and scorecarding as well as profitability management. At the end of 2006 the company released the next generation of Profitability Management, which now fully integrates activity-based management information into scorecarding and planning/budgeting. It is in the areas of strategy management and profitability where SAS differentiates itself, as these solutions are more mature and have more traction than most of the competition. SAS continues to build momentum with vertically focused FPSM offerings, in particular in financial services and the public sector and, more recently, the retail space. These industries show the strongest demand for cost and profitability management as well as readiness for more robust strategy management applications, so it is no surprise that SAS is high on the short list within these industries. The company continues to build success with FPSM, most often with customers where there is already a SAS presence. However, as finance realizes the value of more sophisticated solutions that include data mining and predictive analytics, SAS is a key vendor finance should evaluate. While SAS continues to build market awareness of its financial solutions today, it is well ahead of other vendors in recognizing and developing the requirements of the future and should continue to figure more prominently on the FPSM radar screen. Given the changing market landscape due to acquisitions, and the confusion created, SAS has the opportunity to capitalize on this and make its move. F i n a n c i a l P e r f o r m a n c e a n d S t r a t e g y M a n a g e m e n t M a r k e t b y S e g m e n t The mix of solutions within the FPSM market continues to track as expected, and planning and budgeting applications are still the primary drivers of growth. Financial consolidation applications still see compliance-related growth but will continue to factor more and more into management reporting structures that are supported with analytical reporting through BI tools. The whole notion of strategy management is still immature, and IDC sees a mix of scorecard-driven reporting that exists not only in the FPSM market but also as part of BI tools. Many of these initiatives are in fact BI driven, with scorecards and
  • 5. ©2007 IDC #209241e 5 dashboards a gray area that cannot be clearly addressed through a market taxonomy. The biggest area to watch, however, is profitability management. IDC continues to refine the definition and tracking of this space, and the acquisition or OEM/integration of former ABC/M solutions by larger suite players is part of a movement toward packaged solutions that provide more structure for measuring profitability. The packaged applications segment of profitability capabilities is reflected in the FPSM submarket share depicted in Figure 3. However, IDC believes that the majority of solutions are still "built" with BI tools, and those requirements will continue to drive further productization that will make this area the highest-growing FPSM segment. Figure 3 shows the breakdown by market segment of the various financial performance and strategy management applications in 2006. F I G U R E 3 W o r l d w i d e F i n a n c i a l P e r f o r m a n c e a n d S t r a t e g y M a n a g e m e n t A p p l i c a t i o n s R e v e n u e S h a r e b y M a r k e t S e g m e n t , 2 0 0 6 Strategy management (14.6%) Profitability management (20.0%) Financial consolidation (28.5%) Planning and budgeting (36.9%) Total = $1.756B Source: IDC, October 2007 E S S E N T I A L G U I D A N C E As all major vendors seemingly now have capabilities across the performance management suite, differentiation of solutions will ultimately change from the past, and it can be expected that user requirements will change as well. The following criteria will play an important role in vendor differentiation: Ease of use, such as self-service capabilities geared toward end users
  • 6. 6 #209241e ©2007 IDC Expanded analytic applications that cross functional areas, such as HR, capital expenditure planning, or GRC integration High-performance platform criteria such as: Performance and scalability Data quality, audit capability, and embedded controls Analytics — revitalized importance of OLAP More sophistication: predictive analytics, what-if analysis, and modeling — for power users as well as for a broader audience Vendor expertise and dominance in a functional or vertical arena, such as: Broader integration strategies into areas such as compliance and risk Verticalized solutions based on in-house expertise and delivered content Focused partner strategies L E A R N M O R E R e l a t e d R e s e a r c h Worldwide Business Analytics Software 2007–2011 Forecast Update and 2006 Vendor Shares: Business Intelligence, Data Warehousing, and Analytic Applications Forecasts Point to Continued Strength (IDC #208699, September 2007) Worldwide Supply Chain, Services Operations, and Workforce Analytic Applications 2006 Vendor Shares (IDC #208116, August 2007) Emerging Business Analytics Vendors Attract Venture Capital Attention (IDC #lcUS20829207, August 2007) Worldwide Business Intelligence Tools 2006 Vendor Shares (IDC #207422, June 2007) Business Intelligence Software: Buyer Priorities and Preferences (IDC #206814, May 2007) Business Objects Rounds Out Its Performance Management Strategy with the Acquisition of Cartesis (IDC #lcUS20662207, April 2007) Worldwide Business Analytics Services 2007–2011 Forecast: Increased Growth in BA Software Drives Growth for Related Services (IDC #206107, March 2007) Worldwide Business Analytics Software 2007–2011 Forecast: The Growth Cycle Continues (IDC #206071, March 2007)
  • 7. ©2007 IDC #209241e 7 Business Intelligence and Performance Management Consolidation Round Two: Oracle Acquires Hyperion (IDC #lcUS20585607, March 2007) IDC's Software Taxonomy, 2007 (IDC #205437, February 2007) Worldwide Information Access 2007 Top 10 Predictions: The Last Great Computing Platform Arrives (IDC #205154, January 2007) S y n o p s i s This IDC study provides the market sizing and vendor shares for the financial performance and strategy management market in 2006 and reflects the impact of significant market consolidation through year to date 2007. "Market consolidation is shrinking the number of vendors in the financial performance and strategy management (FPSM) market," says Kathleen Wilhide, research director, GRC and Performance Management Solutions. "Strong demand for FPSM applications continues, but it was dampened by recent acquisition activity and speculation. The market should rebound as clarity emerges on the new vendor landscape." C o p y r i g h t N o t i c e This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit www.idc.com to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit www.idc.com/offices. Please contact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2007 IDC. Reproduction is forbidden unless authorized. All rights reserved.

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