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Business Performance Solutions Clash Of The Titans The Market Remains Vibrant Following Vendor Consolidation
 

Business Performance Solutions Clash Of The Titans The Market Remains Vibrant Following Vendor Consolidation

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    Business Performance Solutions Clash Of The Titans The Market Remains Vibrant Following Vendor Consolidation Business Performance Solutions Clash Of The Titans The Market Remains Vibrant Following Vendor Consolidation Document Transcript

    • January 20, 2009 Business Performance Solutions: Clash Of The Titans by Paul D. Hamerman for Business Process & Applications Professionals Making Leaders Successful Every Day
    • For Business Process & Applications Professionals Includes a market sizing forecast January 20, 2009 Business Performance Solutions: Clash Of The Titans The market remains vibrant Following vendor Consolidation by Paul D. Hamerman with Kyle mcnabb and meghan Donnelly ExECuT i v E S u m mA ry Business performance solutions (BPS) — a software category consisting of applications for budgeting, forecasting, financial reporting, profitability analysis, and performance measurement — has seen dramatic growth and vendor consolidation over the past two years. The growth prospects for this space remain bright, despite the near-term impact of the recession, driven by strong interest in strategy and performance measurement. Forrester expects BPS software revenues to grow by 12.7% through 2012, growing from its current size of $2 billion to $3.2 billion during this timeframe. Six large vendors — IBM, Infor, Microsoft, Oracle, SAP, and SAS Institute — dominate this market, while a number of business intelligence (BI), enterprise resource planning (ERP), specialists, and BPS pure plays offer a variety of interesting alternatives. TABl E O F CO n TE nTS n OT E S & rE S O u rCE S 2 Business Performance Solutions Monitor The This research is based on numerous client Pulse Of An Organization inquiries, as well as ongoing briefings and discussions with BPS vendors, including Actuate, 5 The Recession Will Only Temporarily Slow BPS Adaptive Planning, Board international, Clarity Growth Systems, Host Analytics, iBm Cognos, infor, 9 BPS Vendors Come In All Shapes And Sizes lawson Software, longview Solutions, microsoft, rECOmmEnDATiOnS Oracle, SAP, SAS institute, and Tagetik. 14 Learn From Best Practices To Avoid Implementation Risks Related Research Documents “measuring And Aligning Business Performance” WHAT iT mEAnS 15 Market Consolidation Leaves The Door Open April 2, 2008 For Innovation “The Forrester Wave™: Business Performance 15 Supplemental Material Solutions, Q4, 2007” October 10, 2007 “Business Performance Solutions: The Competition Heats up” February 7, 2007 © 2009, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please email clientsupport@forrester.com. For additional information, go to www.forrester.com.
    • 2 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals BUSIneSS PeRFORMAnCe SOLUTIOnS MOnITOR THe PULSe OF An ORGAnIzATIOn Business performance management consists of a set of processes, frameworks, and systems for activities such as planning, measuring, communicating, and monitoring business results (see Figure 1). Enterprises typically link these activities to corporate strategies and objectives and might drive them down to many individuals within the organization to encourage accountability and control. Forrester defines business performance solutions as a category of purpose-built software applications that support these activities.1 The major BPS functional elements include: · Strategy and performance measurement address goals, objectives, and accountability. A strategy management application supports formal strategy management philosophies (e.g., the Balanced Scorecard) but might be adapted to a business’ specific needs. Applications often display the strategy definition in visual strategy maps. Scorecards measure progress against the goals and objectives set forth in the strategy framework. Performance dashboards display more detailed information and allow drilling down to root-cause detail. Dashboards typically include a variety of key performance indicators (KPIs) that might include strategic scorecards as well as relevant comparisons against plans, budgets, forecasts, prior performance, and industry benchmark data. · Planning, budgeting, and forecasting solutions support multiple forward-looking processes. Although used almost universally as a control on spending, budgeting often falls short in supporting performance initiatives — often the result of a rigorous and inflexible process, not due to a software shortcoming per se. Fortunately, in addition to budgeting, the planning solutions support a variety of scenario-based planning activities as well as forecasting processes that add value beyond that provided by traditional budgeting processes. · Cost and profitability management provides detailed analysis to improve margins. This complex modeling activity helps organizations analyze development, production, and operating costs against revenues by product, customers, and lines of business. Cost and profitability management applications often use activity-based costing as the methodology to develop sophisticated cost and profitability analytical models. · Financial reporting and consolidation produce financial statements. Financial reporting and consolidation applications produce reports focused on delivering financial statements based on accounting results. Statutory consolidations support regulatory compliance and generally accepted accounting principles (GAAP) requirements. These applications also support internal reporting of financial information. Although the functional elements described above align primarily with finance processes, enterprises can use strategy and performance measurement, as well as forecasting, to support all areas of the business. Many BPS product portfolios often include purpose-built performance management applications for nonfinance areas including human resources (HR), operations, supply chain, sales, and IT. All types of businesses and government organizations use BPS products, although considerable extension and adaptation to business requirements is often required. © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 3 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals Figure 1 Business Performance Solutions Footprint User experience Dashboards Scorecards Spreadsheets BPS application components Financial reporting Strategy and Business intelligence and consolidation performance measurement platforms and ERP systems integration tools Planning, budgeting, Cost and profitability and forecasting management Configuration tools for processes and business models Source: Forrester Research, Inc. 46571 Organizations Face An Uphill Battle With Business Performance Process execution Adopting a strategically aligned and performance-driven culture is easier said than done. Performance- driven enterprises need more timely support than traditional management processes — including budgeting and accounting — often provide. Similarly, planning and measurement processes based on labor-intensive methods (e.g., spreadsheets) are not responsive enough to run the business. Business performance initiatives suffer from implementation and execution challenges ranging from culture and organizational alignment to technology integration and project execution. Typical BPS implementation challenges include the following: · Strategies and execution processes are misaligned. All reasonably successful businesses have a strategy, but often do not support their strategies with processes for communicating, aligning, and executing them. When business units and departments lack a formalized performance measurement system aligned with strategy, they develop their own performance measurements and reporting mechanisms. The result: a great deal of effort expended, but company goals and objectives are under-realized. · Financial accounting and budgeting processes move more slowly than the business. Financial information, a critical component of business performance information, enables the visibility of revenues, expenses, profitability, and assets across various organizational dimensions. © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 4 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals Yet problems with the complex procedures and batch interfaces required to close the books along with lengthy budget preparation cycles diminish the actionable value of the information. · Improvement initiatives face cultural resistance and unanticipated behaviors. Any initiative to drive change in an organization, even if mandated from the top, faces natural resistance. The phrase “you are what you measure” highlights the profound impact of measurements on human behavior.2 To gauge their true behavioral impact, organizations must put measurements into play, requiring trial-and-error tweaking. Measurement systems present challenges, particularly when they affect compensation and, potentially, job security. · Business performance questions go unanswered, even with the best technology. A multitude of technology challenges hinder delivering performance information. One of the biggest challenges, data integration, must collect information residing in a number of transactional systems. Even when the systems can successfully assemble information on a BI platform, the daunting task of effective information delivery remains. Business stakeholders must willingly engage in the process of shaping the business models and frameworks that drive the delivery of results. Therefore, IT-led initiatives to build and deliver performance management solutions are doomed to fail without strong business-driven alignment. BPS Packages Often Replace Homegrown Solutions An organization with a strong internal BI IT talent pool and a robust BI infrastructure will likely have developed customized business performance systems, particularly to address business performance measurement and forecasting requirements. Companies with very limited resources still rely primarily on spreadsheets and basic tools for business performance reporting and analysis. These approaches have worked well for some organizations, but frequently require labor-intensive maintenance and lack desired levels of flexibility. BPS packages offer a level of configurability that puts control more squarely into the hands of the business stakeholders. These solutions typically provide more business process control and accountability than homegrown solutions, as well as starter kits containing best practices and prebuilt functionality. Despite these user-driven advantages, IT’s role remains critical for integrating and managing the underlying information. Enterprises seeking BPS support should look for: · Compelling graphics and user interface features. While some products rely heavily on a signature graphical paradigm, such as fuel gauges, customers need a selection of graphical looks to suit the information context. End users should have the ability to personalize the presentation of the graphical content by selecting the visualizations (e.g., symbols, colors, and charts) that bring the information to life. · Breadth of information. The extent to which a BPS vendor embeds a comprehensive analytical data model differentiates many products. The data model should represent the full breadth of © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 5 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals the business, from finance to sales and operations, as well as supporting a variety of business types. The solution should also enable organizations to compare certain KPIs to industry metrics via connections to external content publishers. · Flexibility and extensibility. Every enterprise has a combination of needs ranging from common to unique, so the flexibility of the product to be configured (not customized) with nonstandard measurements is essential. The business problems to support, from budgets, to forecasts, to profitability analysis, depend on the business users’ abilities to model attributes such as hierarchical structures, mathematical formulas, and timeframes. · Openness for integrating multiple data sources. The product needs to be open at the data level to analyze information from multiple systems. Vendors typically embed or work with leading data integration and extract, transform, and load tools to manage the diversity of data inputs to the system. The measurement applications ideally should allow access to underlying details within the data through drilling into the source data. · Support for measurement frameworks. Enterprises often find best practice measurement frameworks useful as predefined structures within the BPS tools. For example, several tools provide support for Balanced Scorecard frameworks and may be certified as compliant by the Balanced Scorecard Collaborative organization. THe ReCeSSIOn WILL OnLy TeMPORARILy SLOW BPS GROWTH BPS has strong long-term growth prospects, but this software category is not immune to the recession that we expect to continue well into 2009. Total software revenues (licenses, maintenance, and subscriptions) will grow by 12.7% compound annual growth rate (CAGR) through 2012 from $2 billion in 2008 to $3.2 billion in 2012 (see Figure 2). We based our market size estimate on our analysis of individual vendor product revenues and momentum. In analyzing the revenue components, we find: · License revenue will see a slight decline in 2009, followed by a strong recovery. The recessionary impact is manifested primarily in license revenues, due to reductions in IT spending. Ironically, software for managing budgets and forecasts, mission-critical in times of intense economic pressure, make up a significant portion of this market. Enterprises will struggle to justify upgrading planning and analysis software in the middle of the crisis. Following a slight 2009 decline, licensing will return to strong levels for 2010 and beyond. · Maintenance is substantial and sustainable. Due to the maturity of the BPS market, particularly for planning and financial consolidation applications, application maintenance fees provide a strong recurring revenue base. Maintenance revenues will continue to grow as new licenses and automatic contractual increases are added to the base. Since maintenance © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 6 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals represents more than half of the total BPS product revenues (54%), it will sustain overall growth for the segment even in this challenging macroeconomic climate. · Subscriptions will grow as the market gravitates toward software-as-a-service (SaaS). Software subscription revenue, including SaaS, currently makes up a relatively small component (8%) of total BPS revenues. But subscription revenue will grow at a 15.7% CAGR during the next few years. SAS Institute currently generates the bulk of the subscription revenue in this space today, although enterprises deploy its applications on-premise. SaaS vendors in this space — including relatively small companies like Adaptive Planning and Host Analytics — will see good uptake as this deployment model moves toward becoming the mainstream in BPS. Within three years, customer demand for the SaaS consumption model will compel larger BPS vendors to introduce SaaS offerings. Figure 2 Forecast: Global BPS market Growth 2008 To 2012 The spreadsheet detailing this forecast is available online. Actual Forecast $3,500 Subscription $3,000 revenue $2,500 Revenue $2,000 (US$ millions) Maintenance revenue $1,500 $1,000 License $500 revenue $0 2007 2008 2009 2010 2011 2012 CAGR Subscription revenue $139 $155 $183 $222 $266 $289 15.7% Maintenance revenue $974 $1,082 $1,223 $1,407 $1,632 $1,893 14.2% License revenue $670 $744 $737 $840 $940 $1,053 9.5% Total revenue (millions) $1,783 $1,981 $2,142 $2,468 $2,838 $3,235 12.7% (numbers have been rounded) Sources: Company reports, Hoover’s, and Forrester estimates. Source: Forrester Research, Inc. 46571 © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 7 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals Strategy And Performance Measurement Solutions Lead BPS Component Growth The traditional finance components — planning, budgeting, and forecasting and financial reporting — make up 39% and 28%, respectively, of BPS product revenues. Strategy and performance measurement (25%), however, has the highest growth rate at 18%, as companies move toward more comprehensive enterprise performance initiatives (see Figure 3). Considering each of the four component categories individually, we find: · Forecasting has moved to the forefront as a growth driver for the planning category. Demand remains strong (11% growth through 2012) for planning, budgeting, and forecasting solutions, which enable companies to support a range of planning processes. Forecasting is a more nimble planning vehicle than either budgeting or structured financial planning models (e.g., for mergers and acquisitions). In fact, flexible forecasting models, which organizations can build for various aspects of the business, drive many deals to help companies cope with economic uncertainty and market volatility. · Financial reporting and consolidation is largely a replacement market. Public companies with multiple subsidiaries and lines of business use these applications primarily for external reporting and statutory compliance. As a mature category, maintenance sustains its 10% growth rate, but legacy product replacement and stopgap solutions fuel licensing. Regulatory filing requirements, adoption of eXtensible Business Reporting Language (XBRL) as an open standard for rendering financial statements, and adoption of international accounting standards (i.e., International Financial Reporting Standards) drive growth for this mature segment of BPS. · Strategy and performance measurement systems have the highest growth potential in BPS. Many organizations already measure business performance across the enterprise using a variety of metrics and KPIs, but technology capabilities often lag management’s need for this information. The desire to formalize measurement processes, supported by incentive rewards, contributes greatly to our forecasted 17% growth for this segment, a trend that parallels the rapid uptake of human capital management applications for employee performance.3 The incorporation of risk management measurement frameworks (key risk indicators [KRIs]) to help companies anticipate the negative consequences of unusual events will also drive growth.4 · Cost and profitability management is making a comeback. Current economic conditions inspire renewed interest in closely managing costs and profitability. Though relatively small (8% of BPS), this category has a healthy growth trajectory of 13% through 2012. Companies will demand these tools to help them understand their most profitable products and customers, and which water down profit margins. Adopters of these tools may benefit from expert guidance in constructing the models, which software suppliers often provide. © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 8 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals Figure 3 BPS Segment Analysis 3-1 2008 BPS segmentation by product category Cost and profitability 8% Planning, budgeting, and forecasting 39% Strategy and measurement 25% Financial reporting 28% 3-2 2008 BPS segment growth Strategy and 18% measurement Cost and 13% profitability Planning, budgeting, 11% and forecasting Financial reporting 10% (numbers have been rounded) Source: Company reports, Hoover’s, and Forrester estimates. Source: Forrester Research, Inc. 46571 © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 9 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals BPS VenDORS COMe In ALL SHAPeS AnD SIzeS Four of the largest information technology vendors in the world dominate the current BPS market — IBM, Microsoft, Oracle, and SAP. A stunning market consolidation took place in 2007, when SAP, IBM, and Oracle acquired three major BI and BPS vendors — Business Objects, Cognos, and Hyperion, respectively. These BI vendors were also among the leaders in BPS at the time they were acquired, and BPS assets factored heavily in these multibillion dollar acquisition transactions. Microsoft’s entry into this market occurred in the same timeframe, largely through internal development efforts of Microsoft Office PerformancePoint Server 2007. Two additional major BPS players — Infor and SAS Institute — have annual revenues exceeding $2 billion, putting them among the largest software vendors. These top six vendors currently account for approximately 70% of the overall BPS market in terms of software revenues (licenses, maintenance, and subscriptions). expect More Of The Same: Market Consolidation Is Familiar Territory Within BPS Prior to the large BI acquisitions, the BPS market had been consolidating for several years. Many enterprise users of BPS still use the former brand names of the products they use, making a genealogy chart useful for those trying to identify what they’ve licensed (see Figure 4). Figure 4 Business Performance Solutions vendor Genealogy, 2002 To 2008 Oracle SAP IBM Microsoft Infor SAS Institute Geac/ ABC Hyperion Cognos OutlookSoft ProClarity Extensity Technologies UpStream Comshare Applix Pilot Software FRx Software Software Razza Systems Adaytum Solutions Business Union Stratature Objects Decisioneering Frango (Crystal Ball) Dundas Data Cartesis Visualization Siebel ALG Software PeopleSoft SRC Software Interlace Systems Source: Forrester Research, Inc. 46571 © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 10 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals Earlier transactions included in this roll-up include SAS Institute’s acquisition of cost and profitability specialist ABC Technologies in 2002, and Cognos’ acquisition of budgeting and planning vendor Adaytum in 2003. Several deals occurred just months prior to the larger BI acquisitions, including SAP’s acquisitions of OutlookSoft and Pilot Software in 2007, and Cognos’ acquisition of Applix just two months prior to the IBM-Cognos deal announcement in November 2007. Whereas IBM had no pre-existing BPS assets to rationalize with Cognos, SAP and Oracle had more overlaps to resolve. Each had to decide which products to lead with and which to put on life support. Oracle’s clear choice was to lead with the Hyperion BPS products, while SAP chose a mix of assets between its portfolio (e.g., OutlookSoft and Pilot Software) and those of Business Objects (e.g., ALG Software and Cartesis).5 While vendors have well-defined road maps at this stage, the integration and harmonization work continues. BPS Offerings Fall Into Four Types Of Vendor Buckets The types of vendors offering BPS products range from the technology giants to small, specialized vendors (see Figure 5). Breadth of coverage of the four main BPS functional components varies widely, and has no correlation to overall vendor size, as shown in the more detailed vendor guide (see Figure 6). These categories and key vendors are described below. · Diversified technology leaders battle for supremacy. The four technology giants in this category, as mentioned previously, control the lion’s share of this market. Each of these vendors can provide standalone BPS solutions as individual products or suites, and can also align these products with their major technology assets in applications and platforms. · ERP vendors focus on their applications base. Infor’s Performance Management solution, formerly a best-of-breed product (Geac/Comshare), has some traction independent of its diverse ERP applications installed base. However, Infor most often provides it as a cross- sell or upsell to complement its core applications. Lawson generally sells its budgeting and dashboarding products to its ERP base. The outlier in this category, Longview Solutions, operates as an independent unit focusing on larger customers, while its parent company, Exact Software, focuses on the small and medium-size business (SMB) ERP market. · Business intelligence vendors emphasize platforms and tools. SAS Institute is the only member of this group that offers a comprehensive set of BPS offerings. While the SAS offerings are well-integrated with one another, it is also the leading player in cost and profitability solutions as a discrete offering. The other three BI vendors listed — Actuate, Information Builders, and MicroStrategy — focus their BPS efforts on enterprise performance and strategy measurement, with less emphasis on the financial domain components. · BPS pure plays focus on market niches. Vendors in this category range from comprehensive BPS to point-solution providers, yet share a common strategy to differentiate themselves from © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 11 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals the larger market leaders. European-based Board International (Switzerland) and Tagetik (Italy) now seek growth in other markets, including the US. Clarity Systems has a strong budgeting and planning solution along with a differentiated external financial statement and regulatory product, Clarity FSR. Adaptive Planning and Host Analytics provide SaaS solutions in an historical on-premise market. PROPHIX Software offers a budgeting and performance management solution for SMBs. Specialist vendors in this bucket include Acorn Systems (cost and profitability) along with many others. Figure 5 BPS vendors By Type • Acorn Systems • Adaptive Planning • Board International • IBM Cognos • Actuate • Clarity Systems • Microsoft • Infor • Information Builders • Host Analytics • Oracle • Lawson Software • MicroStrategy • PROPHIX Software • SAP* • Longview Solutions† • SAS Institute • Tagetik Diversified ERP Business BPS technology intelligence pure plays leaders *Though primarily an ERP software vendor, SAP has substantial business intelligence (e.g., Business Objects) and middleware assets Longview Solutions is owned by Exact Software, an ERP software company, but continues to operate as an † independent BPS provider. Source: Forrester Research, Inc. 46571 © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 12 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals Figure 6 Guide To BPS vendors And Products Planning, Cost and budgeting, and Financial Strategy and profitability Vendor Key product(s) forecasting consolidation measurement management • Acorn Performance Acorn Systems • Acorn Price Analyzer • Actuate Performancesoft Views Actuate • Actuate Performancesoft Track Adaptive • Adaptive Planning 5.0 Planning Board • BOARD Management International Intelligence Toolkit • Clarity 6 Clarity Systems • Clarity FSR • Host Corporate Host Analytics Performance Management (CPM) • IBM Cognos 8 Planning IBM Cognos • IBM Cognos 8 Controller • IBM Cognos 8 BI • Infor Performance Infor Management (PM) • WebFOCUS Performance Metrics Manager (PMM) Information • WebFOCUS Performance Builders Management Framework (PMF) Source: Forrester Research, Inc. 46571 © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 13 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals Figure 6 Guide To BPS vendors And Products (Cont.) Planning, Cost and budgeting, and Financial Strategy and profitability Vendor Key product(s) forecasting consolidation measurement management • Lawson EPM (Enterprise Performance Management) Lawson Software • Lawson Budgeting & Planning • Khalix by Longview Longview Solutions Solutions • Longview 7 (future release) • Microsoft Office Microsoft PerformancePoint Server 2007 MicroStrategy • MicroStrategy Business Intelligence Platform • Oracle Hyperion Planning • Oracle Hyperion Financial Management (HFM) • Oracle Business Intelligence Oracle Enterprise Edition (OBIEE) • Oracle Hyperion Profitability and Cost Management • Oracle Crystal Ball • PROPHIX Performance Management PROPHIX Software • PROPHIX Budgeting and Reporting • SAP Business Planning and Consolidation (BPC) • SAP Strategy Management SAP • BusinessObjects Profitability and Cost Management • BusinessObjects Financial Consolidation Source: Forrester Research, Inc. 46571 © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 14 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals Figure 6 Guide To BPS vendors And Products (Cont.) Planning, Cost and budgeting, and Financial Strategy and profitability Vendor Key product(s) forecasting consolidation measurement management • SAS Strategic Performance Management • SAS Activity-Based SAS Institute Management • SAS Profitability Management • SAS Financial Management Tagetik • Tagetik 3.0 Source: Forrester Research, Inc. 46571 r E C O m m E n D AT i O n S LeARn FROM BeST PRACTICeS TO AVOID IMPLeMenTATIOn RISkS A large body of knowledge and experience has emerged from other successful performance management initiatives that can improve success and time to value. Some best practices include: · Use a burning platform that accelerates time-to-value. Successful business performance initiatives occur when a business imperative drives organizational commitment and a sense of urgency. The current economic climate provides ample impetus to improve planning and measurement processes and systems. Other types of burning platforms include regulatory changes, major acquisitions, company restructuring, and so on. · Look at the road ahead to drive performance. running the business with lagging indicators and historical accounting information leaves too much to chance. Companies should engineer performance processes that include forecasting and measurement of leading indicators to stay ahead of the competition. · Put monetary rewards behind performance measures at all levels of the organization. A performance management best practice is to put rewards in place to properly motivate people. These incentives need to be straightforward and transparent, as well as frequent enough (e.g., quarterly) to keep people engaged. · Begin with pilot projects to tune performance measures for the desired results. Performance systems need to evolve through internal experience and experimentation to produce the desired results. you should network with external peers and expert resources to understand successes and failures. © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 15 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals W H AT i T m E A n S MARkeT COnSOLIDATIOn LeAVeS THe DOOR OPen FOR InnOVATIOn The market events of the past few years leave us with four of the largest technology vendors on the planet — iBm, microsoft, Oracle, and SAP — in control of market share. While Oracle and SAP battle for supremacy in this space, microsoft has the highest potential to gain market share. With a newer solution set leveraging its microsoft Office franchise, microsoft will gain traction among organizations of various sizes, including large enterprises. iBm Cognos, meanwhile, has embarked on a road map to refresh some of its aging assets. yet, among these leading players, none have built their entire solution set from the ground up and each faces a unique set of challenges to integrate, innovate, or mature their product sets. Organizations desire less costly solutions that more closely match their needs. Potentially viable alternative choices include functional (e.g., planning and costing) and industry-specific point solutions, SaaS solutions, and simpler products targeted toward smaller organizations. Smaller BPS vendors that are: 1) technically innovative; 2) less costly to own; 3) quicker to deploy; and 4) focused on solving specific business problems, will continue to make their mark. SUPPLeMenTAL MATeRIAL Companies Interviewed For This Document Actuate Lawson Software Adaptive Planning Longview Solutions Board International Microsoft Clarity Systems MicroStrategy Host Analytics Oracle IBM Cognos SAP Infor SAS Institute Information Builders Tagetik © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • 16 Business Performance Solutions: Clash Of The Titans For Business Process & Applications Professionals enDnOTeS Forrester assessed 10 leading business performance solutions vendors across 83 criteria in a product 1 evaluation. Additional point-solution vendors not covered in this evaluation might be worth considering as well, depending on priorities and current capabilities. See the October 10, 2007, “The Forrester Wave™: Business Performance Solutions, Q4 2007” report. Metrics influence actions and decisions, whether used explicitly to influence behaviors or simply to report 2 results. Source: John R. Hauser and Gerald M. Katz, Metrics: You Are What You Measure, MIT Sloan School of Management, 1998. Employee performance solutions is the fastest growing product segment within HR and HCM applications, 3 with a forecasted 17% growth rate through 2011. See the January 7, 2008, “HR/HCM Applications 2008: Best-Of-Breed Solutions Make A Comeback” report. Performance management and measurement will top many priority lists, driven in part by a focus of 4 enterprises to drive risk management into business decisions. See the November 21, 2008, “Trends 2009: Financial Performance Management” report. SAP was faced with a rather complicated BPS road map as a result of the Business Objects acquisition. See 5 the April 1, 2008, “SAP Unveils Its Starting Lineup For Business Performance Solutions” report. © 2009, Forrester research, inc. reproduction Prohibited January 20, 2009
    • making leaders Successful Every Day Headquarters Research and Sales Offices Forrester Research, Inc. Israel Australia 400 Technology Square Japan Brazil Cambridge, MA 02139 USA Korea Canada Tel: +1 617.613.6000 The Netherlands Denmark Fax: +1 617.613.5000 Switzerland France Email: forrester@forrester.com United Kingdom Germany Nasdaq symbol: FORR United States Hong Kong www.forrester.com India For a complete list of worldwide locations, visit www.forrester.com/about. For information on hard-copy or electronic reprints, please contact Client Support at +1 866.367.7378, +1 617.613.5730, or clientsupport@forrester.com. We offer quantity discounts and special pricing for academic and nonprofit institutions. Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward- thinking advice to global leaders in business and technology. Forrester works with professionals in 19 key roles at major companies providing proprietary research, consumer insight, consulting, events, and peer-to-peer executive programs. For more than 25 years, Forrester has been making IT, marketing, and technology industry leaders successful every day. For more information, visit www.forrester.com. 46571