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Key considerations for evaluating CPM software and CPM vendors

Get advice on managing the process of purchasing corporate performance management software, including financial performance management tools, and evaluating CPM software vendors.

Corporate performance management (CPM) software usually is first purchased to address tactical problems – for instance, the need for better and faster budgeting or financial reporting in the case of financial performance management tools.

But forecasting, planning and budgeting software and other CPM applications have evolved significantly over the years, gaining new features and functionality. Now, even smaller corporate performance management vendors offer suites of related products, in addition to the veritable CPM hotels available from IBM, Oracle Corp. and SAP AG.

Most of the CPM software on the market is flexible enough to meet the needs of various users, according to industry analysts. But they cited some key technical criteria and questions for vendors that prospective buyers can use to streamline the software selection process and ensure that their organizations get CPM tools that meet business needs.

As with other types of corporate applications, one of the biggest considerations in purchasing CPM software is whether to go with a single vendor or adopt a best-of-breed strategy. Consulting firm Gartner Inc., for one, recommends that companies stay within the product line of one CPM vendor whenever possible.

Best of breed vs. one corporate performance management software vendor
“We argue that the CPM suite should be consistent, that you use the same vendors for finance that you use for planning and that you have a consistent stack,” said John Van Decker, a CPM and financial management systems analyst at Gartner. He acknowledged that best-of-breed point products can work for some companies but said that such businesses need to be aware upfront of the possible ramifications of their choices, including any synergies between applications that they might gain or miss out on in the future depending on what they decide.

On a very practical level, Ventana Research analyst Robert Kugel said companies should consider their size and buy appropriate software. “There’s a stratification here, and you should be looking [for applications] within your affinity group,” he said. “If you’re large, you shouldn’t be looking at midsize [software] just because it’s cheaper – because it won’t get you far enough along.”

The next point to consider is the budget for your CPM system, according to Kugel. There’s little sense in overspending on CPM software and then finding that the benefits you gain from the technology won’t deliver a return on the investment, he said.

Another consideration is making sure that the software you buy is a good fit for business users, not just the IT department.

“Some of the least successful implementations I’ve seen are when IT folks choose the right solution for IT, but then nobody in the business wants to use it because it doesn’t have what they need,” Kugel said. “You need to have the [required] IT capabilities to deliver the business functionality, but at the end of the day, this isn’t going to work if the applications aren’t right for the business.”

Continuing with the business perspective, analysts said that a good CPM system should provide useful graphics and a customizable set of user interface features that let corporate executives, business managers and other employees format data in ways that help them to understand it – for instance, through dashboards, charts or icons. Data integration capabilities also are important, especially for organizations that are looking to pull data from various business systems into their financial performance management applications and other CPM tools.

CPM software vendor ideal: strong market position, clear strategy
CPM software can represent a significant investment, so CPM vendors that have a solid market position and a clearly articulated product development strategy and roadmap might be the safest choice from a financial standpoint. That doesn’t necessarily narrow the field much, though: Gartner’s latest CPM Magic Quadrant report lists a total of 13 CPM software vendors, and between them Gartner and Forrester Research Inc. provide coverage on more than a dozen other vendors to their clients.

[A]t the end of the day, this isn’t going to work if the applications aren’t right for the business.

Robert Kugel, Ventana Research

No surprise here: one of the most important and valuable techniques for whittling down a shortlist of CPM vendors is talking to reference customers – including users who felt some pain during the deployment process. They should be able to provide some valuable insight into how their software vendors helped them navigate through the implementation problems. 

Looking in the mirror is another good idea. In addition to evaluating CPM vendors and their software capabilities, Gartner recommends that prospective buyers engage in some self-examination to make sure they’re ready for CPM from a cultural and business maturity standpoint.

Van Decker said that before making any software purchasing decisions, organizations need to decide on the CPM metrics that they plan to track. “This isn’t just about buying technology,” he noted. “The company should have a readiness for it, with performance management processes defined. If they aren’t defined, you probably don’t understand your requirements.”

Gartner analyst Neil Chandler added that a successful CPM software implementation “is as much about the people and processes [within a company] as it is about the applications the vendors sell.”

Chris Maxcer is a freelance writer.

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