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Oracle falls below IBM and SAP in CPM systems matrix

While historically dominant leader Oracle has the latest CPM functionality in its portfolio, Nucleus Research says buyers aren't biting.

As the CFO role broadens to incorporate more strategic duties, it's fitting that the CPM systems CFOs depend on are also evolving. According to Nucleus Research's first-ever CPM Technology Value Matrix, CPM systems are entering a transformative period where functional boundaries are being pushed out, and the megavendors that have long ruled the market -- IBM, SAP and Oracle -- need to take note.

"They should definitely be paying attention to what's going on behind them," said Hyoun Park, principal analyst at the Boston-based research firm and author of the matrix. "There's a lot of innovation happening, [and] this market is not standing still the way it was for years. Those large vendors can't take anything for granted as all the new functionalities start coming in."

While all three megavendors were positioned in the leaders section of the matrix, Oracle, traditionally lauded as the dominant vendor for corporate performance management (CPM) systems, trailed behind IBM and SAP. Also, while these three vendors were the sole occupants of the leaders' quadrant in Gartner's 2013 Magic Quadrant for CPM Suites, two additional vendors broke into the top-right on Nucleus' report: Adaptive Planning and Infor.

As new business intelligence (BI), tax, disclosure and strategy management capabilities become enmeshed in CPM and bring its purpose closer to the term's true meaning, Park advised buyers to approach CPM system purchases with an eye toward differentiating features and ease of use.

BI and cloud rising in importance for CPM

Because CPM systems were built for finance users, its capabilities have typically been relegated to core finance functions such as budgeting, planning and forecasting, financial reporting and consolidation, and cost management. However, Park said business leaders have been requesting more visibility into financials over the past few years, so many CPM vendors have added BI capabilities -- a trend that he predicts will accelerate over time.

"There's been increased end-user demand for overall performance management ability -- [for] corporate performance as a phrase to be defined correctly rather than talking about it simply from a financial perspective," Park said. "So it's not just [about] understanding finance, but also head count, revenue [and] the various contributions that each product or effort provides to company performance. Because of that, companies now need to be able to see the numbers more easily, so we're seeing a trend of BI coming into traditional CPM."

The impact that cloud-based technology is having on the CPM systems market is reflected by Software as a Service (SaaS) vendor Adaptive Planning's placement in the leader's quadrant. While Park said he was surprised by this positioning for a native cloud vendor, he explained that the matrix methodology factored in ease of use as well as ease of deployment, which boosted Adaptive Planning's overall score. He also said the vendor's acquisition of BI vendor myDials in 2012 has enhanced the platform's reporting and analytics.

"Adaptive Planning is still a relatively small company, [and] in terms of pure market share they have a long way to go before they approach IBM, SAP and Oracle," Park said. "But as a solution that competes in the enterprise space and is proven to scale to thousands of users, I think we're going to increasingly see it and [other] cloud-based solutions come in, especially for core planning, but also for larger CPM projects."

In terms of finance executives' level of comfort about putting financial information in the cloud, Park said some of his interview subjects -- typically from small and midmarket organizations -- were embracing cloud-based financials, but others remained staunchly opposed.

Oracle trailing IBM and SAP in modern CPM adoption

Although the report notes that Oracle is still considered by vendors and users to be the predominant leader in the CPM systems market, adoption challenges caused it to rank below IBM and SAP, respectively.

"Oracle has functionality in all of the key areas of both traditional and modern CPM, especially with the integration of OBIEE [Oracle Business Intelligence Enterprise Edition] with Financial Management and ability to run Oracle Hyperion on Exalytics for in-memory performance," the report stated. "However, as profitability, strategy and disclosure have increasingly become important aspects of the CPM suite, Oracle has faced challenges in gaining adoption for the entirety of its CPM suite."

So what's causing this slow adoption? Park pointed to integration challenges.

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"Although Oracle does have all of the functionality in place, it's distributed over a dozen different applications, and Oracle is still building the road map to bring them together," he said. "For instance, Oracle has just put together the capability to integrate tax planning and financial planning, which would seem to be pretty basic, but there wasn't that bridge prior to very recently."

While Park said he expects Oracle's usability to increase "as connections mature," he noted that IBM and SAP have experienced greater adoption of their newer, non-finance-related CPM offerings. In fact, the report stated, "Several vendors profiled in the Value Matrix have demonstrated value-added wins for traditional Oracle customers seeking to augment PBF [planning, budgeting and forecasting] with additional functionality." Also, Oracle CPM implementation and support is typically more problematic compared with experiences of IBM or SAP customers, according to the report.

At the other end of the market, Park said smaller vendors are gaining market share as they develop differentiating features, such as Salient's ease of use, Exact-Longview's tax support, SAS' predictive analytics and Arcplan's specialized workflows. And this innovation is challenging megavendors to keep pace.

With this in mind, he discouraged buyers from solely considering CPM systems vendors in the top-right quadrant, and instead suggested evaluating a variety of products. "A lot of these companies have things they do very, very well," he said.

CPM buyers should look beyond core capabilities

Since the functions that have traditionally defined CPM should now be considered core capabilities, Park said buyers should instead focus on differentiating features when evaluating products. He listed three to watch out for in particular: ease of use, process mapping capabilities and the integration of financial and tax functions.

"A number of these solutions have become easy enough to use that they literally require no IT support in implementation and ongoing use," he said. "It's also important to look for a platform to support process mapping that is specific enough to match the company's own business process mapping standards. You can get very granular at this point, and they're often in a drag-and-drop interface, which makes it easy for a business user to create workflows."

In general, he encouraged CPM systems buyers to expand their view of the technology and the role it plays within an organization.

"Both end users and vendors need to have a bigger picture of what they want to do with CPM. It's not enough to say 'this covers our financial view' anymore -- [you] have to think about whether the applications you choose will be able to support strategic or risk-based visibility and see how they fit in with BI [and] other enterprise applications," he said. "A decade ago [CPM] would've been walled off in the financial silo of the organization, [but now] all of these considerations have to come into the CPM purchase."

Emma Snider is the associate site editor for Follow her on Twitter @emmajs24 and the site @SearchFinApps.

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