Back in the early 2000s when I was running marketing at Business Objects, Gartner’s then-lead BI analyst, Howard Dresner (known as the father of BI and the person who named the category) started pushing a notion called enterprise performance management (EPM). Back then, EPM meant the unification of BI and planning/budgeting.
The argument in favor of EPM made sense and was actually kind of cool: with BI you could ask any question, but BI never knew the correct answer. What did that mean?
It meant that BI tools were primarily tied to operational systems and could tell you the value of sales/salesrep for any quarter in any region. The problem was that BI didn’t know what the answer was supposed to be. BI knew the cost of everything and the value of nothing.
The solution was tie to BI to financial systems, which were full of targets and thus could allow us not just to know the value of any given metric, but what the value of that metric should be.
It sounded great and I bought in. More importantly, so did the category:
- Cognos acquired Adaytum and later Applix/TM1
- BusinessObjects acquired SRC and Cartesis and was then acquired by SAP, who had acquired Outlooksoft
- Hyperion acquired Brio (the same idea, but in reverse with the financial planning vendor acquiring the BI vendor)
Then what happened? In my opinion, pretty much nothing. Sure Hyperion reps could increase deal sizes by trying to drop Brio licenses across the whole financial department, as opposed to just FP&A. Cognos could cross-sell Adaytum, with the help of an overlay sales force.
But did integration happen? No. BI and financial planning/budgeting consolidated, but they never converged. This is interesting because it’s rare. For example, by contrast, CRM really happened. SFA vendors didn’t just acquire customer service vendors and marketing vendors — the three applications came together to create one category.
That didn’t happen with EPM. You could always ask someone who worked at Hyperion my favorite question, “which side did you work on?” and you always heard either, “oh, the BI side,” or “oh, the finance side.” You never, ever got asked to clarify the question.
Over time, EPM came to mean financial planning, budgeting, and consolidation (along with associated reporting/analytics) — and not the unification of BI and financial planning.
What did this prove? You can put the two categories under one roof via consolidation, but the actual markets are oil-and-water and don’t mix together well. Why? Two reasons:
- BI is a platform sale, EPM is an applications sale
- BI is sold to IT, EPM is sold to the finance department
So other than selling to a completely different buyer with a completely different value proposition, they make excellent candidates for integration! Put concretely, if you can’t talk about inter-company eliminations, AVB reports, AOPs, topside journal entries, long-range models, FX rate handling, and legal entities, then you can’t even start to sell EPM. I marketed BI for 9 years and we talked a totally different language: aggregate awareness, multi-pass SQL, slow-changing dimensions, and star schemas. The two languages are not totally unrelated. They are nevertheless different.
Despite this history, many vendors still seem hell bent on mixing EPM water with BI oil. One cloud EPM vendor positioned themselves for years as a leader in “BI and CPM” somehow thinking the rock-bottom acquisition of a cheap scorecarding tool made them a player in the $15B BI market.
To be clear, I view EPM and BI as cousins. Yes, in EPM we make scorecards, dashboards, and reports. Yes, in EPM we do multi-dimensional modeling and analysis. No doubt. But we do it for finance departments, we tie our planning/budgeting systems to the general ledger and we are focused on both financial outcomes and financial reports. Yes, we also care about integrating models across the organization — sales, marketing, services, and operations. But we are not trying to sell generic infrastructure for making reports and visualizations across the enterprise.
Put simply, in EPM we use BI technologies to build financial applications that tie together the enterprise on behalf of the finance department.
Surprisingly, SAP didn’t get the consolidation-not-convergence memo. This is somewhat amazing given that SAP is a strong player in both BI and EPM, but somehow hasn’t seemed to notice not only that the two markets never converged but also that there is a very good reason for that. They are still tilting at windmills fighting to integrate two categories not destined for integration with a vintage-2002 message.
Here’s the press release:
WALLDORF — SAP SE (NYSE: SAP) today unveils the SAP Cloud for Analytics solution, a planned software as a service (SaaS) offering that aims to bring all analytics capabilities into one solution for an unparalleled user experience (UX).
Built natively on SAP HANA Cloud Platform, this high-performing, real-time solution plans to be embedded with existing SAP solutions and intends to connect to cloud and on-premise data to deliver planning, predictive and business intelligence (BI) capabilities in one analytics experience. The intent is for organizations to use this one solution to enable their employees to track performance, analyze trends, predict and collaborate to make informed decisions and improve business outcomes.
Note, that in addition to my strategic concerns, I have a few tactical ones as well:
- This is a futures announcement without a date. The service “planned.” The “planned benefits” are stated. The only thing I can’t find in the plan is an availability date.
- Pricing hasn’t been announced either. So other than knowing what it costs and when it will be available, it was an informative announcement.
- While SAP is claiming that it’s previously announced SAP Cloud for Planning is included in the new offering, I have heard rumors on the street that SAP Cloud for Planning is actually being discontinued and customers will be moved to the new offering. At this point, I’m not sure which is the case.
In the end, I’m not trying to beat on SAP in general. I don’t love the Hana branding strategy, that’s true, but Hana itself (i.e., columnar, in-memory database) is a good idea. I have no problems with SAP BI’s products — heck, my fingerprints still remain lightly on a few of them. In EPM, we compete with SAP, so my agenda there is obvious.
But the thing I object to, the tilting at windmills, is that they are still banging the unify EPM and BI drum. SAP’s new analytics may eventually end up a reasonable or good BI solution. But if they’re betting serious chips on unifying BI and EPM it’s misguided.