Category Archives: CPM

The New Gartner 2018 Magic Quadrants for Cloud Financial Planning & Analysis and Cloud Financial Close Solutions

If all you’re looking for is the free download link, let’s cut to the chase:  here’s where you can download the new 2018 Gartner Magic Quadrant for Financial Planning and Analysis Solutions and the new 2018 Gartner Magic Quadrant for Cloud Financial Close Solutions.  These MQs are written jointly by John Van Decker and Chris Iervolino (with Chris as primary author on the first and John as primary author on the second).  Both are deep experts in the category with decades of experience.

Overall, I can say that at Host Analytics, we are honored to a leader in both MQs again this year.  We are also honored to be the only cloud pure-play vendor to be a leader in both MQs and we believe that speaks volumes about the depth and breadth of EPM functionality that we bring to the cloud.

So, if all you wanted was the links, thanks for visiting.  If, however, you’re looking for some Kellblog editorial on these MQs, then please continue on.

Whither CPM?
The first thing the astute reader will notice is that the category name, which Gartner formerly referred to as corporate performance management (CPM), and which others often referred to as enterprise performance management (EPM), is entirely missing from these MQs.  That’s no accident.  Gartner decided last fall to move away from CPM as a uber category descriptor in favor of referring more directly to the two related, but pretty different, categories beneath it.  Thus, in the future you won’t be hearing “CPM” from Gartner anymore, though I know that some vendors — including Host Analytics — will continue to use EPM/CPM until we can find a more suitable capstone name for the category.

Personally, I’m in favor of this move for two simple reasons.

  • CPM was a forced, analyst-driven category in the first place, dating back to Howard Dresner’s predictions that financial planning/budgeting would converge with business intelligence.  While Howard published the research that launched a thousand ships in terms of BI and financial planning industry consolidation (e.g., Cognos/Adaytum, BusinessObjects/SRC/Cartesis, Hyperion/Brio), the actual software itself never converged.  CPM never became like CRM — a true convergence of sales force automation (SFA) and contact center.  In each case, the two companies could be put under one roof, but they sold fundamentally different value propositions to very different buyers and thus never came together as one.
  • In accordance with the prior point, few customers actually refer to the category by CPM/EPM.  They say things much more akin to “financial planning” and “consolidation and close management.”  Since I like referring to things in the words that customers use, I am again in favor of this change.

It does, however, create one problem — Gartner has basically punted on trying to name a capstone category to include vendors who sell both financial planning and financial consolidation software.  Since we at Host Analytics think that’s important, and since we believe there are key advantages to buying both from the same vendor, we’d prefer if there were a single, standard capstone term.  If it were easy, I suppose a name would have already emerged [1].

How Not To Use Magic Quadrants
While they are Gartner’s flagship deliverable, magic quadrants (MQs) can generate a lot of confusion.  MQs don’t tell you which vendor is “best” because there is no universal best in any category.  MQs don’t tell you which vendor to pick to solve your problem because different solutions are designed around meeting different requirements.  MQs don’t predict the future of vendors — last-year’s movement vectors rarely predict this year’s positions.  And the folks I know at Gartner generally strongly dislike vector analysis of MQs because they view vendor placement as relative to each other at any moment in time [2].

Many things that customers seem to want from Gartner MQs are actually delivered by Gartner’s Critical Capabilities reports which get less attention because they don’t produce a simple, dramatic 2×2 output, but which are far better suited for determine the suitability of different products to different use-cases.

How To Use A Gartner Magic Quadrant?
In my experience after 25+ in enterprise software, I would use MQs for their overall purpose:  to group vendors into 4 different bucketsleaders, challengers, visionaries, and niche players.  That’s it.  If you want to know who the leaders are in a category, look top right.  If you want to know who the visionaries are, look bottom right.  You want to know which big companies are putting resources into the category but who thus far are lacking strategy/vision, then look top-left at the challengers quadrant.

But should you, in my humble opinion, get particularly excited about millimeter differences on either axes?  No.  Why?  Because what drives those deltas may have little, none, or in fact a counter-correlation to your situation.  In my experience, the analysts pay a lot of attention to the quadrants in which vendors end up in [2] so quadrant-placement, I’d say, is quite closely watched by the analysts.  Dot-placement, while closely watched by vendors, save for dramatic differences, doesn’t change much in the real world.  After all, they are called the magic quadrants, not the magic dots.

All that said, let me wind up with some observations on the MQs themselves.

Quick Thoughts on the 2018 Cloud FP&A Solutions MQ
While the MQs were published at the end of July 2018, they were based on information about the vendors gathered in and largely about 2017.  While there is always some phase-lag between the end of data collection and the publication data, this year it was rather unusually long — meaning that a lot may have changed in the market in the first half of 2018 that customers should be aware of. For that reason, if you’re a Gartner customer and using either the MQs or critical capabilities reports that accompany them, you should probably setup an appointment to call the analysts to ensure you’re working off the latest data.

Here are some of my quick thoughts the Cloud FP&A Solutions magic quadrant:

  • Gartner says the FP&A market is accelerating its shift from on-premises cloud.  I agree.
  • Gartner allows three types of “cloud” vendors into this (and the other) MQ:  cloud-only vendors, on-premise vendors with new built-for-the-cloud solutions, and on-premises vendors who allow their software to be run hosted on a third-party cloud platform.  While I understand their need to be inclusive, I think this is pretty broad — the total cost of ownership, cash flows, and incentives are quite different between pure cloud vendors and hosted on-premises solutions.  Caveat emptor.
  • To qualify for the MQ vendors must support at least two of the four following components of FP&A:  planning/budgeting, integrated financial planning, forecasting/modeling, management/performance reporting.  Thus the MQ is not terribly homogeneous in terms of vendor profile and use-cases.
  • For the second year in a row, (1) Host is a leader in this MQ and (2) is the only cloud pure-play vendor who is a leader in both.  We think this says a lot about the breadth and depth of our product line.
  • Customer references for Host cited ease of use, price, and solution flexibility as top three purchasing criteria.  We think this very much represents our philosophy of complex EPM made easy.

Quick Thoughts on the 2018 Cloud Financial Close Solutions MQ
Here are some of my quick thoughts on the Cloud Financial Close Solutions magic quadrant:

  • Gartner says that in the past two years the financial close market has shifted from mature on-premises to cloud solutions.  I agree.
  • While Gartner again allowed all three types of cloud vendors in this MQ, I believe some of the vendors in this MQ do just-enough, just-cloud-enough business to clear the bar, but are fundamentally still offering on-premise wolves in cloud sheep’s clothing.  Customers should look to things like total cost of ownership, upgrade frequency, and upgrade phase lags in order to flesh out real vs. fake cloud offerings.
  • This MQ is more of a mixed bag than the FP&A MQ or, for that matter, most Gartner MQs.  In general, MQs plot substitutes against each other — each dot on an MQ usually represents a vendor who does basically the same thing.  This is not true for the Cloud Financial Close (CFC) MQ — e.g., Workiva is a disclosure management vendor (and a partner of Host Analytics).  However, they do not offer financial consolidation software, as does say Host Analytics or Oracle.
  • Because the scope of this MQ is broad and both general and specialist vendors are included, customers should either call the Gartner for help (if they are Gartner customers) or just be mindful of the mixing and segmentation — e.g., Floqast (in SMB and MM) and Blackline (in enterprise) both do account reconciliation, but they are naturally segmented by customer size (and both are partners of Host, which does financial consolidation but not account reconciliation).
  • Net:  while I love that the analysts are willing to put different types of close-related, office-of-the-CFO-oriented vendors on the same MQ, it does require more than the usual amount of mindfulness in interpreting it.

Conclusion
Finally, if you want to analyze the source documents yourself, you can use the following link to download both the 2018 Gartner Magic Quadrant for Financial Planning and Analysis and Consolidation and Close Management.

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Notes

[1] For Gartner, this is likely more than a semantic issue.  They are pretty strong believers in a “post-modern” ERP vision which eschews the idea of a monolithic application that includes all services, in favor of using and integrating a series of cloud-based services.  Since we are also huge believers in integrating best-of-breed cloud services, it’s hard for us to take too much issue with that.  So we’ll simply have to clearly articulate the advantages of using Host Planning and Host Consolidations together — from our viewpoint, two best-of-breed cloud services that happen to come from a single vendor.

[2] And not something done against absolute scales where you can track movement over time.  See, for example, the two explicit disclaimers in the FP&A MQ:

Capture

[3] I’m also a believer in a slightly more esoteric theory which says:  given that the Gartner dot-placement algorithm seems to try very hard to layout dots in a 45-degree-tilted football shaped pattern, it is always interesting to examine who, how, and why someone ends up outside that football.

EPM, Project Orion, and the Beginner’s Mind

I’ll always be thankful for my time at Salesforce both because I met so many amazing people and because I learned so much.  I learned about the importance of Trust in a SaaS company (and was drilled in the mantra, “nothing is more important than the Trust of our customers.”)  And I learned about shoshin, the Zen concept of the Beginner’s Mind.

The Beginner’s Mind
It’s not unusual when working at Salesforce to hear about Zen concepts or get an email reply from Marc containing only a Zen proverb.  But of all the concepts I learned about, the most powerful and elusive was shoshin, a concept that Benioff says he adopted from Steve Jobs.  Per Wikipedia:

Shoshin (初心) is a word from Zen Buddhism meaning “Beginner’s Mind.” It refers to having an attitude of openness, eagerness, and lack of preconceptions when studying a subject, even when studying at an advanced level, just as a beginner would.

Shoshin is powerful because it enables you to take a fresh look at an old problem.  Shoshin is elusive, however, because it requires you to step outside your paradigm — the filters through which you see the world — which perhaps sounds easy, but can be incredibly difficult.  In fact, in what I all the paradox of knowledge, the more you know about something the more difficult it is to break out of your paradigm, to get outside the metaphorical box.

As an example of this, our head of products, Sanjay Vyas, recently went to a silent, ten-day vipassana meditation retreat.  Vipassana means “to see things as they really are”  and is a technique that has been passed down from the Buddha by an unbroken chain of teachers to the present day.  At the retreat, the first phase is three days spent simply trying to calm the noise in your mind.  Only then, after three days of silent meditation, are you ready to start to attempt to see things as they really are.  Such is the difficulty in breaking free from a paradigm.

The Problem We Approached With a Beginner’s Mind
What problem did we try to see with a Beginner’s Mind at Host Analytics?  End-user planning, budgeting, and forecasting (three key pieces of enterprise performance management, also known as EPM).  Why did we do it?  Because despite decades of great success within finance organizations, we believe that EPM has under-penetrated the overall market.

Far too many people rely solely on Excel for planning/budgeting and far too many EPM end-users build budgets in Excel and mail them to finance as opposed to using the EPM system.  The same is true for reporting, where far too often users drop out of the EPM system and into Excel to make reports and charts.  (This is less true of Host users due to our strong reporting, but the trend remains true at an industry level.)

While as EPMers, we take great pride in our category and, at Host, in our ability to move enterprise-class EPM to the cloud, we must recognize that at some level EPM has failed to deliver against its broad vision of accountability and empowerment.  To get to the bottom of this, as Clayton Christensen has often observed, you can’t just talk to your customers to understand your market, you need to understand non-consumers as well.  All those Excel-only or primarily-Excel users are Christensen’s non-consumers, so we decided to talk to them.  Here’s an example of what we heard.

“I hate budgeting.  They made me attend the meeting to look at these tools.  I don’t want to use any of them.”  — Chief Legal Officer

We heard this over and over.  The average business user would seemingly prefer a root canal to working on the budget.  Yet we knew these same business users were passionate about metrics, empowerment, accountability, and performance.  So where had the whole category gone wrong?  Thus was born Project Orion.

By Finance For Finance
We realized that for forty years EPM has been designed by finance for finance (or even more specifically, by FP&A for FP&A).  EPM vendors did a great job of listening to EPM customers.  And EPM customers, particularly EPM buyers, often had job titles like Vice President of Financial Planning & Analysis (FP&A).  These were the people who selected the tools.  These were the people who bought the tools.  But, these weren’t always the people who used the tools.  An important part of EPM is to roll it out broadly across an organization, meaning to put the tool into the hands of business end-users, budget owners, in all the various departments.

The Perils of “Configuration” to Dumb Down the Interface
The universal answer to the end-user question was dumb it down.  Configure it.  Take the product that was built for a heavily analytical, highly skilled, finance professional — and FP&A people are whip smart — and dumb down the interface for a business end-user.  Hide some menu items.  Remove some toolbar buttons.  Take away some tabs.

That was the conventional wisdom.  Take a product built for one person and configure it for use by another.  Now some EPM vendors were better than others at this bluff, some had slicker interfaces that would be relatively more appealing than others.  But amazingly, nobody ever said,  “wait a minute, what if we designed the product for people who actually used it?

Thank to shoshin, that’s exactly what we did with Project Orion at Host Analytics.

Task-Oriented Design
Instead of starting with what we had, a template-oriented product built for finance people, and a desire to twist/configure into something else, we started with a blank sheet.  We asked business end-users what they wanted to do with an EPM product.  Those end-users gave us a three-part answer:

  • We want to be able to quickly figure out where we stand relative to the plan.
  • We want help in determining where we are going to land on the current quarter — and to optimize that result.  (Not an easy problem, mind you.)
  • We want to get the next period planned in line with objectives and targets.

And we want to do all of the above quickly and easily because, much as we love this stuff (and we don’t), we’ve got a business to run.  This idea, what we came to call the stand / land / planned message, became the center of Orion design.

How We Knew We Were Onto Something
We noticed quickly that people had strong reactions to Orion, which typically fell into one of two types:

  • Reaction 1:  “Holy Cow, why didn’t I think of that?  It’s kind of obvious in 20/20 hindsight.”
  • Reaction 2:  “That’s not needed.  You just need to configure your way out of the problem.”

In the early days, we got a lot of reaction 2 — particularly from our internal EPM experts, who were somewhat blinded by the paradox of knowledge.  The internal resistance was, at times, intense.  But that resistance told me that we were onto something.  We were challenging the conventional wisdom in a way that could lead to a major breakthrough.  And the more we asked people outside Host, and the more we showed Orion to business end-users, the more convinced we were that we had made such a breakthrough.

The same chief legal officer who said “I hate budgeting” above, said this:

“When I look at Project Orion, it’s clear that you are the only folks thinking about me.  I could and would use this tool.” — Chief Legal Officer after seeing Orion.

Tips on Adopting a Beginner’s Mind
We’re launching Project Orion today and proud both of the software we built and how we came to build it.  We believe Orion is a breakthrough product that is going to change the EPM market.  All because we looked at an age-old problem in EPM with a Beginner’s Mind.

I’ll finish the post with some tips on how to take a shoshin approach that we learned along our journey — and which happily don’t involve 10 days of silent meditation.

  • Put a mix of veterans and neophytes on the project.  This will reduce the paradox of knowledge and naturally bring in some fresh eyes.
  • Confront tough facts.  The data says lots of people still use only or primarily Excel despite 40 years of EPM.  That’s a fact.  The question is why?
  • Challenge the team to document hidden assumptions.  Configuration as the solution to the end-user problem was one such huge assumption.  You can only go outside the box when you know its edges.
  •  Talk to non-consumers.  Talking to customers is great, but it can create an echo chamber.  Talk to non-consumers, too, particularly when fishing for breakthroughs, and ask them why they have not purchased in the product category.
  • Embrace resistance.  View resistance as a good sign, as a sign that you’re changing something big, and not just as a yellow flag.
  • Test early and often.  Go back to the non-consumers you interviewed and ask if your prototype would change their mind.  Iterate in response.

 

 

Is IBM Getting Out of Enterprise Performance Management?

I noticed that IBM last week sold off several EPM products — IBM Cognos Disclosure Management (CDM), IBM Cognos Financial Statement Reporting (FSR), and IBM Clarity 7 products — to a company called Certent.

This, combined with a pretty weak performance in Gartner’s recent financial and strategic CPM magic quadrants — where IBM landed as Visionary and one and a Challenger in the other, and  a Leader in neither — got me wondering about IBM’s commitment to EPM as a category going forward.  Could Planning or TM1 be next?

Moreover, it wasn’t just the new Gartner magic quadrants where IBM didn’t fare well.  In the Dresner Wisdom of Crowds market study, IBM was bottom-right in the Customer Experience model and was the only vendor entirely left out of (i.e., “outside the magnifying glass”) the vendor credibility model.  And IBM’s ring in the spider chart seems to gotten worse, not better, in 2017 over 2016.

Yes, we all know IBM is quite busy re-branding everything that’s not nailed down Watson, but could they be backing off EPM?

Which got me wondering, as I surfed around IBM’s website, why some products appeared to be first-class “products” while others were found under “marketplace.”  Why is DB2 under analytics products while TM1 is under marketplace?

db2 v tm1

Maybe it’s nothing, but I decided to check around a bit.  My friends in the know seem to believe that IBM remains committed to EPM, but that they view Clarity as a legacy product and were tired of getting beaten by Workiva in disclosure management.  That is, they saw it as a desire to focus more on planning and consolidation and as well things like compensation management.

Me, I’m not so sure.  When companies start pruning in an area sometimes they keep pruning.  And, in general, we don’t see them that much in the marketplace — particularly when you think of the powerhouse that Cognos was back in the day.  And, they don’t seem to be doing that well.  And, Watson is the big future focus.  So, file this under rumor and speculation, but watch this space.

The New 2017 Gartner Magic Quadrants for Cloud Strategic CPM (SCPM) and Cloud Financial CPM (FCPM) – How to Download; A Few Thoughts

For some odd reason, I always think of this scene — The New Phone Book’s Here – from an old Steve Martin comedy whenever Gartner rolls out their new Magic Quadrants (MQ) for corporate performance management (CPM). It’s probably because all of the excitement they generate.

Last year, Gartner researchers John Van Decker and Chris Iervolino kept that excitement up by making the provocative move of splitting the CPM quadrant in two — strategic CPM (SCPM) and financial CPM (FCPM). Never complacent, this year they stirred things up again by inserting the word “cloud” before the category name for each; we’ll discuss the ramifications of that in a minute.

Free Download of 2017 CPM Magic Quadrants

But first, let me provide some links where you can download the new FCPM and SCPM magic quadrants:

Significance of the New 2017 FPCM and SCPM Magic Quadrants

The biggest change this year is the insertion of the word “cloud” in the title of the magic quadrants.  This perhaps seemingly small change, like a butterfly effect, results in an entirely new world order where two of the three megavendors in the category (i.e., IBM, SAP) get displaced from market leadership due to the lack of the credibility and/or sophistication of their cloud offerings.

For example:

  • In the strategic CPM quadrant, IBM is relegated to the Visionary quadrant (bottom right) and SAP does not even make the cut.
  • In the financial CPM quadrant, IBM is relegated to the Challenger quadrant (top left) and SAP again does not even make the cut.

Well, I suppose one might then ask, well if IBM and SAP do poorly in the cloud financial and strategic CPM magic quadrants, then how do they do in the “regular” ones?

To which the answer is, there aren’t any “regular” ones; they only made cloud ones.  That’s the point.

So I view this as the mainstreaming of cloud in EPM [1].  Gartner is effectively saying a few things:

  • Who cares how much maintenance fees a vendor derives from legacy products?
  • The size of a vendor’s legacy base is independent of its position for the future.
  • The cloud is now the norm in CPM product selection, so it’s uninteresting to even produce a non-cloud MQ for CPM. The only CPM MQs are the cloud ones.

While I have plenty of beefs with Oracle as a prospective business partner — and nearly as many with their cloud EPM offerings — to their credit, they have been making an effort at cloud EPM while IBM and SAP seem to have somehow been caught off-guard, at least from an EPM perspective.

(Some of Oracle’s overall cloud revenue success is likely cloudwashing though they settled a related lawsuit with the whistleblower so we’ll never know the details.)

Unlikely Bedfellows:  Only Two Vendors are Leaders in Both FCPM and SCPM Magic Quadrants

This creates the rather odd situation where there are only two vendors in the Leaders section of both the financial and strategic CPM magic quadrants:  Host Analytics and Oracle.  That means only two vendors can provide the depth and breadth of products in the cloud to qualify for the Leaders quadrant in both the FCPM and SCPM MQ.

I know who I’d rather buy from.

In my view, Host Analytics has a more complete, mature, and proven product line – we’ve been at this a lot longer than they have — and, well, oligopolists aren’t really famous for their customer success and solutions orientation.  More infamous, in fact.  See the section of the FCPM report where it says Oracle ranks in the “bottom 25% of vendors in this MQ on ‘overall satisfaction with vendor.’”

Or how an Oracle alumni once defined “solution selling” for me:

Your problem is you are out of compliance with the license agreement and we’re going to shut down the system.  The solution is to give us money.

Nice.

For more editorial, you can read John O’Rourke’s post on the Host Analytics corporate blog.

Download the 2017 FCPM and SCPM Magic Quadrants

Or you can download the new 2017 Gartner CPM MQs here.

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Notes:

[1] Gartner refers to the category as corporate performance management (CPM).  I generally refer to it as enterprise performance management (EPM), reflecting the fact that EPM software is useful not only for corporations, but other forms of organization such as not-for-profit, partnerships, government, etc.  That difference aside, I generally view EPM and CPM as synonyms.