See Clear Through CPM Confusion

By Sam Sliman
President, Optimal Solutions Integration, Inc

According to research firm Gartner, the market for corporate performance management (CPM) solutions took off in 2006, growing 20.2% to more than $1.5 billion. Gartner predicts that CPM will remain hot over the next several years, sustaining a CAGR of 14.4% through 2011, at which time the market will top $3 billion.

Hype doesn’t drive markets over the long haul - only meaningful business results can do that. CPM is sizzling today for good reason. Properly delivered, CPM solutions enable senior managers to increase the speed and accuracy of budgeting and forecasting; to formulate strategy and drive its application throughout the company; to evaluate the efficacy of such strategies in real time through key performance metrics; to consolidate financial, legal and managerial reporting for global multi-language, multi-currency operations; to perform forward-looking analysis on data and business planning; and of course, to mitigate risk and ensure regulatory compliance.

SAP has been very active, particularly over the past several years, building, buying and evolving its CPM offering. This recent spate of activity has brought with it a number of changes—in terms of both product nomenclature and underlying technology. These changes have occasioned considerable confusion among SAP customers. CIOs facing mounting C-level pressure to deliver high-impact CPM tools must weigh immediate needs against the importance of protecting existing technology investments. This, coupled with SAP’s shifting performance management product lineup, has left many hesitant to take their first (or next) CPM step.

Source of confusion: What’s in a name?

By now most SAP customers realize that SAP has scuttled the CPM nomenclature. In its place are new product suite names such as Financial Planning Management (FPM) and Enterprise Planning Management (EPM). On top of this, SAP Strategic Enterprise Management (SEM), the company’s established offering in the performance management arena, is alive and well and actively in use among SAP customers, as are a slew of related, battle-tested SAP applications such as Business Planning Simulation (BPS), Consolidation Planning (CPS) and Integration Planning (IP), among others.

And we can’t leave out the inevitable overlap of SAP’s Governance Risk and Compliance (GRC) and Business Intelligence (BI) solutions have with CPM. For example, the recent acquisition of Business Objects, while better known for its business intelligence platform, does bring some point solutions in the CPM space that SAP intends to keep and nurture within its CPM solution ecosystem. Understandably, this thickening of the performance management acronym soup does not make it easier for CIOs to pull the trigger on a strategic performance management initiative.

Source of confusion: Tuck which technology in where?

SAP’s recent acquisitions on the CPM front contribute further to the confusion surrounding the company’s performance management roadmap, particularly as it relates to underlying technology. SAP’s purchase of Business Objects brings with it a host of new BI tools and technologies that SAP is rapidly incorporating into its various performance management solutions, most notably FPM and GRC. Smaller SAP acquisitions -- ‘tuck-in’ buys as SAP calls them -- add yet more technology, capability and, yes, confusion to the SAP performance management mix. There’s Pilot Software (2007) for strategy management, OutlookSoft (2007) for consolidated scorecard planning and budgeting, Acorn Systems (2007 re-seller agreement) for profitability management, and Virsa Systems (2006) for compliance software.

While each of these tuck-ins add a piece of valuable new technology and capability to SAP’s performance management offerings, it cannot be denied that each also adds a touch more confusion to the SAP performance management equation, and a tad more anxiety to CIOs struggling to wrap their minds around it.

See clear through CPM confusion

First, it is important to understand that SAP’s recent activity with regards to its performance management offerings should by no means be interpreted as the company scrambling to bring a new, half-baked performance management solution to market, or simply trying to cash in on the latest software spending craze.

SAP has solidly been in the performance management space since 1998 when it introduced its integrated set of R/3-based Strategic Enterprise Management (SEM) applications. It also is noteworthy that SAP defined its first performance management offering not in terms of the underlying technology, but rather in terms of the specific function and business value these applications were designed to deliver:

“Applications that take cost-based and profit-based management to the next level by providing a total information system that helps managers make decisions that enhance the long-term value of a corporation by providing the right information at the right time.”

To be sure, much has changed since SAP launched SEM. From a technology perspective, this change is perhaps most evident in SAP’s transition to the SOA-ready NetWeaver platform on the backend and to a Microsoft Office driven usability paradigm on the front end. The many recent acquisitions SAP has made, large and small, also alter the technology landscape. No doubt more technology changes will surface over the next several years as SAP moves further down the enterprise SOA path and continues to rationalize acquired product portfolios.

What hasn’t changed, however, is SAP’s customer-centric, value-driven vision for its performance management offeringsfrom the new FPM and EPM solutions to the tried and true SAP SEM. It is not incidental that, as was the case with its first foray into performance management, SAP’s focus with its new performance management products remains sharply on the business value they deliver, not the underlying technology:

SAP FPM:

“Delivering deep business insight based on a holistic view of the enterprise, this package addresses the business challenges facing the corporate finance office and operational decision makers throughout the organization.”

SAP EPM:

“Unifying the full range of financial and operational processes in a single stack, arming finance professionals with capabilities such as strategy, profitability, cost and planning management.”

SAP SEM

“End-to-end ERP software capabilities to support the entire performance management life cycle, including consolidated financial reporting, planning budgeting and forecasting, coporate performance management and scorecards, and risk management.”

So what’s the takeaway for CIOs mired in CPM confusion?

Trust in SAP’s clarity of vision. Don’t focus exclusively on underlying technology. It is sure to change as the performance management market continues to mature. And don’t stay irrationally wedded to the latest catchy acronym, as this, too, is sure to change. Focus instead on your company’s unique, most pressing performance management needs.

Truth be told, there are numerous, iterative paths to performance management excellence. Once you have identified and can clearly articulate your company’s specific performance management goals, tap seasoned SAP consults to help you map out a performance management technology roadmap that is right for your organization—one that delivers value today, protects yesterday’s technology investments, and holds open the door for tomorrow’s performance management full potential.