EPM initiatives key priority for enterprise heads

Eric Klein, John Hagerty

Enterprise Performance Management (EPM) spending is on the rise. Based on a survey conducted by AMR Research in Q4, 2004 with over 400 companies, planned expenditures for software, services, and hardware related to EPM initiatives will just top $22.2 billion in 2005, primarily to support focused, informed, and responsive management strategies.

According to the survey, there is a strong financial commitment to EPM across senior executives ranks, including CxO, operations, and finance, with operations management being the most frequent. Aggressive spending is apparent across vertical markets and companies of all sizes, with most aggressive spending in the financial services sector. Although consulting is a huge area of spending, companies are investing more in internal staff than external services for their EPM deployments.

The EPM spending estimate is based on buyers' projected spending for software, internal and external service, and hardware, not on revenue from software companies that compete in this market space.

Of the three segments, services will garner the greatest share of the wallets, with 45% of the budgets. Companies will spend 26% of their EPM budgets on hardware and the remaining 28% for software, including planning, forecasting, and budgeting products, Business Intelligence (BI) tools, dashboards and scorecards, analytic applications and analytic infrastructure, the report says.

This spending estimate suggests that budgets will be used for EPM initiatives, but not always exclusively according to AMR research. For example, a company will invest in a database that may be used for operational as well as analytic/performance management initiatives, or deploy analytic applications as part of a broader enterprise application strategy.

Companies surveyed also indicated that technology does contribute significantly to improving their critical business processes and that EPM investments spurred long-awaited improvements in the business. Most companies now recognize that technology can and should play an important role in management decision-making processes.

Source: AMR Research