EPM tables - where CFOs steal some thunder away

MUMBAI, INDIA: When Ranjan Tayal, Senior Vice president - Strategic Initiatives, Ramco Systems says he is pretty upbeat about the significance and attractiveness of the EPM part of ERP Software market, the sentence has many hidden layers than what meets an outsider's eyes.

EPM may be just a part of the big fat ERP weddings but it's quite a party here these days.

The software market for BI, analytics and corporate performance management touched $12.2 billion in 2011. But there's more than numbers to watch for the churn.

Two main ERP vendors help us spell the real action happening underneath as we decipher what makes the EPM market tick today.

It's not just another ERP

Both are different markets and just not topically different as it turns out.

Enterprise Applications can be classified into three viz., Transaction, Information and Decision Support Systems. Transaction Systems facilitates process integration and ability to share data across functions, but, however, falls short of the expectations of any decision manager as the only support these systems give is reports, as they are static and fraught with lots of reports.

Transactions Systems are systems facilitate data capture and that's how. ERP falls under the category of Transaction Systems. But a separate class of systems is required for converting data into information and then to insights, which is a prerequisite for EPM.

The logical evolutionary step in the Enterprise Application space is EPM after ERP implementation.

That was the road so far. Three forces are flanking this pool of calm waters at present.

The first among them is condensing more than vendor roadmaps.

 

Cloud - the right premise

Enter Cloud, and one can see that EPM suites are at a new turning point.

Now that cloud seems to be more than a fad and is staying in fashion for long, how much make-over can the EPM segment expect here?

Players have started hinging new bets on the cloud mobility strategy wave.

EPM On-Demand has been brought in by SAP in September 2012. As SAP's seniors claim it comes sans any maintenance or installation issues. "It makes it much easier to innovate faster" as Bryan Katis , Group Vice President & General Manager of Enterprise Performance Management (EPM) Solutions at SAP puts it.

The product is not something that was quintessentially on-premise but thrown into cloud for the sake of it as he argues. "We started with HANA and developed the content a step further. Something that finance function and similar users wanted. It offers insight and the kind of visibility required. It is very intuitive and simple."

From 7.0 to 7.5 versions, SAP has traversed three major releases and the tenth version has seen general availability April onwards this year. The idea as it turns out from conversations with SAP team is to unify the suite with the relevant acquisitions done already. The first step was to bring several products together under the 7.5 suite.

"We saw companies wanting to tackle end-to-end cycles and that's something that could require several different products. We unified the entire curve seamlessly with other applications." Katis iterates.

Efforts, as per his buoyed voice, have shown results. The last 18 to 24 months have really driven adoption. SAP continues to deliver pre-packaged business practices as well as support 24 industries. "Additional components like disclosure management that addresses the last mile of finance function is our focus now."

Quick and effective decision making requires right information anywhere, anytime. Both of these are met effectively by Cloud and Mobility, Tayal proffers. "Analytics or EPM on Cloud ensure access to the information from anywhere anytime and Mobile not only makes it device independent, it makes this information available ‘on the move'."

With fast changing businesses, people would prefer a model where the payments/IT systems related costs scale up as the businesses grows, as he foresees.

The ‘why' does not seem too elusive. "Where EPM is concerned, mobility becomes an important aspect as it enables real-time decision making. We have adopted the "mobile first" strategy and key analytics are available on the handheld. To a CXO it provides Boardroom views on the handheld, enabling effective decision making. Secondly, all functionalities are available on Cloud and can be provided in a flexible commercial model, so users don't have to invest on upfront licenses or long drawn implementation related costs." Tayal explains Ramco's direction.

But does it all fit together?

It's about exploring the possibility of ‘how can companies leverage cloud to make decisions more quickly,' Katis stresses.

That's where HANA (High Performance Analytic Appliance) has helped, he concedes. "Companies are drowning in too much information."

It often leads to a big doubt area whenever someone talks of cloud and on-premise in the same breath. Compatibility with on-premise products sitting on a customer's armchairs for years is a practical issue. It's an issue that hairballs into skepticism no matter who the anti-incumbent cloud suite is fighting with - a sibling from the same company or a nemesis from competition's army. Even if both can technically co-exist, what about the ripples that license-contracts and revenues might set off?

Does SAP realize these misgivings?

We have taken a step back with integration and architecture, Katis lets on.

"The part of ‘Data Services', the on-demand version that allows bringing in both sides of data is a good case in point."

As to the license-related issues, he explains how a customer has to make sure that license scope is taken care of. "As long as you have the right license in place, it does not violate our scope from a SAP point of view."

However for products (premised or cloud ones) licensed from another party, compliance areas have to be checked, he agrees.

Coming back to HANA, irrespective of the hype it has generated, still evokes many practical questions.

The chief being the very relevance of a super-fast engine on a road strewn with potholes. HANA is almost like a Ferrari, capable of astounding speeds.

But to translate this velocity into something really useful for a mundane road stays a challenge.

Or not?

From how Maneesh Sharma, Head- Database and Technology, SAP India sees it; the company is selling business outcomes and not a technology piece. "The conversations we are having now have changed. Earlier there was unarguably a lot of hype. Now as customers win new proof points, we do not just talk about Big Data. We talk about insights - like what's happening at your stores or the real market analysis or real applications like POS or strategic planning."

Katis wields this question and explains, "We have adopted a policy that is pragmatic. EPM 10 is the destination but we are inherently dealing with a certain quality of data everywhere. EPM is the first group, incidentally, to build an application for HANA."

The big debate that is still in vogue is Management Science or Art? Tayal quips.

"Ramco has approached this problem by providing products & solution which optimizes both the flavors of the management through its four offerings in this space viz., Ramco Advanced Reporting & Intelligence, Ramco Business Analytics, Ramco Business Analytics and Ramco Pre Packaged Analytics.

In-memory intelligence and analytics sound like seismic Gulliver stomps in today's EPM lands.

Ramco too packs something called High Performance Advanced analytics in its portfolio. "It comes with preloaded in-memory analytical Data base platform, In memory processing engine for planning, scheduling, simulation, optimization supported by agent based technologies, complete suite of query engines which work on in-memory and aided by rich visualization tool capabilities."

Atul Patel, Vice President, SAP Analytics, Asia Pacific and Japan, SAP, adds to explain SAP's intentions further, "We are doing workshops to see what is possible. Technology notions and barriers or possibilities interest us a lot at this moment."

‘Suspend your disbelief' is the rhetoric that is being a new spin.

"What if a product can allow you to do dynamic forecasting just the way you have dreamt of? To manage your business while sitting in a snail-paced traffic stuck on some metro flyover!" he offers.

The user knows where the shoe bites.

Usability has been a key demand from customers in this segment.

It is of course not easy to juggle that expectation with compliance, authentication o security imperatives, but players have started taking note of this acute gap.

Compliance, Authentication and Security measures are now a basic pre-requisite of any information system, Tayal from Ramco agrees.

"Usability is designed keeping these aspects in view. From being merely transactional in nature, ERPs have evolved and today, it is considered as a foundation to intelligent decision making. This makes it essential for an ERP to score high with regard to usability and intuitiveness."

When designing for Mobile and on Cloud, these aspects become even more important, he highlights.

"Being on Cloud also means the same application would be used by a cross section of users and across multiple industry verticals. This requires the application providers to consider these aspects when designing for usability. In fact, with the commoditization of ERP, usability could become the key factor while choosing an ERP system."

Design thinking is an approach that is backing all efforts when we build new solutions, Patel assures. SAP creates solutions from a technology view for sure but not at the cost of business point of view or a human interaction angle, he illustrates.

Pamper the user, but chase who- CIO or CFO?

Interestingly enough, while enterprise software market has been used to wooing CIOs and weaning them away from rivals, the new attention spot that has emerged strongly in the EPM space is the CFO.

It is the CFO who is gradually turning into a key prospect in the EPM space today, instead of the CIO. One wonders then about the targets that EPM makers chase today. Has the dartboard changed drastically, replacing CIOs with CFOs; Legacy users with SaaS customers and traditional verticals with new bespoke segments?

An EPM would cut across all industry segments, and the entire CXO community stands to benefit from it, in Tayal's perspective.

"Of course, depending on the role, the actual use may vary. For instance, a CIO would require it more from Return on IT investments perspective, whereas an Operations personnel would review it for business operational performance, and a Marketing Personnel would look at it in terms of ROI on the marketing spend."

Patel from SAP shakes off some more dust. He avers that the psychological distance between the two offices stays but in the end it is difficult to imagine headway without the CFO. "An EPM project can take off then."

He explains the two segments of customers that have emerged today - One, the CIO who is savvy and the other, the CFO who can be a bit overwhelmed with the tech-bits. He goes to CIO to have a clear grasp and they both travel back and forth over a prospective EPM purchase.

It does slow down the process, Patel rues, but the process stays on. "Unless the CFO appreciates the solution, it is unlikely to get the right buy-in.

In fact, this could hint towards a bigger change than what the surface offers.

CFO is in the next rung of the corporate ladder and much more ready for the CEO spot, Patel wonders on the sidetracks. That's why simple and flexible solutions get a lot of attention today. The key decision maker and change agent then happens to be the Chief leader, followed by the users in business functions and then the CIO.

Coming to the pecking order of legacy customers today, Tayal notes that EPM meets a business need and has little to do with whether it's a legacy system or SaaS.

"It's just that the solution and costs would vary in both cases. Legacy system would have to be integrated with applications meant for enabling analytics while most of the new age SaaS applications have some elements of analytics built in."

A lot depends on the inherent architecture of the applications, for a legacy application but it would be relatively more complex and less cost-effective as it would be for most SaaS models and particularly for cloud-based solutions that use pre-integrated and pre-built components.

When answering the question of whether it is most needed by the traditional vertical or bespoke segment, again there are no favourites for Ramco.

"It's like saying effective decision making is required more in a few vertical segments. That of course is not true. EPM is all about running your business more effectively and taking decisions that are based on your data and analytics. So, I'd say that every business needs it equally." Says Tayal.

Next is what?

There is no sign of an EPM 11 or 12 as of now, as Katis shrugs off, but enhancements are in tow.

Finance organizations are not jumping head first into cloud, Katis from SAP reveals. "They are dipping their toes first before they can handle volumes. But on-demand components do not necessarily replace existing layers. They add to the system in a complimentary way too. Companies want to reach a broader set of users like sales, retailer forecast etc with mobility platforms as well."

With some 242 customers in the EPM space in India and about 9000 globally, SAP slips in some IDC numbers when it claims to be number one in this space. Higher revenues than its chief rival notwithstanding, the chief ambition now is to change the game.

Analysts have picked up several enhancements of note in the last round.

As to the expanded application components of a CPM suite as appreciated by industry watchers, now extend into Budgeting, planning and forecasting (BP&F); Profitability modeling and optimization (PM&O); Strategy management; Financial consolidation and close and Financial and management reporting and disclosure.

From what Oracle can be heard cheering about; as per Gartner's lens, Oracle leads when it comes to CPM suites, ‘with one of the most widely distributed solutions in the market'.

Oracle Hyperion Enterprise Performance Management is what makes competition for other RPM players interesting.

The corporate performance management (CPM) market has the characteristics of a mature market, with fairly consistent vendor positioning year over year, with consistent Leaders and Challengers, emerging Niche Players, and innovators that are pushing the functional boundaries of the CPM suite as what Gartner: Magic Quadrant for Corporate Performance Management Suites, 2012 unveils.

SAP also features in the same quadrant as Oracle though while Infor takes up the jugular seat in the challenger box.

What's more interesting is where niche players are upping their ante. Names like Prophix software, Bitam, Prevero or KCI computing are bolstering the challenge it here.

Researcher and Consultant Barry Wilderman noted the same trend in his blog.

Apart from strategy management software vendors, with core EPM/Business Intelligence offerings (IBM/Cognos, Infor/Extensity, Oracle/Hyperion, SAP/Business Objects, SAS), one can in the same vein spot numerous niche vendors- the likes of ActiveStrategy, Adaptive Planning, Exie A S, ClearPoint Strategy, Cogniti, Corporater, Gryphon Systems, Performance Solution Technologies, Prodacapo, QPR, Rocket Corvu, StrategyBlocks Limited, etc.

Citing a 2011 survey, conducted by Accenture and Success Factors, he rightly reminds: "Companies today are not effectively executing against strategy and the business leaders know it, with 80 per cent recognizing that they are not doing their best to communicate strategy through the organization, let alone execute against it."

Bitam, for example, is capable of running on multiple platforms. It is a client/server and Web-based, three-tiered application that enables integration into heterogeneous environments supporting multiple Web servers that support Windows, Unix or Linux platforms, as Gartner outlined. Something that is well-suited for midsize companies looking for BP&F, strategy management, financial consolidation and financial reporting.

On the parallel, one can spot how Board International has continued to expand 48 per cent license growth in 2011 globally in the CPM market to the tune of 800 CPM customers (mostly in EMEA).

Taking a reverse gear here to what we covered on usability, apparently users like the Board International's programming-free toolkit approach, which enables CPM applications to be configured easily and extended to meet users' unique requirements.

A CPM suite in a single, integrated application suite, rather than multiple point CPM applications, on the other hand, lets another niche player Exact-Longview gain some strengths.

From what the report cautioned, one can gather how although the Cognos Insight/TM1 product represents IBM's strategic direction, it still has to manage two user bases and, in some cases, still sells Cognos Planning. Although interface consistency isn't an issue, this continues to cause some confusion among prospects and current users.

As to Infor, Gartner estimates that there are more than 3,000 Infor PM customers, and the vendor has a widespread global customer base, with products available in multiple languages.

The vendor needs to pump up more adrenaline on awareness of its PM portfolio through influencers and direct marketing to customers, specially outside the Infor ERP base of clients. This will, as Gartner warned, limit Infor's ability to compete for new business outside its installed base, unless it can build greater awareness.

Similarly, many of Oracle's customers use smaller subsets of its CPM solutions, and Oracle needs to do a better job in expanding its footprint across all CPM solutions. The vendor is primarily deployed by enterprise firms, and some smaller clients have cited its broad portfolio to be too expensive or complex for their requirements. While not a red flag for growth now, this may become more problematic and may hinder expansion into some emerging markets, the report highlights.

Gartner report is upbeat with SAP's commitment to SAP HANA, its in-memory database, will provide advanced capabilities for planning and forecasting through the availability of SAP BusinessObjects Planning and Consolidation version for SAP NetWeaver on SAP HANA.

But one can not shrug off the confusion in the user base about the role of the acquired products, and about the impact of the EPM road map on existing SAP products, as it turns out.

Improvements are in sight though with EPM 10.0, which according to Gartner report, provides more clarity. Legacy SRC users have either upgraded or, in some cases, moved to other vendor offerings; however, SRC is still a supported application through 2013, and some users intend to upgrade to SAP BusinessObjects Planning and Consolidation.

We are not standing still so far, but it's time to accelerate the innovation. SAP chieftains Katis and Patel, conclude it aptly.

Performance Mgt is really a discipline, analytics is foundational and Big Data is a fad that will last a year or two, from what analyst Neil Raden deciphers at a Constellation Research chat. And Wilderman puts the spotlight on business users again because planning and budgeting, analytics should be tied to the original goals set for the organization.

To cut a long process short- If Cloud, usability and conflicts with erstwhile incumbents are tackled well, the game could change for the better, whisking up the usually-frazzled EPM space to a new texture.

Bean-counters sitting on a bean bag then do not sound like an impossible fantasy.