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Posts Tagged ‘Corporate Performance Management’

The 2011 Magic Quadrant for Corporate Performance Management Suites

Thursday, April 7th, 2011

Gartner has released the 2011 Magic Quadrant for Corporate Performance Management (CPM), a concept defined by Gartner (2011) as „processes used to manage corporate performance (such as strategy formulation, budgeting and forecasting), the methodologies that support these processes (including the balanced scorecard or value-based management), and the metrics used to measure performance against strategic and operational performance goals”.

While the CPM market is populated with many vendors, some offer a broad range of solutions and others have limited, specific applications. The goal of Gartner’s Magic Quadrant is to present a global view of the main vendors that offer CPM suites that organizations seeking to implement a CPM strategy should consider.

Magic Quadrant for Corporate Performance Management Suites

Source: Gartner (2011)

The main findings of the research in terms of CPM market are (Gartner, 2011):

Despite the economic recession and a decline in overall IT spending at global level, spending on CPM solutions remained positive. CPM is now considered a mature market that will show steady growth in the future, of 5% to 10% (compared to more than 20% it achieved in prior years);
The market is dominated, in terms of market share, by the three CPM megavendors – Oracle, SAP and IBM – as leaders with high completeness of vision, as well as high ability to execute. However, although they all have strong product portfolios, there is still uncertainty among users about these vendors’ future product road maps;
The fastest-growing vendors of CPM solutions (with 31% and 38%, respectively) were Bitam and Clarity Systems (acquired by IBM in 2010);
Overall, this year has seen a stable market in which the vendors have focused on execution, more than on large-scale vendor consolidation and portfolio rationalization.

Regarding the trends and patterns in the purchase and use of CPM solutions by end users, Gartner’s research revealed the following aspects:

CPM purchases changed in context, focusing on cost optimization as a key theme to an increasing number of organizations planning for growth in 2010, after the economic downturn;
In line with a general desire to leverage software assets already purchased, some clients seemed to focus on improving existing CPM or legacy implementations rather than look at new CPM investments. This lead to a do-it-yourself approach, leveraging Excel or already-purchased online analytical processing (OLAP) technology;
A common approach in 2009 and early 2010 was to purchase a single CPM component, most often Budgeting, Planning and Forecasting (BP&F), or financial consolidation and reporting, as opposed to a full CPM suite;
However, clients that have established applications for BP&F and reporting are now looking more at strategy management and profitability modeling to increase the scope of their CPM solutions.

Reference

Gartner (2011), Magic Quadrant for Corporate Performance Management Suites, available at: http://www.gartner.com/technology/media-products/reprints/tagetik/vol3/article3/article3.html.

Tags: BP&F, Corporate Performance Management, CPM, Gartner, Gartner report, Gartner research, Magic Quadrant
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An overview of Business, Corporate and Enterprise Performance Management

Monday, June 7th, 2010

Simply stated, Business Performance Management (BPM) can be described as a series of business processes, systems and applications designed to optimize both the development and the execution of business plans.

Definition of BPM

In an effort to provide clarity to the industry, a BPM standards group was established in 2003. Their definition for BPM was “a set of integrated, closed-loop management and analytic processes, supported by technologies, that address financial and operational activities.” (Frolick et al., 2006)

Synonyms for “Business Performance Management” include “Corporate Performance Management” and “Enterprise Performance Management”.

Some consider Corporate Performance Management (CPM) is the area of business intelligence (BI) involved with monitoring and managing an organization’s performance, according to key performance indicators (KPIs) such as revenue, return on investment (ROI), overhead, and operational costs. (SearchDataManagement.com, 2010)

If we regard Business Performance Management (BPM) and Corporate Performance Management (CPM) as near synonyms: BPM would serve as the more generalised and used term.

However, because the use of the acronym “BPM” can cause confusion with “Business Process Management”, using terms such as “Corporate Performance Management” or “Enterprise Performance Management” can avoid that confusion.

The history of BPM

Similar to other past trends in information systems, BPM has evolved over several decades. An account of its history is illustrated in the table below:

Source: Frolick et al., 2006

Examples of BPM frameworks

Core BPM processes include financial and operational planning, consolidation and reporting, business modeling, analysis, and monitoring of key performance indicators linked to strategy ( BPM Magazine, 2010).

According to other sources, the BPM framework is composed of four core processes. These four key steps are the foundation for designing, implementing, and managing BPM (Frolick et al., 2006):

1. Strategize

2. Plan

3. Monitor and analyze

4. Take corrective action

The first two steps represent the formulation of business strategy, and the last two steps define how to modify and execute strategy. These four core processes form a closed loop that captures business strategy, which is then translated into strategically aligned business operations. (Image Source: Frolick et al., 2006)

Another example of a BPM or CPM Framework is the one developed by PriceWaterHouseCoopers (2008). It is structured on 6 steps: strategy, plan, measure, insight, execute and reward. It also identifies 5 key enablers that help organizations driving strategy into sustainable performance: Culture, Governance, Data Management, Technology and Process.

Source: PricewaterwouseCoopers, 2008

Various methodologies for implementing BPM exist. They provide companies a top-down framework by which to align planning and execution, strategy and tactics with business-unit and enterprise objectives. Various management concepts are intertwined in practice: Six Sigma, Balanced Scorecard, Activity-Based Costing (ABC), Total Quality Management, Economic Value-Add, Integrated Strategic Measurement and Theory of Constraints.

The Balanced Scorecard is the most widely adopted performance management methodology, especially as a system.

Methodologies on their own cannot deliver a full solution to an enterprise’s BPM needs. Many pure-methodology implementations fail to deliver the anticipated benefits due to lack of integration with fundamental BPM processes.

References

Decision Support Systems Resources 2010, available at http://dssresources.com, accessed 28 May 2010

Frolick, Mark N.; Thilini R. Ariyachandra 2006, “Business performance management: one truth” , Information System Management, Winter 2006, pp. 41-48, available at http://snyfarvu.farmingdale.edu/~schoensr/bpm.pdf, accessed 28 May 2010