Robert Kugel's Analyst Perspectives

What is the Value of Your Financial Performance Management Software?

Posted by Robert Kugel on Nov 27, 2010 12:42:31 PM

Ventana Research has just announced its Value Index for Financial Performance Management (FPM) for 2010. Our value indexes are user-focused assessments of how well software vendors and packages enable companies to improve their execution of core processes. This one is designed to help businesses, especially the finance organization, evaluate the FPM software suites offered by major vendors in the context of their specific needs. Ventana Research defines financial performance management as the practice of managing the efficiency and effectiveness of financial processes including analytics, budgeting, consolidation, planning, reporting and strategy. The methodology we use to produce the Value Indexes involves evaluating in detail aspects of product functionality and suitability-to-task as well as the effectiveness of vendor support for the buying process and customer assurance.

This year’s Value Index for Financial Performance Management found SAP to be the company delivering the highest value on an overall weighted evaluation, which earned it the Hot Vendor rating. It is followed closely by InforIBM, Clarity Systems (which was recently acquired by IBM), Host AnalyticsSAS and Longview, all of which were rated as Hot Vendors, as well as Oracle, which earned the Warm Vendor rating. More than our other Value Indexes, most of the offerings here were very close in their overall ratings. This largely reflects the maturity of the FPM category. Because this evaluation covers the application suites and not solely an individual component, the software offerings are aimed mainly at large and midsize organizations.

From my perspective, the biggest challenge in doing an objective assessment of business software is in structuring the assessment. Unlike IT infrastructure software and tools, most of the business capabilities important to users are not about measuring the “speeds and feeds” that define their capabilities. The purpose of FPM software is to help business achieve greater efficiency and effectiveness. Since in almost all cases there are at least several ways (if not dozens or scores) to define and organize the work that needs to be done, there can be many different ways to support those efforts. Consequently, I have found that in many cases the main issue is whether the software will support the users’ performance management efforts. Whether a package has nine or 19 different ways of spreading values across budget months, for example, is not as important as having the right nine.

Given how close the rankings are, you may ask whether this means that one offering is as good as another. It absolutely does not. Every business has its own FPM processes as well as different IT infrastructure requirements. It is very likely that as your organization winnows down the long list to the short one you will find some very specific differentiators that tilt the decision to the ultimate winner of your evaluation. These determinants may include specific features or bits of functionality, the specific progression of screens or steps in executing a process. If everything else is equal, you may base your choice on existing license arrangements. Your company may want a software-as-a-service SaaS solution or may be dead set against that. But in any case, doing a structured evaluation, one that methodically assesses the characteristics your organization needs in FPM software, will produce the best results. We believe that this Value Index will help guide you to the selection that is most right for you. If you want download the executive report, just download it at our FPM Value Index site.

I express my thanks to the vendors that invested their time and energy to ensure that the evaluation was accurate, comprehensive and unbiased.

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Robert D. Kugel CFA - SVP Research

Topics: ERP, Office of Finance, Financial Applications, Business Technology, Business Performance Management (BPM), Business Planning, CFO, finance, Financial Performance Management (FPM), Corporate Finance, Financial Performance Management

Robert Kugel

Written by Robert Kugel

Rob heads up the CFO and business research focusing on the intersection of information technology with the finance organization and business. The financial performance management (FPM) research agenda includes the application of IT to financial process optimization and collaborative systems; control systems and analytics; and advanced budgeting and planning. Prior to joining Ventana Research he was an equity research analyst at several firms including First Albany Corporation, Morgan Stanley, and Drexel Burnham, and a consultant with McKinsey and Company. Rob was an Institutional Investor All-American Team member and on the Wall Street Journal All-Star list. Rob has experience in aerospace and defense, banking, manufacturing and retail and consumer services. Rob earned his BA in Economics/Finance at Hampshire College, an MBA in Finance/Accounting at Columbia University, and is a CFA charter holder.