Robert Kugel's Analyst Perspectives

Tidemark Reaches the Starting Gate

Posted by Robert Kugel on Jan 3, 2012 11:50:22 AM

My colleague Mark Smith and I recently chatted with executives of Tidemark, a company in the early stages of providing business analytics for decision-makers. It has a roster of experienced executive talent and solid financial backing. There’s a strategic link with Workday that reflects a common background at the operational and investor levels. As it gets rolling, Tidemark is targeting large and very companies as customers for its cloud-based system for analyzing data. It can automate alerts and enhance operating visibility, collaboratively assess the potential impacts of decisions and support the process of implementing those decisions.

Tidemark’s product fits into the performance management/decision support category but has several points of differentiation. One is that it enables larger enterprises to work interactively with a broad set of operating and financial metrics rather than working with multiple legacy business intelligence and reporting systems. It can integrate enterprise data from ERP, CRM, supply chain, logistics, maintenance, real estate and other systems into a single cloud-based analytic and data store in a way that ensures there is master data control from source systems to the new warehouse, and that uses common semantic-layer definitions consistently across all processes and systems.

The business purpose of marshalling all the data in one place is to take advantage of recent advances in managing large-scale data using new database techniques that we have assessed. This can lower the cost of doing so along with utilizing in-memory data processing, which makes it feasible for large organizations to work with operational and financial information much more interactively. Because this can reduce the time required to assemble information (in reports and dashboards), organizations gain time to focus on making the right decision and implementing it. Rather than struggling to lash together sets of fragmented and siloed data every time a new set of analytics is needed, the right data in the right format and context is available at any level for various purposes, including integrated business planning, predictive analytics, and analysis of trends, cost-to-serve metrics, customer profitability and  product profitability. The same data set can be used for dashboards, performance scorecards and operational risk measurement and management. Executives, managers and analysts can go beyond drilling down into the details of what just happened. For example, they can do real-time collaborative contingency planning to explore in detail the impacts of several courses of action during a one-hour meeting.

Tidemark’s second point of differentiation is to make the user experience as close to that of a consumer application (and as far away from traditional business software) as possible. Design has become an increasingly important element in industrial products once sold mainly on functional considerations instead of usability. I expect the same is finally coming true in software as past limitations to design melt away with advances in the underlying technology. I also put tablet and mobility support in this category, because these have become table stakes for enterprise applications. An individual vendor’s advantage in mobility may be built initially on technical capabilities, but competitors can quickly replicate it. User interface design, however, can be a source of lasting advantage.

Tidemark has elected to use HTML5 Internet technology standard so it can support as many Web browsers, smart phones and tablets as possible. In this respect, I think executives decided that the underlying technology is a commodity and therefore it’s best to embrace a broad standard. This may prove to be a smart bet or it could be a sticking point since it will not use the native capabilities of mobile platforms. Notably, it will not be part of the Apple ecosystem, which I think may hurt Tidemark today but may be of no consequence in the future.

Another new, consumer-like feature is the visual metaphor of using sentences to describe what you are doing and seeing with business analytics, which adds to usability for business people. In this form,  analysis, planning and review activities fit the rhythms of how people naturally do and think about business. This approach makes it simple to understand what a business user is asking from the system and what it has presented.

A third point of differentiation from standard performance management offerings is having advanced analytics integrated into the application. Because comprehensive real-time and near-real-time finance and operations data are available for in-memory processing, it’s feasible to employ predictive analytics to improve forecast accuracy and to provide a comprehensive range of alerts when results diverge materially from what’s expected. Such a structure facilitates creating driver-based models for planning and budgeting. Moreover, Tidemark includes risks in its scorecard presentation. All business decisions involve risk, yet risks are rarely part of a balanced scorecard. Scorecards are balanced precisely because they cover trade-offs (for example, in a call center, balancing time-on-call with first-call resolution). Although some risks are implicit in every item on a scorecard (that is, not achieving a key objective) others are indirect or less than obvious, such as deferring scheduled maintenance or operating above capacity limits to accommodate unexpected orders. That noted, it’s impossible to say, based on this introduction, just how broad and deep Tidemark’s capabilities (especially industry-specific metrics, advanced analytics and risk measures) will be in the initial release. Operational risk analytics are likely to be elementary because, outside of financial services, that is the (sad) state of the art at this moment.

It’s still early days for Tidemark, so file the comments above under “excellent if true.” There are a number of big potential snags that the company and its users may confront when they put their system in place.

First on the list are the performance and scalability proof points that must be demonstrated in full-scale deployments. I’m not sure this will be a big issue since the basic technology foundations (cloud data and applications, in-memory processing and core analytics) that Tidemark rests on are solid. More likely, the challenge to users and Tidemark will be the snags that are inevitable when dealing with large organizations’ IT infrastructure (nonstandard legacy systems, for instance) as well as the maintenance issues that companies will have to address that might cause performance and other system metrics to fall short of what customers are expecting. Or performance may be adequate for most complex analytical tasks but not for, say, organizations that do complex sales and operations planning involving large numbers of rapidly changing stock-keeping units (SKUs). At this point, I doubt any of these issues will prove to be overall showstoppers, but they may limit the software’s appeal.

A more fundamental issue that I see is whether and to what degree companies will change how they operate to take advantage of the technology available. Just because something is technically feasible doesn’t mean that companies will change old ways of doing things. Our research shows few companies (just 6%) use driver-based plans, which, from a practical standpoint, is the only way to be able to do agile planning. Outside of financial services, few companies understand how to measure and manage operational risks beyond those major that are already incorporated in business reviews (such as failure to meet sales and profit targets). Attenuating the impact of unfavorable events collaboratively with established risk mitigation scripts (something that is feasible in Tidemark) is not well practiced outside of the military or the parts of companies facing heavy safety and health liabilities.

The next fundamental issue is data governance. As I look at it, the initial system setup can, with varying degrees of difficulty, overcome the accumulated impact of sloppy data management practices. Thereafter, there can be considerable cost involved in maintaining the integrity of the comprehensive data unless the company is rigorous about data governance.

The last fundamental issue for some companies may be the total cost of ownership. Tidemark’s initial pricing projections are competitive with on-premises systems. Companies with sprawling, disjointed enterprise system infrastructures and poor data stewardship probably will have to spend quite a bit more both up front and for ongoing maintenance for a system that includes data from a broad set of enterprise systems. Since few companies have mature data governance practices, dealing with data issues may prove to be a big cost factor in regards to time and agreement on the definitions and representation.

On balance, my initial impression of Tidemark is positive. There’s a great deal of promise and more than a few things that its established competition might want consider copying. Stay tuned.


Robert Kugel CFA – SVP of Research

Topics: Big Data, Data Warehousing, Master Data Management, Performance Management, Planning, Predictive Analytics, GRC, Operational Performance Management (OPM), Budgeting, Risk Analytics, Analytics, Business Analytics, Business Collaboration, Business Intelligence, Business Mobility, Cloud Computing, Data Governance, Data Integration, In-Memory Computing, Information Management, Mobility, Business Performance Management (BPM), Customer Performance Management (CPM), Financial Performance Management (FPM), Risk, Sales Performance Management (SPM), Workday, Workforce Performance Management (WPM), Financial Performance Management, Integrated Business Planning, Strata+Hadoop

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.