Robert Kugel's Analyst Perspectives

If you’re considering purchasing a financial performance management (FPM) suite, you shouldn’t overlook a recent entrant in the category, Tagetik (which sort of rhymes with “magnetic”). The company, which was founded in 1986 and is based in Lucca, Italy, began by focusing mainly on Europe, but has extended its efforts in the United States in the past two years. Tagetik 4.0 is an elegant implementation of a financial performance management suite running on Microsoft’s SharePoint infrastructure.

FPM deals with the full cycle of finance department activities as well as the underlying information technology systems that support them. Tagetik’s suite addresses all of the basic requirements. It has the forward-looking elements of budgeting, planning and forecasting. Its Excel interface is familiar, since most people are trained in using spreadsheets, and most users will find working with it easy. Unlike desktop spreadsheets, though, it has a formal database behind it, meaning that rolling up and consolidating the submissions of any number of participants is almost instantaneous. Moreover, unlike desktop spreadsheets, it stores the data with important attributes such as the time period, corporate structure (division or regions, for example), product (anywhere from families down to specific stock keeping units – SKUs – if desired) and currency. It handles accounting processes. It performs statutory consolidations for US-GAAP, IFRS and other accounting regimes as well as orchestrates the accounting close process. Because its heritage is European, it handles complex legal corporate structures (such as cross-holdings). It does management consolidations, including non-GAAP cost allocations and profitability analysis. It offers a full range of easy-to-configure reporting capabilities, including dashboards and scorecards. And it supports external financial reporting, including adding the eXtensible Business Reporting Language (XBRL) tags required by the U.S. Securities and Exchange Commission (SEC) for companies that file periodic financial reports with that entity.

Dedicated software can significantly increase the efficiency of companies that currently use desktop spreadsheets to perform basic financial and managerial analyses, management reporting and core processes such as budgeting and the financial close. FPM suites like Tagetik’s also can enhance organizational effectiveness by facilitating more management by exception and greater collaboration across business departments and functional silos.

Because it is built on SharePoint, Tagetik’s FPM is especially well-suited to companies that have either standardized on or have in-house expertise with Microsoft servers and other infrastructure software.  One of the standout features of Tagetik’s FPM suite is its workflow, which is easy for those administering the various processes to configure and revise. The ability to quickly design and reconfigure finance processes contributes to an organization’s ability to shorten core processes and avoid unnecessary delays. Handoffs are automated and deadlines are clear, which leads to fewer dropped balls. This can be especially useful for a company that takes more than a business week to complete its accounting close, because it enables companies to manage the process more exactly, establishing clear deadlines and providing alerts when they are not met. Because the software is easily configurable, the finance organization can put process refinements in place whenever it identifies better process steps and flows, as it can for the extended close, which the software supports all the way through XBRL tagging.

Ventana Research evaluated Tagetik’s suite in our recent FPM Value Index and rated the company a Hot Vendor. In assessing the capabilities of the FPM suites we evaluate a full range of functionality; think of these software packages as multifunction tools, like Swiss Army knives for finance. Some of these capabilities address core functions that every company uses (in addition to statutory consolidation, budgeting and dashboard viewing, for example). Others support tasks that have been assumed to varying degrees by finance organizations, such as profitability management and advanced costing methods. We believe that the finance departments of midsize and larger corporations (those with 100 or more employees) need a much larger Swiss Army knife these days to fulfill their expanding roles, and that is why we base our scores on the full set of functionality in these suites, even though an organization may be looking only for budgeting or consolidation software. From our perspective, the main shortcoming in Tagetik’s suite is in its business analytics; costing and predictive analytics, for example, are rudimentary compared to the higher-scoring FPM suites.

The financial performance management suite category is a mature one. We found limited differences across the core capabilities of these packages. However, that’s not to say that companies should be indifferent about which they choose. Different organizations will find some offerings more closely aligned to how the operate; they may prefer the look and feel of one over all others; or their IT organization may have standardized on one vendor’s infrastructure and therefore the total cost of ownership of one may be substantially lower than that of others. For these reasons, and because the suitability of the FPM suite to the specific organization will affect how well a finance organization operates, I strongly recommend that companies do more than a cursory assessment. Their assessment must balance the operational needs of the finance organization with IT considerations. Vendor standardization should not trump any issues finance has with features, functionality or ease of use. On the other hand, if software from a preferred vendor works as well as others on a short list, the organization must provide good reasons why another vendor should be selected.

Tagetik is facing a crowded market but has been winning customers. I recommend that companies that are looking for a financial performance management suite – especially those that are replacing a point solution (such as obsolescent financial consolidation software) or that are moving off of spreadsheets – should add Tagetik to their list of vendors to consider.

Regards,

Robert Kugel – SVP Research