Business Performance Management

And Massachusetts-based BI software-as-a-service (SaaS) provider Oco Inc. has released a new suite of business intelligence solutions that specifically targets midsize consumer packaged goods (CPG) manufacturers. The suite contains modules for sales and profitability analysis, sourcing and procurement, inventory, and quality and production.

Information Builders is partnering with Upstream Professionals Inc., a consulting firm to oil and gas companies, to provide a Well Life-Cycle Management reporting tool. The software will build on the WebFOCUS BI platform, adding a front end for analyzing metrics and key performance indicators for oil-field equipment.

Last week, Clarity Systems announced Clarity 6 Legal Edition 2.0. The new version of the vertical-focused performance management system provides easy, real-time access to data in areas such as billing, expenses, compensation, and hours worked. It enables professional services firms to report across multiple scenarios or periods of time, and then to drill into the details down to the transaction level.

On February 6, IBM and Cognos unveiled 10 joint industry-specific solutions that combine Cognos’ industry blueprints with IBM’s “information on demand” strategy. The new and enhanced vertical BI products include: Financial Risk Insight for Banking, Life Sciences Promotional Spend and Compliance, a Municipal Scorecard, and a Healthcare Analytic solution.

Bitam has released a new version of its multiplatform flagship performance management system. Bitam G6 provides a new interface designed to enhance companies’ strategic insight and accountability for decisions that affect corporate performance. Bitam 6 works across Microsoft, UNIX, and Linux operating systems and includes predictive analytics, statistical functions, and data segmentation capabilities.

Earlier this month, Business Objects released BusinessObjects XI 3.0. This is the first new version of the company’s flagship business intelligence suite since its acquisition by SAP in October, and it was announced with great fanfare. Business Objects calls it the “industry’s first intelligence platform” and claims that it “breaks the barriers of traditional BI.” These claims are partly based on the software’s new capabilities to make unstructured BI information available alongside the data stored in databases — a capability that is on the radar of a wide range of business intelligence vendors. BusinessObjects XI 3.0 includes a new tool, called Polestar, that is designed to improve the BI suite’s search functionality. It also includes BI Widgets for displaying personalized performance data on employees’ desktops, along with a variety of other new features and (no surprise) better integration with SAP data sources.

New research from The Hackett Group, called “Aligning Forecasting Practices With Market Dynamics,” finds that two-thirds of companies are unable to accurately forecast their earnings, even one quarter out. Only a third of businesses report earnings within 5 percent of their forecasts. And fewer than half come within 5 percent of their sales forecasts.

“It’s shocking,” says Fritz Roemer, head of Hackett’s Enterprise Performance Management Executive Advisory Program, “to see this level of poor performance in such a key area. We’ve seen companies take severe hits in the past few years after missing forecasts. … Yet companies still refuse to make the necessary efforts to get this area under control.”

Why? Another finding of the Hackett study is that the external business environment companies face is becoming increasingly volatile. Fourteen percent of Hackett’s survey respondents characterized their business as “high risk/high volatility.” That’s up from 2 percent of organizations in a Hackett study just three years ago.

Hackett’s recommendation for these businesses is to implement rolling forecasts (rather than business forecasts focused only on a single calendar year) and to set accuracy targets for their forecasts. The research found that currently only a third of businesses use rolling forecasts, and only 20 percent maintain forecasting-accuracy targets.

On January 31, IBM announced the completion of its acquisition of BI and BPM vendor Cognos. A week later, the newly combined company announced its strategy in the BI and performance management markets: “to help clients unlock the business value of information and use it for competitive advantage to address emerging, industry-specific business opportunities.” That almost elicits a “well, duh” — but note the “industry-specific.” Cognos offered an array of vertical “blueprints” for performance management before its acquisition; now, expect to see even more of a vertical focus. (See the “Product Briefs” section below for IBM’s first Cognos-related vertical releases.)

The business intelligence (BI) and business performance management (BPM) software markets are transformed. Transactional-system vendors Oracle, SAP, IBM, and Microsoft now dominate the space. There is still room for smaller players to fill market niches, but the big guys are making a lot of promises — promises to seamlessly connect financial and nonfinancial information companywide with the budgeting, analytics, and reporting capabilities of the BPM-specific products they’ve purchased or introduced.

It’s the nirvana of performance management. So, when will it be reality?

The vendors are already releasing new products that span the gaps between their transactional and performance management offerings, suggesting that integration really isn’t much of a problem. But most BPM consultants agree that we’re looking at a timeline of a few years, at least, before the products are truly unified.

Data integration and security are two of the big reasons. A real-time link for data movement between two applications requires that all the data be mapped correctly. Two systems, designed for different purposes and different functions, often provide very different views of the same data. And the departments they’re designed to support may even define the same terms differently.

In a feature article for the March issue of BPM Magazine (which will be online next week), Mark Smith, CEO and EVP of Ventana Research, illustrates the potential for miscommunication in a company’s forecasting processes. “Sales may develop its revenue forecast based on the current pipeline,” he writes, “while finance creates an operating plan based on current-year budgets, marketing creates product forecasts based on its demand-shaping activities, and manufacturing plans based on its supply outlook. Additionally, each group will frame its forecast differently: Sales revenue forecasts will break down by region and customer, the marketing team will forecast in unit sales by product line, financial forecasts will be measured in currency by internal organizational unit, and manufacturing forecasts will be delineated in units by SKU and part number.”

Smith is making the case for a software system that unifies financial and nonfinancial performance information companywide. But he’s inadvertently also making the point that data unification is an extremely complicated process for the vast majority of organizations.

On top of data reconciliation challenges are security concerns. Everyone in the company shouldn’t have access to all the information that a grand, overarching performance management system encompasses. As data moves between BPM, CRM, supply-chain management, ERP, human capital management, and other systems, the access rights of individual users (or groups) need to move with it. It’s not surprising, then, that consulting on performance management software implementations often costs as much as the software itself — even when the software focuses only on the financials.

A BPM product offering that spans both financial and nonfinancial information, and that ties seamlessly into ERP and other transactional systems, is clearly a smart goal for vendors. But getting there won’t be simple. After big spending to acquire sophisticated performance management technologies, the transactional-system vendors are now fighting tooth and nail over BPM customers.

The unification ideal is alluring, but buyers should be cautious and should ask pointed questions about data integration and security challenges, and they should talk to current customers of the vendors on their shortlist about how seamless connections between financial and nonfinancial systems really are.

As Andrew Jorgensen, senior partner with Pinnacle Group Worldwide, writes in another article for the March BPM Magazine,”As the dust settles [from the market’s extensive M&A], now is a great time for companies to evaluate their information goals and assets, and to choose a performance management strategy that will meet those objectives.” But smart buyers will keep in mind that out-of-the-box remedies for integration challenges can’t help but take time.