Some Predictions for Enterprise Performance Management Solutions As A Business Strategy – The Next Generation
| Integrated Planning & AI and EPM |
As part of our continuing Data Analytics Blog Series (Managed by Aileen Aherne, Marketing Manager @ ProStrategy) – another great read for anyone looking to transform their Enterprise Performance Management Processes.
(Author – Craig Schiff , President and CEO, BPM Partners)
Some of this Blog highlights include:
- Artificial Intelligence Will Begin to Provide Real Value…
- Many More Companies Will be Upgrading from Legacy Systems…
- Financial Consolidation Capabilities Will be Included in More Projects…
- Company-wide Planning Will Gain Traction…
Artificial Intelligence Will Begin to Provide Real Value:
Vendors have been touting Machine Learning and AI for years now, but while it helped them to be seen as innovative and leading edge, it hasn’t really impacted sales. No FP&A groups looking for a new budgeting and forecasting system were saying ‘it has to have AI/ML’. That is changing. There are two main reasons for this. First of all, the implementation of AI by the vendors has become more focused and nuanced. Instead of just tacking on the technology so they could say they have it, they are really using it to provide benefits to performance management users. This includes everything from making their systems easier to use to improving data quality and forecast accuracy. The second element leading to increased interest is the marketing itself.
While hardcore technologists are interested in deep learning and natural language processing, the buyers in Finance are more interested in what it can do for them. Vendors are getting the message and talk about predictive analytics and forecast probabilities (machine learning), ease of information access (natural language queries), and more accurate information (anomaly detection).The implementation of AI in the latest performance management products does in fact provide real value to customers which will generate demand, and this in turn provides real value to vendors who successfully package and market this functionality. For more information on this topic see: The Value AI Brings to Performance Management.
Many More Companies Will be Upgrading from Legacy Systems:
We have seen a recent surge of companies looking to replace their legacy on-premise performance management systems with a more modern version and this will continue and grow. In most cases their current vendor does offer a modern, cloud-based offering but it is a brand-new product that bears little resemblance to what they currently own. This in turn has these companies considering alternatives. The thinking goes that if it is a major project to convert to the new offering (which it will be), why limit the search to just the current vendor? These companies are now following a process that is similar to companies that are moving forward with performance management for the first time: evaluating 3-4 vendors to see which one can best meet their current needs. Everyone benefits from this – vendors have a new group of prospects to sell to, and the companies have a wider range of options to choose from instead of just limiting themselves to their current vendor. Now of course their current vendor can offer them some incentives such as a low upgrade fee and a set of conversion tools to try to keep them in the fold.
The reality is that we have not seen much of this. In some cases, it is nearly impossible to provide automated conversion tools based on how different the products are. It is our belief that regardless it is worth taking this opportunity to look at alternatives since the entrenched vendor who was leading edge in the last generation may be behind in the current generation. Requirements may have changed dramatically as well since the last system was purchased.
One other point, if companies haven’t yet considered upgrading from their legacy on premise offerings they should for two reasons. First of all, performance management has come a long way since on premise ruled the day and they may be missing out on great new capabilities. Secondly, they may be investing time and resources in a ‘dead’ product (and taking a risk by relying on a product with greatly reduced support), even if the vendor claims reports of the product’s death are premature.
Financial Consolidation Capabilities Will be Included in More Projects:
Budgeting and planning are currently the most in demand performance management components and have been for many years. However, the majority of our customers in the past year have included some aspects of financial consolidation in their requirements, even when they were not specifically looking for a consolidation system. While we always see a sizable number of companies that are focused on full-blown financial consolidation, many budgeting focused organizations are adding aspects of financial consolidation to their vendor selection criteria as well (see charts below).
Candidates for a robust financial consolidation solution are typically large organizations that have one or more of the following challenges: several different ERP systems, numerous reporting currencies, extensive intercompany transactions, complex local statutory reporting needs, many alternate roll-ups, and/or minority ownership/joint ventures. Some of that functionality and more can also benefit budgeting and planning systems. Currency translation and alternate roll-ups are common requirements of budgeting systems and budgeting vendors accommodate these needs with basic functionality. However, vendors that provide consolidation solutions alongside budgeting and planning can offer more pre-built capabilities and usually deliver better performance. Beyond that, there is functionality that some budgeting and planning purchasers ask for that is typically only included as part of a consolidation feature set.
This list includes detailed audit logs, intercompany matching and elimination, account reconciliation, trial balance, ability to see data pre and post adjustments and in some cases even being able to post journal entries. We expect this trend to continue and apparently the vendors do as well as many of them have a renewed focus on enhancing their consolidation capabilities. For more information on this topic see: How to Leverage Consolidation Functionality in Budgeting and Planning.
Company-wide Planning Will Gain Traction:
Integrated business planning has been a goal for many years. Most organizations have fallen short when it comes to achieving this goal because of two issues: difficulty in coordinating major cross-functional initiatives and lack of technology support. Both problems have begun to sort themselves out. On the technology front several of the larger performance management vendors have started to deliver on the promise of an integrated, collaborative planning platform. Whether they call it connected planning or collaborative enterprise planning or something else entirely, the vision is the same: a single unified planning platform with specific solutions for each area of the business.
Some of the smaller vendors that have focused almost exclusively on financial planning have seen the light as well and are beginning to think of themselves as more of a platform and are utilizing an app store model to deliver solutions to meet the needs of a broader audience. Organizations that are looking for solutions that address operational as well financial planning now have a wider range of options to choose from than in the past when they essentially had to build their own operational solutions using business intelligence tools.
With the technology side being addressed there is still the organizational challenge of each department focusing narrowly on their own needs. Who drives and oversees this cross-functional initiative and makes sure that the company doesn’t end up with a collection of disconnected point solutions? The answer to this question has grown clearer over time. While the CIO and department heads have a role to play, the consensus seems to be that it is the CFO who should oversee coordinated and connected company-wide planning (see chart below). With these two key pieces of the puzzle falling into place we expect to see more companies undertake enterprise-wide planning projects. For related information on this topic see: Performance Management: The Next Generation.
As you can see, in 2019 & beyond there will be more reasons than ever for those that have remained on the side-lines to get on board with performance management. For those that already have, it may be worthwhile to evaluate their current system against more modern products and determine if an upgrade makes sense.
ProStrategy has over 30+ years’ experience providing Business Management Software Solutions & Services to Irish & International Clients. ProStrategy has an established Strategic Business Alliance with Global brands and is a leading IBM & Microsoft Gold Partner. What drives ProStrategy’s success as one of the Industry Leading IT Technology Partners of choice in Ireland has been built on an impressive proven track record in the delivery and ROI of ERP, CRM and Data & Analytics Solutions & Services.
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| Aileen Aherne, Digital Marketing Manager | Phone: 01-4291977 |
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