Sanjeev Aggarwal's Blog

February 7, 2010

Mid-Market CPM Requirements and Vendor Selection Criteria

In today’s fast-paced and volatile business climate, midsize businesses need a clear vision, financial agility, and strong collaborative capabilities to drive better-informed and more strategic business decisions. Mergers, acquisitions, new business models, and increasing regulatory requirements heighten the importance of having accurate, flexible tools to support corporate forecasting, budgeting, reporting, scorecard and compliance functions.

Many midsize companies currently use Microsoft Excel spreadsheets, email, shared folders, and other ad hoc tools for these tasks, but they are finding significant shortcomings with this approach. As a result, more businesses are evaluating CPM solutions as a way to get these jobs done faster, more efficiently, and more accurately.

However, while their financial and planning operations may be very complex, midsize companies are often constrained in terms of their budget, IT resources, and support. In addition to evaluating the features of different CPM solutions and how these solutions stack up in terms of meeting their functional requirements, decision makers need to consider several additional factors. Based on our recent in-depth discussions with several mid-market CFOs and CIOs that have evaluated, selected, and implemented CPM solutions in the last couple of years, here are our suggestions as to the key questions that midsize firms need to answer when evaluating CPM solutions:

  • How quickly and easily can business users learn to use the solution? Easy to use solutions lead to faster, more widespread user adoption. Ideally, CPM solutions should have an interface with a familiar spreadsheet look and feel. You should be able to easily configure the interface and dashboards without help from IT or external consultants, and building models should be intuitive. In a midsize firm, you don’t want to have to rely on or wait for an IT department that’s probably stretched to thin to create and run reports. When users can easily create and run reports themselves, they get the key performance indicators (KPIs) and other information they need more quickly, speeding up and enhancing the decision-making process.
  • What is the total cost of ownership (TCO) for the CPM solution? CPM solutions need to be affordable. They must take into account not only software costs but also any resources that you will need to design, implement, configure and manage these solutions (including annual maintenance fees), as well as the hardware you’ll need to run them on. You must also consider if you’d be better off with a subscription-based service that you can pay for monthly or annually without incurring any upfront capital costs. Many midmarket buyers are considering software-as-a-service (SaaS) or cloud-based CPM solutions that offer subscription-based pricing and eliminate the need for upfront capital investments. SaaS CPM makes it easy for companies to start small and expand use as their needs grow. Since SaaS CPM solutions are delivered over the Web, they don’t require on-premise infrastructure, or internal IT support or maintenance. As a result, you can deploy them more quickly and dramatically reduce TCO.
  • Is the vendor’s pricing transparent? No one wants to start evaluating solutions and then get sticker shock because of hidden costs. Look for vendors that provide transparent pricing on their Websites, or at least, vendors that will give you a good ballpark estimate early on it the evaluation process.
  • Do you want a focused, purpose-built CPM solution, or CPM as part of a broader business intelligence solution? Solutions designed specifically for corporate performance management (such as Adaptive Planning, Clarity, Prophix. Longview and others) are typically more cost-effective and fast to deploy than broader business intelligence suites, which often include a CPM component. However, broad based BI solutions, such as IBM Cognos and SAP Business Objects, are beginning to carve out CPM specific modules and offerings that integrate with the broader suite. Consider what your short and long term requirements in deciding which route will best serve your firm’s needs.
  • Can you try before you buy? Solutions that are easy to evaluate lower your risk—both from a time and monetary perspective. Can you get a true feel for the solution, with a functional trial version? If the finance department can try the solution with real data and see the results, it can speed the vendor selection and decision-making timeframe significantly.
  • How long will it take to implement the solution? Most mid-market enterprises do not have months to spend deploying and getting productive with CPM. Talk to customers already using the solutions you are considering to get an accurate, realistic picture of how long it will take.
  • How well does the solution meet your data security requirements? Security is a top concern for all companies, and in some industries, regulatory requirements also come into play when considering a CPM solution. In some cases, specific compliance constraints require companies to deploy on-premise solutions. However, in many cases, a quality SaaS provider can provide better, more secure and more reliable operations than an internal IT department. Ideally, look for a vendor that is SAS-70 compliant and can readily document the physical and virtual security measures that they use to safeguard your data.

The good news is that today, more CPM solutions are available that are specifically designed to meet mid-market requirements than in the recent past (from companies like Clarity Systems, Prophix, Adaptive Planning, Host Analytics, Longview and from BI companies like SAP BusinessObjects, IBM Cognos, etc.). By carefully assessing the questions above and focusing on the criteria and features most important to your business, you will almost certainly find a CPM solution that can give you a much more connected, productive planning process than could be achieved with Excel spreadsheets.

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