RESEARCH & RESOURCES

Niche Performance Management Vendors Thrive Despite Consolidated Market

IBM, Oracle, and SAP grab most of the attention, but a swarm of upstart performance management players helps keep things interesting.

Although the performance management (PM) market is dominated by IBM Corp., Oracle Corp., and SAP AG, that doesn't mean it's completely devoid of competition, much less of interest.

A number of players have carved out niches for themselves, and while the "Big Three" grab most of the PM press, vendors such as Adaptive Planning, Clarity Systems, Exact Software, Infor, and others vie with Microsoft Corp. and SAS Institute Inc. in a busy PM marketplace.

Microsoft is the 800-pound PM gorilla. Its performance management practice isn't as big -- nor as polished -- as are those of competitors IBM, Oracle, or SAP. However, with its SQL Server-based business intelligence (BI) stack, its Office-driven front-end strategy, and the near-ubiquity of its Win32 and Win64 applications in enterprise IT organizations, it has the look of a still-incubating PM giant.

Microsoft has been sending out mixed signals. Late last month, for example, it announced plans to shuffle its discrete PerformancePoint server PM tool into the Office SharePoint group, effectively killing the 14-month-old PerformancePoint brand. Officials did their best to talk up Microsoft's strategy, prospects, and vision for performance management, where the company now has the uncharacteristic stamp of an underdog.

"I think Microsoft can actually lead the way in how the market defines itself in this space. The fact that we can do scorecards, dashboards, [and] analytics in the same environment in which people collaborate, search, and manage their content, is something that no one else in the industry can do in one product," said Kristina Kerr, lead product manager with Microsoft's Business Intelligence product management group, in an interview late last month.

"Business intelligence is typically not deployed [in] anything beyond 20 percent of the organization, and performance management even less [so]. That's true for a lot of reasons. One of the biggest inhibiting factors was how the technology was built, but the biggest is the cost factor."

Microsoft, Kerr concludes, is focused on making BI and PM "pervasive" throughout an organization. The PerformancePoint shakeup should help it do just that, she maintains.

Perhaps -- but other players are using Microsoft's actions, and the fear, uncertainty, and doubt (FUD) that inevitably attend product-related shake-ups of any kind as a chance to both compete for and snag valuable messaging bandwidth.

Take PM newcomer Adaptive Planning Inc., for example. It markets a software-as-a-service (SaaS) solution for budgeting, planning, and forecasting (BP&F), primarily to midsize companies -- although it's also had some success marketing to enterprise shops at the business unit or department level. Adaptive Planning illustrates just how dynamic the PM market segment actually is: according to market watcher Gartner Inc., the company doubled its revenues in the first half of last year and expanded its customer base to include more than 400 companies.

Adaptive Planning also illustrates how scrappy the non-Big Three PM segment is. It quickly latched onto Microsoft's PerformancePoint shake-up, announcing a "rescue" package for companies "adversely affected" by Redmond's decision to shift PerformancePoint into the Office/SharePoint stack. Describing the former PerformancePoint -- which Microsoft plans to continue to develop as "PerformancePoint Services for SharePoint" -- as a "discontinued" or "under-invested" technology, Adaptive Planning says it will offer disaffected PerformancePoint customers 75 percent off the subscription fees for its budgeting, planning, and forecasting SaaS-ware. In a statement, CEO William Soward even referred to his company's program as a "lifeline" for PerformancePoint customers.

Microsoft's move and Adaptive Planning's response highlight another trend in PM: a shift away from a narrative in which budgeting, planning, and forecasting are converging (or inevitably will converge) with dashboarding, scorecarding, and other, more recognizable forms of BI. Microsoft isn't killing PerformancePoint, after all, but it is deemphasizing that product's BP&F component -- and that's precisely what Adaptive Planning zeroed in on.

Redmond plans to offer BP&F functionality via its Dynamics line (chiefly, through its Forecaster and FRx poducts) -- a move that some (such as Adaptive Planning) spin as Microsoft's basically having given up on PM. Industry veteran Cindi Howson, founder of BIScorecard.com, says that the too-long-prolonged convergence narrative should finally be put to rest.

"In working with customers on selections, I have seen some convergence but not as much as I would have expected amid the buzz or the controversy," Howson writes on her blog. "While convergence is a good vision, in reality, few of the product lines that span performance management and BI are that well integrated (yet). The tasks associated with each application are different, and it seems neither user segment is willing to sacrifice functionality for integration or one-stop-shopping."

Howson also considers the obverse of the coin. "There is of course the alternative view to this move: that Microsoft simply got into the performance management game too late and is simply conceding the market to competitors, vendors who have been there longer and have stronger relationships with the office of finance. Microsoft says it will pursue the performance market as a company but via its Dynamics business unit, not the BI business unit," she says, concluding "I would say there's a degree of truth in both views."

PM Players Thrive Despite Consolidation

The PM segment does not lack for competitors.

Take Clarity Systems. Gartner notes that Clarity is "one of the remaining independent CPM specialists that represents a viable option for firms that do not want to commit to larger-vendor, end-to-end offerings." It's a predictable marketing point -- during periods of consolidation, smaller vendors tend to rally around the idea that customers want alternatives to the established leading players -- but that doesn't make it any less true. Clarity's recent financials were record setting, spurred by 40 percent year-over-year growth in licensing revenue. If it worked for Informatica in the data integration (DI) segment, it could certainly work for Clarity and others in PM.

Part of Clarity's success stems from its bona fides: it markets a viable alternative to the all-in-one offerings of the Big Three, according to Gartner. Its Clarity 6 suite comprises Excel and Web interfaces layered on top of a unified metadata model. It also markets both a SaaS deliverable (Clarity OnDemand) and a dedicated financial reporting solution, Clarity FSR. The latter, not surprisingly, is one of Clarity's biggest growth engines.

"[Clarity] is using FSR to gain greater marketing visibility and to sell into existing competitor accounts, as compared with those of vendors in the process of rationalizing portfolios that include acquired products," write analysts Neil Chandler, Nigel Rayner, and John E. Van Decker in Gartner's most recent CPM Magic Quadrant report. "With FSR, Clarity has strengthened its CPM solution to improve financial reporting and statutory report submission, making it easier for organizations to create and submit reports, such as 10-Ks, with reduced costs and improved compliance."

Clarity has had success targeting customers of all sizes, but PM pure-play Exact Software, which markets Longview, primarily caters to small and midsize enterprise (SME) customers. Exact's offering is suite based, and -- as is the case with Adaptive Planning, Clarity, and others in the PM space -- it's helped Exact post stellar growth numbers. Like Adaptive Planning, which focuses on BP&F, Exact is more of a niche player than is Clarity: a fair chunk of its revenue growth has been fueled by sales of Longview's tax planning and reporting component.

"This is not part of the current market definition of CPM suites, as this functionality is generally still purchased on a best-of-breed basis, and some of [Exact's] … larger sales in this space are for tax solutions only," the Gartner trio indicates. "However, this is an integrated part of [Exact's] … offering, and it can act as a differentiator in some CPM evaluations."

Exact isn't sitting still: it's prepping a data visualization component (called Optix) and plans to deliver the next major revision of its PM suite, Longview 7, an SOA-based offering that uses Microsoft .NET. Both deliverables are scheduled to ship this year.

Like Clarity and Exact, PM player Infor also made the cut in Gartner's latest CPM Magic Quadrant survey. Gartner lists it as a "Challenger," largely on the strength of its Infor PM 10.1 -- an enterprise PM offering -- and Infor PM Business Edition, an SME offering that it released just last year.

Unlike either Clarity or Exact, Infor comes to PM via mid-market ERP, which means that it has an enormous -- and potentially PM-hungry -- installed base: Infor claims 70,000 users of its ERP software and says it has up to 3,000 PM customers. Like virtually every other player in the PM space, Infor is growing at a healthy clip. "Infor has again seen steady growth during the past year in CPM sales with its enterprise solution Infor PM 10," the Gartner trio concludes.

TDWI Membership

Get immediate access to training discounts, video library, research, and more.

Find the right level of Membership for you.