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Gartner’s Cloud ERP Magic Quadrant Lists Sage Intacct and Microsoft Visionaries

Gartner’s Cloud ERP Magic Quadrant Lists Sage Intacct and Microsoft Visionaries

As the market for Enterprise Resource Planning applications continues to evolve, the cloud has become the primary option not only for growing businesses, but for enterprises as well. As the cloud continued to become more feasible, Gartner announced a shift last year in its Magic Quadrant to reflect this new market—announcing a change from a generic listing of ERP applications to a cloud-only listing, citing the $31B opportunity that exists and the role of the cloud in a “postmodern ERP strategy.”

“The market for core financial management suites has been static for many years. However, over the last 12 to 18 months, cloud core financial management suites have matured to such an extent that they have disrupted this static market. This reflects the increasing prevalence of postmodern ERP strategies.

[…] Postmodern ERP is the deconstruction of suite-centric, monolithic, on-premises ERP deployments into loosely coupled applications, some of which can be domain suites (such as core financials or HCM) or smaller footprint applications that are integrated as needed.”

2017 marked a shift in the thought process for applications, as Gartner made the same move toward the cloud for Corporate Performance Management suites last year as well.

In 2018, the market has stabilized, and enterprises are going full steam ahead toward the cloud—by 2023, 50% of all new midsize core financial management application projects and 25% of large and global ones will be public cloud implementations.

Background: 2018 Gartner Magic Quadrant Financial Management Applications

Why Cloud?

Throughout the past year, companies have shown demonstrated interest in the cloud, with specific interest in public cloud applications.

“Many large organizations with extensive on-premises business application architectures for core financial applications are investigating cloud solutions’ capabilities and gauging when they should switch to the cloud. […] Many are pursuing a postmodern ERP strategy that involves surrounding their ERP solution with best-in-class cloud solutions for ancillary functionality, where faster processing, better collaboration and easier-to-use analytics are needed (such as for travel expense management and financial planning and analysis).”

What’s pushing these organizations toward the cloud? Gartner cites five major attractions:

  • The ability to keep up to date with new releases (customers are generally forced to stay within one or two releases of the current one)
  • A more consumerlike interface
  • Improved analytics
  • Improved agility, gained through faster introduction of new functionality
  • More emphasis on end users (in the office of finance) managing the applications, with less reliance on IT staff

What Defines a Core Financial Management Suite?

This Magic Quadrant covers core financial management suites that provide a view of an enterprise’s financial position through automation and process support for any activity that has a financial impact. According to Gartner’s definition, core financial management suites include:

  • The functional areas of general ledger (GL), accounts payable (AP), accounts receivable (AR), fixed assets (FA), project accounting, project costing and project billing.
  • Financial analytics and reporting capabilities, including provision of financial information (via profit-and-loss statements and balance sheets, for example), and of key performance indicators to managers and executives.
  • Basic indirect purchasing functionality (from creating a requisition through to purchase order processing, and AP invoice matching and payment). Many enterprises — especially midsize ones — need some basic procurement functionality within their core financial applications.

What Constitutes a Cloud Solution?

Additionally, Gartner required applications judged to meet specific “cloud criteria,” which included ‘born in the cloud’ solutions designed initially as cloud applications, multi-deployment solutions, re-architected solutions, and traditional applications delivered as public cloud applications.

“Cloud solutions typically improve agility and collaboration, and offer superior analytics, ease of use, geographic coverage and industry capabilities. Consequently, the market’s focus has shifted rapidly to cloud-based solutions. The rate of cloud adoption varies widely, however — by industry, business domain and organizations’ size, sophistication and resources.”

How Vendors Are Judged

The Magic Quadrant is based on sustainability, judging vendors on their success as a company. These judgements are based on completeness of vision and ability to execute. This differs from the product analyses, which are discussed in the Critical Capabilities report to be released later this year.

Ability to Execute

  • Product or Service
  • Overall Visibility
  • Sales Execution
  • Market Responsiveness
  • Marketing Execution
  • Customer Experience
  • Operations

Completeness of Vision

Eight components go into the completeness of vision judgements.

  • Market Understanding
  • Marketing Strategy
  • Sales Strategy
  • Product Strategy
  • Business Model
  • Vertical/Industry Strategy
  • Innovation
  • Geographic Strategy

The 2018 Magic Quadrant Core Cloud Financial Management Suites

Based on the criteria above, companies are broken into four groups—leader, challenger, visionary, and niche player. Each vendor that makes the list is defined as one of the following:

  • Leader: Higher Completeness of Vision, Higher Ability to Execute
  • Challenger: Higher Ability to Execute, Lower Completeness of Vision
  • Visionary: Higher Completeness of Vision, Lower Ability to Execute
  • Niche Player: Lower Ability to Execute, Lower Completeness of Vision

2018 Gartner Magic Quadrant Financial Management and ERP

Sage Intacct Named Visionary Cloud ERP

Appearing once again on the list as a visionary, Sage Intacct continues its push toward the top right corner of the Magic Quadrant. Following Sage’s purchase of the company last year, the company has gained a powerful backer as the company looks to expand beyond North America.

“Sage Intacct provides a full suite of core financial management applications. It also offers time recording, expense management, inventory management, and contract subscription billing and revenue management capabilities. Its solution is aimed at small and lower-midsize enterprises, but scalable enough for some large ones. Sage Intacct’s customers are primarily in service-centric industries and the not-for-profit sector. Intacct had focused entirely on North America, but now, as part of Sage, it is expanding its reseller channel into Europe and Asia/Pacific, and is focused on broader international expansion.”

Noted for its strong cloud commitment, functionality, vision, and customer feedback, the company scored fourth-highest completeness of vision. Gartner noted that the company’s focus on North American midsized enterprises limits its opportunities, but does have the potential to cater to larger ones as well.

Microsoft Named Visionary for Dynamics 365 for Finance and Operations

While Microsoft offers a broad variety of ERP applications, many of which we provide to our own customers on premises, hosted, and in the cloud, the only current solution that meets Gartner’s inclusion criteria is Dynamics 365 for Finance and Operations.

From Gartner:

“Microsoft launched Dynamics 365 for Finance and Operations in November 2016 as a repackaging of Dynamics AX7, which it released in March 2016. (Dynamics AX7 was a rearchitected version of Dynamics AX 2012, which focused on public cloud deployment in the Azure cloud.) Dynamics 365 for Finance and Operations continues the “cloud first” strategy of Dynamics AX7, but hybrid and fully on-premises deployments are also possible (this document Magic Quadrant assess only the cloud product).”

Among the strengths, Gartner noted the functional capabilities, the integration with Power BI, and geographical reach, while noting that the company could work to improve its positioning, as well as fighting through the growing pains that come from being a new product in the market.

Get the Report: 2018 Magic Quadrant for Core Cloud Financial Management

If you are considering ERP in the cloud in 2018, 2019, or beyond, and would like to see where each player stands in terms of functionality, market readiness, and more, we invite you to download the entire report free of charge from our friends at Sage Intacct. Just head over to the Analyst Reports section to peruse this and other offers. Ready to learn more about our work with Microsoft Dynamics and Sage Intacct? Reach out to us for a free consultation.


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