Chief Financial Officers and other business leaders have a challenge ahead: faster decision making based on ever-growing pools of information. For finance, organizations looking to better manage this information and make more effective strategic decisions turn to corporate performance management solutions to accomplish goals and make smarter decisions.
But the first decision many organizations need to make is this: “What software should I use?”
The Gartner Magic Quadrant
To address this, leading analyst firm Gartner takes a look at many of the software options available to businesses, releasing a variety of Magic Quadrants—the company’s analysis of different software solutions based on interviews with end users and executives at companies in order to provide gold standard research for organizations looking to purchase software.
Host Analytics has continued to move upwards and to the right on the Magic Quadrant for “Corporate Performance Management Suites,” beginning as a ‘niche player’ on its first Magic Quadrant in 2009 and moving up through the years to ‘visionary’ status, noting its increasing completeness of vision.
2016: A New Era of CPM Magic Quadrants
We noted Host Analytics achieving such status in 2014 and 2015, but as the times and vendors change, so did the Magic Quadrant. This year, Gartner split its Magic Quadrant for CPM into two segments: financial CPM (FCPM) and strategic CPM (SCPM), following research titled “The Breakup of the CPM Suite,” quoted,
The split enables finance application strategists to leverage FCPM applications to better target improvements in accounting processes as well as management reporting and analysis
The split enables finance and corporate application strategists to leverage SCPM solutions to provide enhanced business planning and best practices for corporate planning and modeling, performance reporting and strategy management
The emergence of FCPM and SCPM will create new evaluation and implementation challenges for CPM strategists
New Magic Quadrants: FCPM and SCPM
Following the split, Host Analytics found itself competing among other leaders in both the Financial CPM and Strategic CPM categories:
What is Strategic Corporate Performance Management?
SCPM solutions support the office of finance’s budgeting, planning and forecasting efforts. They also provide profitability modeling and strategy management capabilities. Ultimately, these solutions help CFOs and other business leaders orchestrate organizational performance and manage strategy in a more controlled and transparent manner.
All vendors support at least two of the following components of SCPM:
- Financial budgeting and planning: The financial budgeting process sets short-term targets for revenue, expenditure and cash generation, usually with a one-year horizon. It typically uses financial classifications found in the general ledger to classify financial goals and targets.
- Integrated financial planning (IFP): Joins the financial planning components of other business domains, such as workforce and sales, with those of corporate finance, with the goal of improving the financial plan.
- Strategy management: Enabled through corporate planning and modeling and/or specialized applications. Strategy management applications exist to support SCPM initiatives.
- Profitability modeling: Enabled through corporate planning and modeling and “point” solutions that provide best-practice capabilities, especially for more flexible, end-user-driven corporate planning and modeling initiatives.
- Performance reporting: Takes management reporting to a new level of inclusion and ease of use with additional collaboration capabilities that transform traditional management accounting reports into new performance playbooks that provide a more inclusive approach to results explanation. Performance reporting incorporates both operational and financial results and enhanced narratives.
For full descriptions of each component, download the entire SCPM Magic Quadrant from the Host Analytics website.
What is Financial Corporate Performance Management?
Gartner defines the components of an FCPM solution as supporting financial accounting processes to achieve a corporate financial close, including financial reporting and consolidation, and enhanced financial control and automation (EFCA). The FCPM market includes the following six key pillars or components:
- Financial consolidation:The ability to bring together financial information from multiple general ledger (GL) sources, while providing for eliminations for intercompany accounting and booking for joint-venture and non-GL businesses.
- Financial reporting: Provides financial accounting-based reporting to meet the demands of regulators, investors and tax authorities, and to inform the operational and strategic financial management of the organization.
- Management reporting, costing and forecasting: Provides responsibility reporting and cost accounting reports to the management of the enterprise, as well as inputs to disclosure reporting to investors. Within management reporting, predictive capabilities are leveraged to forecast future financial reporting, based upon actuals and plans.
- Reconciliations/close management: The capability to manage the financial close, including activities spanning the accounting cycles. These include the EFCA functions of reconciliation management, close cockpits that span ERP and post-ERP processes, and journal entry control.
- Intercompany transactions: Also an EFCA function, the ability to approve at a voucher level and handle accounting transactions across multiple GLs and companies. This function works closely with intercompany reconciliation.
- Disclosure management: Also an EFCA function, the ability to support multiple regulatory requirements for disclosure reporting, including eXtensible Business Reporting Language (XBRL) and in-line XBRL (iXBRL) tagging. These products may also provide a “board book” capability, as well as forming the foundation for performance reporting within SCPM.
For full descriptions into FCPM components, download the FCPM Magic Quadrant from the Host Analytics website.
Magic Quadrants: SCPM and FCPM
The Magic Quadrants for both SCPM and FCPM are shown below.
2016 Magic Quadrant: SCPM
2016 Magic Quadrant: FCPM
Get the Full Reports
Host Analytics has made both reports available in full on their website: Download the 2016 Magic Quadrants for Financial Corporate Performance Management and Strategic Corporate Performance Management here.
Wipfli/Brittenford has been a provider of financial management solutions to businesses of all sizes. Learn more about Host Analytics, as well as our other software solutions for businesses, and contact us here.