What do the 3 trends in CPM landscape developments mean to you?

Cloud, integration and platform

15 minutes reading time

The past decade will not be remembered for its technological developments when it comes to corporate performance management (CPM) solutions, but the market is ready for a significant transformation. Recent developments in cloud computing, in-memory computing, machine learning, artificial intelligence and big data infrastructures make it easier to process large amounts of data and to identify risks and opportunities to improve results. How does the, traditionally somewhat conservative, finance role adapt to these developments? How do CPM vendors respond to this? Discover the developments within the CPM landscape.

From On-Premise to Cloud

Corporate Performance Management solutions help the Office of Finance with processes such as Financial Close, Reporting, Budgeting, Planning, Forecasting and Analysis. Figure 1 shows an overview


Figure 1: CPM cycle (© CPMview)

In recent years we’ve seen an increasing shift in the market from legacy on-premise CPM applications to new innovative cloud solutions. Driven by technological progress, CPM vendors are investing in SaaS solutions to reduce the support costs for their applications, increase flexibility and achieve better ‘time to value’. New CPM cloud solutions are generally more user-friendly and easier to manage than their on-premise predecessors and offer the following advantages:

  • Leverage the latest technology and software versions.
  • Geared towards the end user of the solution which reduces dependence on the IT department within organisations.
  • Promise better performance through innovative platforms with in-memory databases.
  • Offer better and simpler integration options with different data sources.
  • Offer more friendly and modern licensing models and therefore a lower initial investment for the customer.

Conclusion, the CPM market is on the move! Established names in the market such as SAP, Oracle and IBM must develop new solutions to cope with this shift and can no longer rely on their long-established solutions. They must convince their existing customers to go along with this direction and present the customer with a roadmap that meets modern demands and requirements with an acceptable price tag and migration path.

At the same time, the entry barriers for new players in this cloud market are lower than before and these new players are not affected by the difficult transition that existing players have to make. Despite all this, the market is still fairly concentrated, probably due to the relatively high development costs and complexity when it comes to creating new solutions. Nevertheless, players such as OneStream Software, Workiva and Vena Solutions, all founded around the beginning of this decade, have managed to gain an important position in the market for CPM solutions and to advance their established competitors in various ways.


Figure 2: CPM Value Matrix – NUCLEUS RESEARCH

Cloud, integration and platform – the words that spell success? Chances are that if you look at the website of a CPM vendor today you will come across the words cloud, integration and platform repeatedly. The CPM vendors’ strategy is also largely focused on these concepts, although the meaning is not the same for all suppliers. To illustrate this, we put our technology partners SAP and OneStream Software next to each other to see how they substantiate these terms. I would like to state explicitly that this is our own interpretation of SAP and OneStream’s strategic course in this.

SAP – The Intelligent Enterprise

SAP is catching up in the cloud market with its own SAP Cloud Platform. SAP offers a high performance in-memory HANA database. A mature ERP suite called S/4 HANA that is built on years of experience in the on-premise market with predecessors such as R/3 and ECC. A digital platform focused on integration and intelligent technologies such as Artificial Intelligence, Machine Learning, IoT and Blockchain. SAP has positioned itself for the future as a cloud company with Intelligent Solutions: The Intelligent Enterprise.

SAP emphasises the integrated platform with solutions for Finance, Supply, HR, Sales and Manufacturing. Looking specifically at the CPM market, integration continues because SAP also integrates ERP with CPM within its platform. You could also say that SAP brings operational finance together with planning, budgeting, consolidation and reporting. Hence, C-level topics.

Driven by technological progress, it is possible in SAP’s vision to plan, consolidate and analyse large amounts of data on a high level of detail on master data. Bringing Finance and CPM together in one platform guarantees data quality, one definition, a faster close or even continuous accounting, and complete transparency and audit trail. It’s no longer necessary to transfer the local figures of entities from the local accounting systems to a CPM solution for the Group Close, for example. The consolidation functionality is directly available in the S/4 HANA Finance suite where the local close and group close are two sides of the same coin. All this can be illustrated as below, see figure 3:

Figure 3: Group reporting scenario landscapes

SAP is fully committed to integrate ERP and CPM together in a total Finance solution. Cloud-based in terms of architecture and delivery using modern and intelligent technologies. An ambitious strategy with possibly a number of implications for its CPM applications.

Broad innovation agenda

Due to the wide-ranging SAP innovations within the platform, in which we can safely say that the ERP layer (the basis) has the first priority, SAP can potentially fall a bit behind in terms of development of its CPM cloud solutions compared to the competition in the market.

SAP Group Reporting is the new strategic solution by SAP for Financial Consolidation and the Group Close. The product only recently entered the market and is therefore not yet mature or proven, but promises a broad and advanced package of functionality for the future. SAP combines the best of its various on-premise consolidation solutions in this new solution. We are talking about SAP BW-BCS, SAP BPC (formerly Outlooksoft) and SAP Financial Consolidation (formerly Cartesis).

SAP Group Reporting was primarily developed as an integrated solution within the S/4 landscape and can be rolled out both in the cloud and on-premise, see figure 4 for an overview of Group reporting architecture. SAP Group Reporting is also available as a standalone public cloud solution separate from operational accounting and other ERP functionalities in S/4 HANA.

Figure 4: Group reporting architecture

In addition to Group Reporting, SAP Analytics Cloud (SAC) is SAP’s strategic FP&A solution. SAP Analytics Cloud brings business intelligence and planning functionalities together in one product and uses machine learning and AI for predictive analytics. Together with Group Reporting and S/4 Finance, SAC offers a total financial management solution for Actuals, Budget and Forecasts within the S/4 landscape.

Figure 5: FP&A for SAP S/4HANA Cloud

SAP’s CPM offering for now and in the future

SAP is offering a very advanced and wide range of CPM functionality within its S/4 platform in the near future. A game changer, a total package in which its own database technology, ERP solutions and CPM solutions come together in one financial management system. In particular for full swing S/4 customers, it’s a very nice proposition.

In addition to the innovative cloud portfolio, in the coming years SAP customers can still opt for mature and proven on-premise solutions such as SAP Business Planning and Consolidation (BPC). In a managed hosting scenario in the modern BW/4 HANA landscape with full integration of SAP Analytics Cloud a complete, proven and modern standalone CPM solution.

OneStream – the modern, unified platform for corporate performance management

The words platform and integration are also central to OneStream. OneStream is offered both on-premise and in the cloud where migration from one scenario to another is just a matter of hours. In short, developed in its DNA as a cloud solution with maximum IT deployment scenarios.

Yet the words platform and integration have a different meaning here than for SAP. OneStream is designed to be an independent CPM solution, not linked to a preferred ERP application and solution.

At OneStream, platform means one unified solution for Financial Consolidation, Reporting, Planning, Analytics and Data quality all in one product. In addition, the OneStream SmartCPM™ platform has its own MarketPlace of additional solutions. This can be compared to the AppStore (MarketPlace) on your iPhone (Platform). As a OneStream user it’s possible to continuously download new solutions into the OneStream platform such as Account Reconciliation and specialty planning solutions for HR (people planning), Sales, Capital and Cash Planning. But also workflow solutions to keep a better grip on the completion, like a Task Manager and Close Manager. And more recent solutions to meet the requirements of IFRS 16 or advanced dashboard capabilities.

Platform therefore stands for integration of the most important CPM processes for the Office of Finance. Continuous innovation via the XF MarketPlace, flexibility without direct dependence on the structures of one ERP, and advanced methods to integrate (master) data from different sources while maintaining data quality. A platform that can deal with heterogeneous landscapes and offers the flexibility for organisations to include new companies in their financial reports outside of clearly defined ERP structures. A platform that wants to meet the best CPM solutions for the many without optimising it specifically for a particular ERP solution.

A stand-alone CPM solution always comes with some important points of attention. First of all, how can the solution handle master data management and master data governance issues between different applications? What are the performance implications when a large detail of source data is needed for management reporting purposes? What is the actual implementation time required to integrate data and source systems in a heterogeneous landscape? And how does the system cope with the inevitable duplication of data (single source of truth) and associated data quality topics? Also for OneStream implementations, sufficient attention must be paid to these topics.

Figure 6. SmartCPM Platform OneStream


The CPM landscape is on the move. There’s plenty of choice for organisations that are looking to replace their current CPM 1.0 solutions for the Office of Finance. Do you strategically choose the all-in solutions by major vendors such as SAP and Oracle and do you achieve economies of scale from your investment in the longer term? Do these vendors offer the best tailor-made solutions for your complex organisation? Are these solutions flexible and cost-efficient enough to keep pace with market developments?

Or do you want an independent CPM 2.0 solution built with the aim of offering the best CPM experience? Solutions that are flexible, independent and integrate with a multitude of G/L and ERP systems. Where ownership and management can primarily lie within the Office of Finance.

We continue to follow these developments with great interest. Do you want more information about our SAP or OneStream services? Need help making the right choice for your next CPM solution?