While the number of organizations moving forward with business performance management (BPM) is expanding, the number of established BPM vendors is shrinking. These two trends may seem contradictory, but they're really not. Let's look at what is driving the consolidation in the BPM space, and what the implications are for current users and future purchasers.
In the past two years, there have been quite a few mergers involving performance management software companies. Two primary trends are driving this consolidation. The first trend is that vendors are filling holes in their product offerings or strengthening existing components. Cartesis acquiring INEA is an example. Cartesis is a very strong player in complex, global financial consolidations, one of the cornerstones of BPM. Until fairly recently, they did not have a separate budgeting and planning module, another key element of BPM. When they did finally release their own budgeting module, they found themselves in the market with a version 1.0 product competing with many established products. To level the playing field, they needed a budgeting product that had gone through several versions and had a robust feature set. They were able to find these necessities in INEA's product set. Thus, this first trend is really about time to market with a complete, robust BPM suite.
The other major trend involves business intelligence (BI) vendors trying to get a bigger piece of the BPM pie. Most pure-play BI vendors have looked at performance management as expanding the usage of dashboards. While dashboards and the scorecards they display are a key part of BPM, without solid consolidation and planning systems underneath to process the data to be analyzed, the BPM system is incomplete. Business Objects realized this and announced the recent acquisition of SRC Software with its consolidation and planning software, rounding out their product set. It wasn't too long ago that Business Objects was criticizing Cognos for doing pretty much the same thing (with their acquisitions of Adaytum for budgeting and more recently Frango for consolidation). Clearly, most of the BI vendors are now seeing that BPM represents a strategic business initiative that is helping to drive the growth of the BI market as well as the BPM-specific applications that are required. Our own BPM Pulse survey confirms that Business Objects has done the right thing: the overwhelming majority of BPM purchasers are looking to buy packaged applications or packages plus tools to extend the applications. Business Objects has now joined the ranks of Hyperion and Cognos as one of the few BPM vendors to offer the full spectrum of BPM tools and applications.
What does this mean for BPM customers and prospects? For prospects, it means that it may soon be possible to buy a complete suite of BPM components from a single vendor that offers the depth of functionality typical of best-of-breed products. The reason we say "soon" is that many of these mergers still face the huge hurdle of true product integration (user interface, data and meta data). If you are focused on just one module today - planning, for example - it may be okay to buy it now from one of these vendors. It is reasonable to assume that by the time you are ready to add additional modules, they will have dealt with their integration challenges, at least at a basic level.
For current users of these products, the story is a little different. While your newly merged vendor may offer you more choices in the future, the products you are currently using may undergo significant changes to fit with their new stablemates. Additionally, the sales or support team you have developed a relationship with may be reorganized, and more than likely there will be some departures. However, it seems unlikely that the product itself would be dropped. These mergers are happening because of the products; thus, the products will enjoy a long life, perhaps a longer and healthier one than their prior owner could have provided.
In summary, this market consolidation is good for the end-user community in the medium term, but you should watch for potential near-term bumps in the road as the consolidated organizations adapt to their expanded product suite and learn the strengths of their combined teams.
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