Market for enterprise performance management still maturing, says new study
Dresner Advisory Services has published its 2019 Wisdom of Crowds - Enterprise Performance Management Market Study, which provides a comprehensive look at user perceptions, intentions and realities associated with enterprise performance management systems.
The 2019 report builds upon four previous enterprise planning market studies from Dresner, and turns the focus to enterprise performance management, reflecting what the research firm sees as a shift to a more holistic approach to performance management. While enterprise planning remains an important aspect of EPM, the report now covers capabilities such as artificial intelligence, data-driven decision-making, and the impact of EPM on other enterprise systems such as enterprise resource planning (ERP).
Current adoption levels indicate that the market for enterprise performance management is still maturing and has room for future growth. According to the study, 38 percent of organizations already use enterprise performance management software, while a total of 30 percent are either currently evaluation, or may use enterprise performance management software in the future.
Annual financial budgets are the highest priority planning capability in enterprise performance management, although respondents highly rank more advanced capabilities such as rolling forecasts, strategic planning, and linking strategic plans to annual budgets.
Information Management spoke with report author Howard Dresner, chief research officer at Dresner Advisory Services, for his take on the significance of the report findings.
Information Management: Dresner Advisory Services has released its 2019 study on enterprise performance management. What are the key findings in this year’s study?
Howard Dresner: The market for enterprise performance management is still maturing and has room for future growth. Sixty-two percent of respondents are potential future users of enterprise performance management software.
Finance and operations are the functions with the highest levels of enterprise performance management adoption today, with 64 percent and 50 percent respectively.
Adoption plans for EPM are skewed to 2021 or later. Sixty-nine percent of organizations considering enterprise performance management software plan to do so beyond 2020.
Most respondents view enterprise performance management as an important technology. 87 percent rate enterprise performance management as critical, very important, or important.
IM: How do those key findings differ, if at all, from last year’s study?
Dresner: The scope of the study has changed from 2018 to 2019, thus direct comparisons are not easy to make. In 2018, the study was focused purely on enterprise planning (primarily planning, budgeting and forecasting) while in 2019 the scope was broadened to enterprise performance management.
EPM systems include core enterprise planning capabilities (strategic, operational and financial planning and forecasting) but include reporting and analytics capabilities that allow organizations to set goals and objectives and monitor performance against those objectives.
The main difference are that the adoption of EPM is lower than for enterprise planning (38 percent currently use EPM today compared to 58 percent using enterprise planning in 2018). Also, in 2018 SaaS became the preferred deployment option for enterprise planning while it is not yet the preferred deployment option for EPM, especially in very large organizations (more than 10,000 employees).
IM: What did you find to be the most surprising findings?
Dresner: SaaS is not yet seen as important for EPM compared to enterprise planning and some other areas of BI and analytics. Cloud deployment (whether SaaS or hosted/private cloud) is overall preferred to on-premises deployment, but in 2018 we saw a marked increase in the preference for SaaS in enterprise planning. EPM is slower to move to SaaS than enterprise planning.
A total of 56 percent of respondents use EPM at country, regional or global level. This shows that the majority of EPM deployments are at a significant business entity level, with 36 percent being at global level. This is impressive in a market that is still maturing.
IM: How are so-called emerging technologies or disruptive technologies impacting EPM?
Dresner: The survey included questions on machine learning and AI, as Dresner Advisory views this as a potentially disruptive technology in this space. Respondents were split on the impact of machine learning and AI in enterprise performance management. 29 percent of respondents see significant potential in AI and machine learning, while 21 percent feel that users will resist its adoption and 50 percent are undecided. The executive management function sees the greatest beneficial impact from machine learning and AI.
We feel that machine learning and AI could be a source of competitive advantage in EPM for both vendors and early adopter end users. 41 percent of respondents stated they expect these capabilities to be delivered by their enterprise performance management vendor, so there is definitely an opportunity for vendors to create differentiation in their EPM solutions by leveraging machine learning and AI.
IM: Among those organizations that are most using EPM software, what are they seeking with the tool and what results are they getting?
Dresner: In terms of functional capabilities, annual financial budgets are the highest priority planning capability in enterprise performance management, although respondents highly rank more advanced capabilities such as rolling forecasts, strategic planning, and linking strategic plans to annual budgets.
Organizations use EPM software to replace informal and spreadsheet-based performance management practices and processes. This is reflected in 88 percent of respondents stating they use data-driven decision-making either all the time or most of the time. Only 12 percent say they use data-driven decision-making some of the time, and only 1 percent use it infrequently.
Also, because executive managers, finance and line-of-business managers frequently use EPM software, this can help overall penetration of BI capabilities in functions that can be harder to reach with more generic BI tools.
IM: How is overall satisfaction among these organizations with their experiences?
Dresner: The satisfaction varies by vendor relationship. Dresner Advisory rates vendors using 33 different criteria, on a five-point scale for each. Criteria covers sales /acquisition experience (8 criteria), value for price paid (1), quality and usefulness of product (12), quality of technical support (5), quality and value of consulting services (5), whether the vendor is recommended (1), and integrity (1). The market study gives detailed analysis by vendor against these criteria.