A measure of performance

19 Dec 2007

The recent acquisition of Business Objects by SAP was the latest round in the battle between the two ERP giants, following on from Oracle’s takeover of Hyperion back in March.

With two of the leading business intelligence vendors now subsumed into the portfolio of the big application software companies, Cognos is the only major BI player to retain its independence.

Such activity highlights how hot this software sector has become. IDC estimates that business analytics software revenues grew by 11.2pc in 2006, reaching US$19.3bn and it predicts annual growth rate of 10.3pc over the next five years.

Closer to home, a survey carried out by iReach for SAS revealed that BI was used as a core software asset by all sectors in the Irish market although depth of deployment varied. Over 66pc of financial services respondents employ it across all functions, but the majority of organisations, such as the public sector, use it mostly for operational tasks rather than predicting future trends.
Local software and services company ProStrategy has built up strong channel partnerships with business intelligence vendors including Cognos and has a better take than most on where the market is heading. Like SAS, Business Objects and Hyperion, Cognos is a high-end specialist provider that has three strands to its product range: reporting and analytics, planning and control.

“There are a limited number of companies here that will be interested in Cognos-type products and the ones that are have a solution by now. It’s like tier one ERP, the customers have largely decided,” says ProStrategy managing director Noel Shannon.
There is, however, a big opportunity for performance management and business analytics in the medium-enterprise space. As a Microsoft partner ProStrategy has high hopes for the Dynamics ERP product and its integration of analytics tools that came with the software giant’s acquisition of ProClarity last spring. “Microsoft’s performance management offering is very exciting and we think lots of companies will want it. There is a huge service opportunity for us in putting together a good stack of Microsoft solutions for organisations, with the ProClarity piece at the front end,” he said.

While more companies are looking to PM there is still an education job to be done to help them maximise its adoption, according to Shannon. “When we go in with a PM solution we spend a good deal of time getting the data correct underneath it. Otherwise you’re putting icing on a bad cake. All PM systems assume you have good integrity in your data so you do need to normalise it, get it in the right place with people defining fields in the same way.”

More companies are finding it easier to get right, says Shannon, because they have put in ERP systems which tie them to a single database. With this foundation in place they will be able to get their reporting tools working properly, paving the way for full-blown PM. “Reporting is about looking into the past. From there you can get to the planning and the budgeting phase and then you can start looking to the future,” says Shannon.

Fiona Walsh, channel and business development manager at SAP Ireland, agrees that proper PM depends on the quality of the data. “What drives the ability to prove and monitor performance is reporting and the visibility of real time data. You have to be able to drill down, find the data and measure it against the KPIs [key performance indicators]. It’s all very well having a KPI that can improve efficiency by 10pc, but you have to be able to prove it.”

An organisation’s most important KPIs will depend on the market they are operating in. “For some it might be around bringing a product to market faster. For others it will be revenue and growth. It’s about having the metrics in place and being able to track their relevance to the KPIs,” says Walsh. The challenge for SAP and other PM vendors is being able to take myriad data and treat it with a consistency of approach that makes it easier to mine. “Business Objects will continue to help us to do that,” says Walsh, commenting on the recent acquisition.

While she welcomes the breadth and scope the products will bring to the SAP portfolio she says that technology is ultimately an irrelevance. “Chief financial officers don’t care where the information comes from as long as it is clearly visible. They will have a dashboard on their personalised portals that can predetermine the alerts they want to see. They will be able to see problems emerging and be able to take decisive action to turn it around.”

For ERP vendors like SAP it has been a natural next step to integrate PM tools into their applications. “In the last five or six years we had seen organisations running Kaplan and Norton scorecard systems so it was a natural evolution for SAP to embed them in our solution,” says Walsh.

Another part of a successful PM strategy is to ensure that it is closely aligned to the HR function and human capital, says Walsh. “We see PM as part of a holistic area called ‘talent management’. Companies have to look right across the organisation and identify the roles that need to be occupied within the business to support PM. You have to evaluate whether the existing workforce has the skills required and if it doesn’t, you go out and hire them.”

The thinking is that the wider business goals should increasingly be linked to individuals who are measured in terms of KPIs and MBOs (management by objectives). “The responsibility is devolving from the executive board and line managers all the way down to the individual. The personal contribution of each employee is measured in terms of how it affects the strategy of the business,” she says. This has transformed the dynamic for employees. “It used to be only senior employees who managed on an MBO basis, but anecdotally it’s clear that many more people now have bonuses related to performance.”

By Ian Campbell