Although business performance management (BPM) offers outstanding benefits, such as helping organizations align their performances to their business processes and their overall organizational strategies, widespread adoption has been slow at best. BPM vendors need to ask themselves why this has been the case, and what they can do to increase their market penetration. A step in the right direction would be to identify BPM's competitors within the overall business intelligence (BI) market, analyze the market penetration that BI solutions have sustained, and determine how BPM can reposition itself to increase its competitive edge.
Identifying Vendor Differences
Identifying the way vendors are positioning themselves in the market may help users find the vendors that most closely meet their requirements. Although there is a great deal of feature and functionality crossover, vendors market their differences aggressively. This may create confusion for user organizations. Differentiators among vendors are generally seen in business benefits, market positioning, and organizational uses, which often translates into how solutions are adopted and used.
BPM Vendors
Leading BPM vendors include Applix, Cartesis, CorVu, Clarity Systems, Actuate, and Hyperion. Analysts forecast that the BPM market will reach roughly $1 billion (USD) by 2011. While BPM vendors provide similar features as their BI counterparts, they primarily focus on planning, budgeting, forecasting, consolidation activities, etc. that center on an organization's financial performance. This can include sales and marketing efforts, human resources management, and vertical market solutions.
Traditional BI Vendors
Traditional BI vendors include Cognos, Business Objects, Information Builders, and MicroStrategy. In 2005, analyst consensus placed the overall BI market between $4 billion and $6 billion (USD) with high growth rates for subsequent years. BI vendors provide users with the ability to create and leverage data from within a data warehouse, and extract, transform, and load (ETL) functionality that pools data from across various applications to create a centralized data repository. Additionally, reporting, online analytical processing (OLAP), analysis, scorecard, and dashboard functionality provide the user with interface and front-end analysis tools. Lastly, many BI vendors develop solutions based on various vertical markets, or business functions, to meet the general needs of organizations out of the box, and increase their usage across the organization by providing specialized solutions.
In addition to vendors with a strong presence in either BPM or BI markets, several vendors have expanded their product offerings and marketing strategies to compete in both spaces. Included in this list are Actuate and Hyperion, which have crossed over from BPM to include BI. Within the BI space, Cognos and Business Objects are examples of vendors positioning themselves in both markets. These crossovers give users more flexibility. For BI vendors, their expansion into the BPM market gives their customers the advantage of a BI platform, vendor viability, and features and functionality. Additionally, many customers that implement BPM solutions do so as expansions within their BI frameworks.
Operational BI Vendors
Operational business intelligence (OBI) has emerged to provide organizations the forward-looking analysis and real-time decision-making ability lacking in traditional BI. Operational BPM and BI use similar tools to measure and define an organization's performance, and to compare those defined measurements to identified metrics. However, the focus of each market differs slightly. BPM focuses on the departmental management of metrics, or key performance indicators (KPIs), to manage the application of strategic planning. OBI leverages the use of BI to embed those tools within organizational processes. OBI includes the development of analytics and dashboards to monitor various metrics and provide collaboration tools to interface with various departments. OBI tends to appeal more to operations users and lines of business (LOB) managers, while performance management tools appeal to financial applications users.
Factors Inhibiting the Widespread Adoption of BPM
Aside from market size and current market penetration, the perception of BPM is that it has less presence than its BI counterpart. In reality, BPM and BI each play to a different audience in terms of usage within the organization. BPM's main focus is financials, including budgeting, consolidations, planning, and so on. However, BPM vendors may offer some similar features and functionality as BI vendors. BI vendors focus on the breadth of their product offerings, which include data warehousing, OLAP, reporting, usage of dashboards, etc. This means that BPM vendors might have to fight to get their "foot in the door," because BI plays to a wider market.
Installed Base
BPM vendors compete in a skewed market where they are immediately disadvantaged. Why? BI has a large installed base. BI vendors use aggressive marketing campaigns to target their current customer bases and to increase standardization within organizations. This presence often creates a roadblock for BPM vendors. A BI vendor's installation base and crossover strategy makes the vendor a natural contender for growth within user organizations. BI vendors have greater success because it is easier to sell to a current, satisfied customer than to find new customers. Additionally, many BI vendors develop crossover strategies or market their BI functionality to meet an organization's BPM needs.
Platform Standardization
Standardization on a single platform by the information technology (IT) department represents a significant obstacle to BPM vendors. One of IT's goals is the creation of a stable and manageable environment. BI standardization involves the use of a common BI platform to meet the needs of an entire organization. It also allows BI vendors the advantage of expanding their installed bases to generate more revenue and to align themselves more closely with the IT department.
Identifying Vendor Differences
Identifying the way vendors are positioning themselves in the market may help users find the vendors that most closely meet their requirements. Although there is a great deal of feature and functionality crossover, vendors market their differences aggressively. This may create confusion for user organizations. Differentiators among vendors are generally seen in business benefits, market positioning, and organizational uses, which often translates into how solutions are adopted and used.
BPM Vendors
Leading BPM vendors include Applix, Cartesis, CorVu, Clarity Systems, Actuate, and Hyperion. Analysts forecast that the BPM market will reach roughly $1 billion (USD) by 2011. While BPM vendors provide similar features as their BI counterparts, they primarily focus on planning, budgeting, forecasting, consolidation activities, etc. that center on an organization's financial performance. This can include sales and marketing efforts, human resources management, and vertical market solutions.
Traditional BI Vendors
Traditional BI vendors include Cognos, Business Objects, Information Builders, and MicroStrategy. In 2005, analyst consensus placed the overall BI market between $4 billion and $6 billion (USD) with high growth rates for subsequent years. BI vendors provide users with the ability to create and leverage data from within a data warehouse, and extract, transform, and load (ETL) functionality that pools data from across various applications to create a centralized data repository. Additionally, reporting, online analytical processing (OLAP), analysis, scorecard, and dashboard functionality provide the user with interface and front-end analysis tools. Lastly, many BI vendors develop solutions based on various vertical markets, or business functions, to meet the general needs of organizations out of the box, and increase their usage across the organization by providing specialized solutions.
In addition to vendors with a strong presence in either BPM or BI markets, several vendors have expanded their product offerings and marketing strategies to compete in both spaces. Included in this list are Actuate and Hyperion, which have crossed over from BPM to include BI. Within the BI space, Cognos and Business Objects are examples of vendors positioning themselves in both markets. These crossovers give users more flexibility. For BI vendors, their expansion into the BPM market gives their customers the advantage of a BI platform, vendor viability, and features and functionality. Additionally, many customers that implement BPM solutions do so as expansions within their BI frameworks.
Operational BI Vendors
Operational business intelligence (OBI) has emerged to provide organizations the forward-looking analysis and real-time decision-making ability lacking in traditional BI. Operational BPM and BI use similar tools to measure and define an organization's performance, and to compare those defined measurements to identified metrics. However, the focus of each market differs slightly. BPM focuses on the departmental management of metrics, or key performance indicators (KPIs), to manage the application of strategic planning. OBI leverages the use of BI to embed those tools within organizational processes. OBI includes the development of analytics and dashboards to monitor various metrics and provide collaboration tools to interface with various departments. OBI tends to appeal more to operations users and lines of business (LOB) managers, while performance management tools appeal to financial applications users.
Factors Inhibiting the Widespread Adoption of BPM
Aside from market size and current market penetration, the perception of BPM is that it has less presence than its BI counterpart. In reality, BPM and BI each play to a different audience in terms of usage within the organization. BPM's main focus is financials, including budgeting, consolidations, planning, and so on. However, BPM vendors may offer some similar features and functionality as BI vendors. BI vendors focus on the breadth of their product offerings, which include data warehousing, OLAP, reporting, usage of dashboards, etc. This means that BPM vendors might have to fight to get their "foot in the door," because BI plays to a wider market.
Installed Base
BPM vendors compete in a skewed market where they are immediately disadvantaged. Why? BI has a large installed base. BI vendors use aggressive marketing campaigns to target their current customer bases and to increase standardization within organizations. This presence often creates a roadblock for BPM vendors. A BI vendor's installation base and crossover strategy makes the vendor a natural contender for growth within user organizations. BI vendors have greater success because it is easier to sell to a current, satisfied customer than to find new customers. Additionally, many BI vendors develop crossover strategies or market their BI functionality to meet an organization's BPM needs.
Platform Standardization
Standardization on a single platform by the information technology (IT) department represents a significant obstacle to BPM vendors. One of IT's goals is the creation of a stable and manageable environment. BI standardization involves the use of a common BI platform to meet the needs of an entire organization. It also allows BI vendors the advantage of expanding their installed bases to generate more revenue and to align themselves more closely with the IT department.
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