Yesterday SAP announced that it is buying the Planning and Forecasting software maker Outlooksoft. Now, given that SAP has worked so hard on SEM and specifically integrating its Planning engine within Business Warehouse (BW) itself... a tie that is tighter with the new Netweaver 2004S version, it surprised me that this buy was done.
Sanjay Poonen, the Sr. VP and GM of Analytics at SAP says this move is to get closer to the CFOs. This acquisition needs to be seen in the light of SAP's other relatively un-noticed acquisitions of Pilot for Strategy Management, Virsa for Risk Management, and a reseller agreement with Acorn for profitability management, says Prasanth on his blog.
Also, this acquisition takes SAP's Governance, Risk and Compliance (GRC) initiative further. It does, therefore, make sense for SAP to look at all aspects of a CFO's concerns!
This move also is important in that OutlookSoft is based on MS Office and with Duet being the thrust, it will come in handy in SAP's future direction for BI/CPM. Joshua Greenbaum lists some advantages that this acquisition brings to SAP:
It’s a relatively small company, couple hundred employees, 700 customers (not too shabby, but a far cry from Hyperion’s 15,000 customers), with some great technology. Microsoft Office is the basis for its user interface, which ties in closely to SAP’s Duet strategy. And the CPM focus of OutlookSoft promises to tie in closely with SAP’s GRC initiative, which is making impressive inroads into both the installed base and, even more importantly, with non-SAP customers as well. Which furthers the synergy that OutlookSoft brings to the table: of its 700 existing customers, 75% are non-SAP customers, which was another part of the story that appealed directly to SAP.
What will this do for SAP’s competition with Oracle/Hyperion? One thing that will change is the dialogue around CPM. SAP now has three key products to fill out its CPM strategy: strategy management is covered via the Pilot acquisition, profitability management is covered via a reseller agreement with Acorn. And now planning and consolidation have been covered by OutlookSoft. SAP will have its own integration challenges, though I believe they will be much simpler to surmount than Oracle’s integration requirements vis-à-vis Hyperion.
What I think gives SAP some advantage is the integration with GRC and Duet, which are generally considered leading edge initiatives. Particularly GRC: this is one three-letter-acronym that Oracle has yet to challenge effectively with its own offering (they already do Office integration, though their marketing hasn’t really capitalized on this Duet-like functionality.) Tying corporate performance management to GRC is going to make for a strong case inside the office of the CFO, and has a good chance of putting Oracle on the defensive, something it was hoping was not going to be the case once Hyperion was in its portfolio.
So, the battle is re-engaged, this time in the office of the CFO.
Now, this brings me to an important point for the delivery of these services. BI and it successor initiative CPM (Corporate Performance Management) - intertwined with Planning, Forecasting, and Accounting Consolidations - are being geared for the CFOs! That is what the software makers are thinking. What about the Consulting companies?? I have yet to see a consulting company that has tried to sell a BI initiative to a CFO! Which is where it should be! A year and a half back I was talking to a senior person in IBM India's BI practice and he told me that BI was coupled with CRM in his place. I was taken aback. In my view, BI should be coupled with CRM to be sold to the CMO, but it should be coupled with CPM/Planning/Consolidations to be sold to the CFO!
More and More, the CIOs are reporting to the CFOs.. and that is one thing that most consulting firms forget! If the consultants can prepare the CIO to make his CFO happy, their consulting business will do much better! So all that reports and KPI stuff needs to be neatly tied to the Shareholder Value and how the company can grow it. Here is what every consultant selling CPM/Planning services should remember:
Stock price - which the CFO is most concerned about - is highly dependent on the increase in Shareholder Value. But the real reason for increase in Stock price is when your Actual Increase in Shareholder Value is MORE than the Expected Increase in Shareholder value by the Street! So, to make sure of that, you - as a CFO - should first know what your SHV is (Balanced Scorecard and Planning). and then have a mechanism to track it (Dashboards)... and also make sure you can compare it with the actuals (Consolidated Accounting results) .. which is what the Street folks are doing!
So, in my personal view, the Consulting companies are lagging behind the Vision of the software makers - which is a little strange!
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