10th October 2005 The battle for dominance in the corporate performance management (CPM) space is hotting up as suppliers jostle for preferred status with large corporate accounts. One of the key innovators is Cognos, a provider of business intelligence software, performance management solutions and author of the popular ReportNet package. Gary Simon, FSN's Managing Editor, caught up with Rob Ashe, CEO of Cognos Inc, whilst he was in the UK last week to launch the latest release of Cognos' business intelligence platform, Cognos8.
Cognos coined the term Corporate Performance Management (CPM) but not everyone has latched on to the phrase, or necessarily bought into the CPM paradigm. Indeed, Rob Ashe readily acknowledges that even Cognos talks about a Business Intelligence (BI) platform in the same breath as CPM solutions. "CPM as a concept is not uniformly accepted by the user community but most customers recognise that they need a performance management system," says Ashe, "and that's a long way forward from where we were two years ago. BI is the enabling technology supporting performance management processes. The two aspects are converging but we are probably only just emerging from the 'early adopters' phase of market development."
Part of the problem has been the lack of cohesion between IT and finance underlined by what Ashe sees a significant difference in approach. "Finance has a much more prescriptive and structured approach to performance management than IT. Some companies come at performance management wanting to make better use of their investment in data warehouses whereas other, finance sponsored initiatives, often start with a scorecarding project. Either way, there is a great thirst to drive out information across the enterprise and most companies now see the value of linking business intelligence and performance management into one seamless environment."
It is this convergence and the broader desire of companies to standardise around one supplier platform for all of their reporting needs that is defining Cognos' strategy. "It's a battle for incumbency," says Ashe, explaining that Cognos wants to be the incumbent supplier from which customers choose any of the tools and applications they need.
This logic is behind the latest release of Cognos' BI platform which seeks to bring all of the reporting tools into one single platform that is cheap for IT to maintain and simplifies access to information for end users.
However, Cognos has to change its culture and behaviour to match developments in the market. "We were very IT focussed in the past but learnt a considerable amount from the acquisition of Adaytum a few years back. We needed to deal at the level of the customers' problem rather than a technology solution. These days we have to talk to both finance and IT audiences and bring much greater knowledge of both domains to the table," says Ashe.
But riding both horses at the same time brings its own set of challenges and risks. Ashe acknowledges that the launch of Cognos 8 was IT oriented and with the benefit of hindsight may have left people with the false impression that Cognos had returned to its IT roots. "Standardisation of the BI platform spans the whole enterprise so we had to convey our message for this launch to the CIO. It was a deliberate decision on our part and reflects a 'go to market' strategy rather than any underlying shift in culture."
With a mission to be the incumbent supplier Cognos is also learning to build long term relationships with customers and extolling the virtues of a single product environment for business intelligence, a modern systems architecture and a platform for performance management. From a product point of view there is much more concentration on business processes and giving users better access to information with more context.
The purchase of Frango, a consolidation supplier, earlier this year completed Cognos' CPM portfolio and is deemed a success. "Again we have learnt a lot from the acquisition which gives us deep finance capability," says Ashe. "We're concentrating on rolling out Frango in the U.S. where it did not have a presence but Europe is in good shape and there are further releases planned." As for integration, Cognos is content for the moment that Cognos Controller, (as the product is now called), is accessible as a data source to the Cognos BI platform.
Cognos is not the only vendor that has been out shopping. The business intelligence and performance management markets have seen a frenzy of acquisition activity over the last 18 months but Cognos sees itself as an independent player. "I suspect that one of the ERP suppliers will try to buy some CPM capability but the market needs a strong independent CPM supplier. Customers will not want to be locked into the constraints of an ERP based solution."
Ashe considers that the CPM market is ready to take off and quotes research indicating that CPM vendors only have 15% penetration of the available market. That means there is a lot of upside and he believes that companies are beginning to ask the right questions about performance. "We've been around a long time as a company and I believe we can make a real difference."
Yet progress in the BI industry has been relatively slow. Although Ashe agrees that a 15% market penetration in almost as many years is hardly exceptional he defends the industry's position and believes the tide is turning. "The industry has had fifteen years of beta testing and it has grown from zero to billions of dollars in that time. Also, 15% means that lots of people have been impacted by BI solutions. We have to accept that some markets take a long time to develop. I prefer to see the glass as half full," he says.
Cognos coined the term Corporate Performance Management (CPM) but not everyone has latched on to the phrase, or necessarily bought into the CPM paradigm. Indeed, Rob Ashe readily acknowledges that even Cognos talks about a Business Intelligence (BI) platform in the same breath as CPM solutions. "CPM as a concept is not uniformly accepted by the user community but most customers recognise that they need a performance management system," says Ashe, "and that's a long way forward from where we were two years ago. BI is the enabling technology supporting performance management processes. The two aspects are converging but we are probably only just emerging from the 'early adopters' phase of market development."