Although the Business Performance Management (BPM) concept is a relatively recent development Cartesis has served the office of the CFO for more than one and a half decades. During this period, Cartesis has grown from its origins as a specialist provider of consolidation systems, initially to the French marketplace, into a fully fledged global player with more than 1300 customers, and 24 per cent share of the Fortune Global 100. This deep seated breadth of experience and financial domain knowledge distinguishes Cartesis and its product solutions from ERP vendors and traditional Business Intelligence (BI) vendors that have ‘migrated' into the more specialist BPM field.
Present day demands for exceptional performance against the backcloth of increasing compliance, auditability and control, require a deeply rooted understanding of international accounting standards, financial reporting and corporate governance as well as the complex processes that bind them into an effective performance management regime. Self evidently, serving the challenging needs of Global 2,000 companies in this area requires much more than a loose collection of tools, applications and technologies. This review examines how Cartesis has evolved into a trusted provider of performance management capability to large and complex organisations with an enviable reputation for customer retention and satisfaction.
The making of Cartesis
The BPM marketplace is one of the fastest growing segments of the software industry and this trend is widely forecast to continue. Unsurprisingly, it has attracted more than its fair share of competitors. Yet Cartesis has flourished in the face of this competitive pressure and outpaced the growth of the market by a very large margin. Although a privately owned company, Cartesis has publicly reported growth in software sales in fiscal 2005 of 43 per cent and an astonishing 91 per cent for its first trading quarter in fiscal 2006. With annual turnover in excess of $109 million and more than 600 employees Cartesis has clearly broken out of the pack. It enjoys a customer base of household names in most sectors but very visibly in the financial services sector which is noted for its complexity. Customers across the market include household names such as ABN Amro, AXA, RBS, Diageo, L'Oreal, Nestle, Unilever, Siemens, Nissan, Hilton, Cargill, Catepillar and others. But what is Cartesis' basis of competition and how has it achieved this level of success in an overcrowded market?
In broad terms, Cartesis' success can be ascribed to the clarity of its message, a product portfolio rooted in a clear vision of the processes it supports and a deep empathy with the finance organisation it mainly serves.
The Cartesis message
In a much over-hyped marketplace, with no universally agreed definition of Business Performance Management, Cartesis presents a refreshingly ‘earthy' analysis of the performance management applications an organisation needs and the way that the relevant data should be managed. Essentially, says Cartesis, a BPM solution is made up of three key ‘pillars', namely; Planning and Forecasting, Financial Consolidation and Compliance and Reporting and Analysis all supported by a single Integrated Data Model (IDM). The clarity of this message gets straight to the heart of the principle processes that drive the regular activities of the finance function and demonstrates that all of this effort is to no avail unless the underlying data is marshalled in an appropriate way. So what are the processes and how should data be shared between them?
BPM Processes
The BPM process is a cycle of activity that commences with strategy development, modelling of the enterprise's economic performance and the establishment of the key business objectives and measures (Key Performance Indicators) by which management can asses its progress and prospects for success. Crucially, these measures are required to be communicated and understood throughout the organisation so that they can be linked to operational budgets, plans and forecasts. By bringing actual performance together with planned and projected performance, management can analyse over and under achievement and take appropriate action as necessary to restore or exceed planned performance. Finally, the insights gained during the latter part of the performance management process can be used to inform revisions to the strategy itself, bringing the whole process full circle in what is often described as a ‘closed loop' process.
However, in recent years, the BPM process as described above has been stretched by additional demands created by an increasingly challenging regulatory and compliance environment. For example, Sarbanes Oxley, IFRS, the EU Accounts Modernisation Directive have brought issues of control, compliance and data integrity to the fore. In today's marketplace, Cartesis' long track record in financial and statutory consolidation is especially valued since the rigours of auditability and control have been part of its organisational ‘DNA' and product set since its formation in 1990. This gives Cartesis a very different level of understanding and capability from the technology led solutions proffered by many newer entrants to the BPM market.
Although, it is easy to portray BPM as a tightly coupled process the reality is often very different. Independent research commissioned by Cartesis highlights that, for example, around 64 per cent of companies are looking for improved integration between their planning processes and the consolidation of actuals. A similarly high percentage is seeking to improve the way in which corporate strategy is embedded in planning processes. So how can organisations harness technology to improve their performance management regime?
It is precisely to meet this need that Cartesis has launched its BPM Extended Suite. It provides a complete and robust set of performance management applications (the three pillars mentioned above) with a common approach and architecture. Just as importantly, its Integrated Data Model provides the essential glue that allows data to be shared seamlessly across the application set and BPM processes.
The Integrated Data Model
Effective handling of data and in particular the so called ‘metadata' or structural information about the organisation, such as the chart of accounts and entity hierarchies is absolutely fundamental to the successful deployment of BPM solutions. Shared metadata allows elements which have common meaning in an organisation to be shared across the BPM applications without duplication and without risking the data integrity of the system.
Similarly, the ability to tightly integrate the applications in the BPM suite ensures that accurate, timely and relevant data can be ‘surfaced' on demand in any of the applications which need it. Thus tight integration and shared metadata provide the essential building blocks of an effective performance management suite. However, for historical reasons, the term ‘integration' is capable of a wide number of interpretations and not always what it seems.
In broad terms, the word ‘integration' is used to describe a whole range of technical options by which data is exchanged between applications. The most primitive level of integration allows data to be transferred periodically as a manual batch file transfer between one application and another. In this type of integration, the transfer between the source and target system is effected as a ‘mechanical' process in which the data is transferred without any particular context or meaning.
At the other extreme, is the intelligent and controlled exchange of data which uses shared metadata (data about data) to impute meaning so that all of the information arrives in the appropriate place. For example a budgeting application ‘understands' the monthly budget for April 2006 in dollars for the profit and loss account in exactly the same way as the management consolidation application or the reporting and analysis package.
The frequency with which information is exchanged is also a very relevant consideration in assessing the capabilities of a BPM solution. Clearly, it is ideal if the BPM applications can share information in real time so that it is available and up-to-date whichever application is used to view the data.
The Cartesis Integrated Data Model provides the best of all worlds by offering shared metadata across the three pillars of its solution and the exchange of data in real time between the planning and consolidation applications. In this way, Cartesis provides the basis for a completely closed loop performance management process since each phase of the performance management cycle is inextricably linked to the next in a continuous loop.
The Applications: The Cartesis Extended Suite
In common with many performance applications the Cartesis BPM Extended Suite is web based so that all key maintenance, data entry and report generation can be carried out over the web. It also means that the applications can be rolled out cost effectively to a large number of users in even the most geographically dispersed organisations.
Since Cartesis makes extensive use of Microsoft technologies throughout the system it can leverage Microsoft SharePoint for portal development, maintenance and suite navigation. Below is one example of how Microsoft Sharepoint can be leveraged with the Cartesis Extended Suite
The Cartesis Extended Suite and Microsoft Sharepoint
From a technology viewpoint the applications are based on Microsoft technologies. Platform support includes, Oracle and SQL Server. However, Cartesis enables linkages to a wide range of transaction and other systems using ETL (extract, transform and load) tools and technologies.
Cartesis ES Planning
Historically, budgeting, planning and forecasting processes have been amongst the most neglected parts of the performance management cycle with application support often being limited to budget data collection through a consolidation system or perhaps a stand-alone budgeting system. However, increasing investor pressure on corporate performance coupled with the need to demonstrate efficient, controlled and auditable processes has brought this area of performance management into the spotlight.
Cartesis ES Planning, with its rich functionality and broadly based workflow has been designed to provide a secure environment to support the key processes in this critical area. For example, ES Planning allows for modelling and scenario planning of the business, and the creation of detailed budgets and forecasts. By using the same application for business modelling and regular budgeting Cartesis ES Planning helps to ensure that strategic objectives are carried through to operational plans. The integrated data model ensures that maximum process efficiency by leveraging all of this information in the consolidation and reporting applications of the full Extended Suite.
ES Planning, in common with all of the applications in the Extended Suite, is a multidimensional system which allows management to gain enhanced business insight by studying multiple views of its organisation. In addition to ‘reserved' dimensions, such as the chart of accounts, unit (department), product, category, currency and period which are essential to the running of the application, users can establish virtually a limitless number business dimensions, for example, customer, channel, division or project to more accurately describe, plan and analyse the business. These can be specific to ES Planning or shared as appropriate with ES Magnitude.
Whilst the IDM provides the basis of a centralised web based model for the business, individual businesses and reporting entities in the group can establish additional members and dimensions for local use where necessary so that the system can be tailored to support local management reporting as well as group reporting.
Creating budgets, plans and forecasts in ES Planning is straightforward and data entry is supported by an Excel style grid which is colour coded to differentiate data entry cells from protected cells displaying, for example, derived calculations and assumptions. ES Planning supports a wide range of data entry methods and ‘spreading' algorithms, for example, based on the seasonality of prior year actuals, which can accelerate the time it takes to populate the model. The system also supports driver based budgeting so that individual users can enter information at a relatively high level using familiar business terms rather than budgeting at a chart of accounts level. So, for example, a branch manager in a retail business could simply enter the number of part time staff engaged during a particular week and the system will calculate, behind the scenes, the implications for tax and insurance. Cells impacted by amendments to the model change colour to alert the user to the consequences of the change. Different phases of budget building are accommodated through a sequence of tabs, rather like work sheets, that guide the user through the completion of the budget sequence.
ES Planning supports both ‘bottom up' budgeting using detail at the lowest level of granularity in the organisation as well as ‘top down' budgeting through target setting by group management in the budget model. Variance analysis accompanied by traffic lighting to expose the degree of variance can highlight a disparity between the top down and bottom up approach. ES Planning is particularly good at providing traceability through variances. The manner in which a user can drill down through a variance is guided by the user selecting the dimensions and members to explore. This provides a unique level of context for each enquiry which is specific to the user's area of responsibility. More formally, ES Planning supports a roles based approach to budgeting and forecasting by tying tasks, areas of data entry or functionality to specific user permissions and log in details. This roles based approach extends across the entire suite so that the entire user experience is customised and controlled.
Workflow capabilities in ES Planning are designed to maximise process efficiency by automatically routing completed budget templates to approvers and reviewers of budgets for acceptance and onward transmission to the next reviewer in the process chain. Alternatively, templates can be rejected pending resubmission by the originator. All of the workflow activity supports open email standards so that it can be integrated for example with corporate email systems so that automated notices accompany each stage of the process to let the participants know what actions they need to take. The paths taken by the workflow rely on hierarchies defined in the dimension structure. At a glance, the workflow can highlight overdue tasks and submissions through a graphical display and detailed history of activity.
ES Planning's graphical display of the planning cycle in process
Cartesis ES Magnitude
ES Magnitude is the foundation of the Cartesis BPM Extended Suite and offers very rich capability developed from the knowledge gained by the Cartesis organisation over a fifteen year period serving large multinationals. In common with the other ES applications, it is a fully multidimensional and web enabled application and therefore shares all of the advantages of the ES Planning application with which it is integrated in real time.
However, as a consolidation application it has important differences, for example around data collection. An important element in accelerating reporting cycles is to be able to automatically collect information from underlying source systems such as ERP systems. ES Magnitude Datalink provides the data mapping tools and technology that allows data to be harvested from underlying transaction systems in controlled and auditable way. In fact one of the notable features of ES Magnitude is the complete traceability it provides for information from its origination in source systems through every stage of consolidation processing into reporting. Once created, the Datalink can be invoked every period to rapidly draw information into the group reporting application where it is validated.
In a rather similar way to the collection of budget templates described above, the data collected from or “published” by subsidiaries can be directed along a user definable workflow for review and approval as appropriate. This feature and the ability to sort published packages by, say, geography or division provides deep oversight and control of the consolidation process and will certainly be welcomed by multinationals with a large number of reporting entities to supervise. It also represents an indispensable level of control for those companies regulated by Sarbanes-Oxley.
In common with other leading consolidation tools ES Magnitude provides comprehensive functionality around data validation and business rules, currency translation, percentage ownership, and inter-company eliminations. It shares its hierarchical structures with ES Planning and provides additional analysis capability which can be used for requirements such as segmental reporting. Additional dimensions allow the scope of consolidations to be prescribed and different consolidation versions (historic structures) to be retained for future reporting. There is also vast flexibility over the choice of consolidation currency. Cartesis report that closely defining the scope of consolidations via the “scope” dimension gives material improvements in consolidation speed whereas the “version” dimension in tandem with the “currency” dimension supports a wide range of scenario planning and business modelling. For example, old and new structures can be held with actual or prospective acquisition targets to model possible strategic outcomes. Alternatively, the additional dimensionality can be used to handle multi-GAAP reporting under IFRS.
Other notable features include the “flow” dimension that automatically assists the tracking of balance sheet movement accounts without the need to clutter the chart of account structure with additional accounts and business logic. Cartesis considers this is another reason why the consolidation engine can return quick response times.
Cartesis ES Information Delivery
The third pillar of the Cartesis Extended Suite is a very straightforward but effective Excel based reporting tool which can be used to satisfy ad-hoc reporting requirements as well as more regular production reporting without recourse to technical resources and complex programming.
Essentially, ES Information Delivery ‘sits' astride the Integrated Data Model and allows elements of the underlying hierarchical structures used by ES Planning and ES magnitude to be selected under user control to generate a specific data views or personal cubes of information. Once defined the cube can be automatically refreshed as often as desired and is made available to the Excel add-in portion of the ES Information Delivery application. The Excel add-in provides a very direct interface to the cube which, technically speaking is likely to be well within the grasp of most end users. It enables quite complex reports to be compiled with dimensions being selected and deselected very easily by dragging information on or off the reporting grid under mouse control. Cartesis, say that this latest version of ES Information Delivery compares very favourably with earlier reporting tools because of its ability to handle ‘nested' dimensions on the grid. This means that quite granular and complex reports can be handled without any special knowledge. As before, drill down through the underlying data in the personal cube takes the direction of the hierarchies selected by the user. This means that “drill downs” become “drill throughs” as the user takes unscripted paths through the underlying cube, for example to resolve variances. If required, it is possible to drill out into other applications.
For more regular reporting, reports generated in ES Information Delivery can be saved and dynamically updated when used again along with the full range of cosmetic, charting and graphing options available within Excel.
Summary
Cartesis holds a differentiated position in the overcrowded BPM marketplace. Its fifteen year history is steeped in financial reporting with global 2000 companies and it counts many household names within its customer base. It enjoys considerable customer loyalty and its many relationships at the group level, reflect its deep capability in complex statutory, regulatory and management reporting as well as its broadly based understanding of accounting issues, compliance, audit and control.
In recent years it has successfully built on this foundation to provide a comprehensive BPM solution based on a uniquely integrated data model. This is the cornerstone of its solution and the basis on which it satisfies the management processes implied by a continuous performance management regime. The clarity of its vision based on a limited number of functionally rich applications (the three key pillars), a straightforward systems architecture and leverage of popular Microsoft technology provides a welcome departure from the overly complex solutions of some competitors.
By focussing exclusively on the BPM market, Cartesis has managed to outpace many of its rivals which also serve the Business Intelligence or ERP markets. Whilst smaller than some of its quoted rivals, its longstanding pedigree in financial applications, which are the mainstay of a BPM solution, mark it out as a specialist and distinct provider of performance management capability. Having substantially completed its software developments and broken through the $100m turnover ceiling Cartesis is poised to compete very effectively in the first division of BPM suppliers.
About FSN Publishing Limited
FSN Publishing Limited is an independent research, news and publishing organisation catering for the needs of the finance function. The report is written by Gary Simon, Group Publisher of FSN and Managing Editor of FSN Newswire. He is a graduate of London University , a Chartered Accountant and a Fellow of the British Computer Society with more than 23 years experience of implementing management and financial reporting systems. Formerly a partner in Deloitte for more than 16 years, he has led some of the most complex information management assignments for global enterprises in the private and public sector.
Whilst every attempt has been made to ensure that the information in this document is accurate and complete some typographical errors or technical inaccuracies may exist. This report is of a general nature and not intended to be specific to a particular set of circumstances. FSN Publishing Limited and the author do not accept responsibility for any kind of loss resulting from the use of information contained in this document.
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