Some of you may remember how Coca-Cola changed the taste of their flagship drink in 1985 and named it ‘New Coke’. This was in the hope of revitalising their brand. For those of you young enough to have missed this event, it turned out to be a massive disaster and they reverted to the ‘Old Coke’ within months.
Roll-forward some 35 years and Gartner replace their famous ‘Magic Quadrant for Cloud Planning’ to a ‘Market Guide for Cloud, xP&A Solutions’. Not quite Coca-Cola, but for those of us in the industry, a massive change. According to Gartner, this is a natural evolution to provide better insight for consumers when the maturity of the market reaches a position where “offerings are interchangeable”. Others would argue it was because the Magic Quadrant (MQ) had lost its edge and was no longer the market leader in its field (see my previous article The Gartner effect: are magic quadrants worth the hype? | Generation CFO GENCFO).
So, how does the new ‘Market Guide for Cloud, xP&A Solutions’ measure up and will it provide the promised insight? Or is it the next ‘New Coke’?
The planning market has matured
One point I will agree with Gartner is that the planning solution market has reached a level of maturity. By this I mean that the core functionality offered by the leading solutions is very similar, making it very difficult to differentiate by functionality alone. I have addressed this subject in my article How do you differentiate between CPM solutions? | Generation CFO.
Based on previous press releases, this maturity was the catalyst for Gartner’s move to a ‘Market Guide’ approach for planning, or xP&A as they like to call it. In their own words, “when a market matures to the point that the offerings become fairly interchangeable, comparative positioning is less important than an analysis of and recommendations about the market itself.”
The main thrust of the (3) key findings of the report is that the Extended Planning and Analysis (xP&A) concept is a game-changer. Apparently, it is the “next-generation extension of FP&A” and is a “vendor response to challenges faced by enterprises”.
Interestingly, xP&A is Gartner terminology that they introduced in their 2020 Magic Quadrant for cloud planning. As I have opined in previous articles, the xP&A trend is not so much emperor’s new clothes, more a makeover and fitting by a well-known fashionista. It was already the direction of travel for forward-thinking finance teams and the vendors had been long since evolving to meet this demand. Increasing collaboration, extending functionality, and integrating operational planning are not new concepts by any stretch of the imagination.
Very confusingly, despite Gartner moving to a ‘Market Guide’ due to maturity, they conclude that “xP&A solutions are immature and, as a result, may be lacking in functional depth and breadth”. This appears a compete contradiction and, in my opinion, misleading to most consumers of this report. FP&A solutions are highly mature and their functionality constitutes +90% of the Gartner xP&A definition. Yes, they may lack some of the complexities of the niche operational planning tools, but this is the icing on the cake for the majority. To start to differentiate xP&A and FP&A solutions is nonsense at this stage. This is certainly not something that an ordinary consumer would understand.
The main body of the report looks at various market aspects; definition, description, direction and analysis. It talks about a single platform, collaborative working and better decision making. It outlines the evolving role of finance, the need for agile planning and performance management, consistency and gaining competitive advantage.
Whilst this is all useful content that brings several thought processes into one, it merely regurgitates xP&A spiel used in countless articles and presentations. In fact, I am finding it difficult to pick anything out of these sections of the report worthy of any note.
What is evident to me is that Gartner appears to have little appreciation of what is happening in reality. There are two examples of this in the report. The first is that Gartner predicts that by the end of 2024, “30% of FP&A implementations will be extended to support operational finance processes”. I am not sure who they are speaking to, but in my experience, we are already well above this in 2021. Nearly every organisation I know, that is in the implementation phase, has this firmly in the roadmap.
The second example is their contention that “most functions in the year ahead will still independently select their own BoB (Best-of-Breed) planning solutions or use Microsoft Excel spreadsheets, often resulting in a siloed landscape without consistency of purpose”. Again, this is certainly not my experience of the market nor of the vendors who are doing such a great job in ensuring customers do not go down this path. And it contradicts much of the research we have seen that suggests a move toward enterprise planning solutions and away from Excel. Unless, of course, Gartner are identifying current enterprise planning solutions as BoB and not xP&A. Wow, the mind boggles!
With respect to the market itself, there is an attempt to differentiate xP&A from FP&A and IBP with BoB thrown in for good measure. In case you do not know your acronyms, IBP is integrated business planning. Even as someone who professes to being a subject expert, I lose the will to live and understand what on earth they were talking about. Apparently, we can expect more turn-key solutions, with starter kits and better integration. Hmm, is that not in every vendor product roadmap?
Previously, we were treated to a graphical depiction of capability (the Magic Quadrant). In the Market Guide, there is an “understanding of the market and its offerings” and a list of “Representative Vendors”. Whereas there was previously a criterion for who was included, there appears to be none. On the face of it, all vendors are invited to participate. That sounds as though this is open to everyone, or is that me being naive?
The new table layout, showing capability, is a step in the right direction. However, what is the definition of the processes, what does this mean? Also, can you understand the key, because I am struggling.
For me, the ‘Vendor Strengths and Cautions’ section of the old Magic Quadrant report was where some value could be found. Now there are ‘Vendor Profiles’. However, it feels to me as though these have been written by the vendors themselves as they all contain a significant level of marketing speak.
There are three new entrants in this report compared to the previous one. There is insight software that has acquired multiple software companies in the finance area, including CALUMO, one of the other new ones. The third is Solver, which I confess to have never come across in the UK thus far.
And finally, we reach the ‘pièce de résistance’, the Gartner recommendations for those considering xP&A. They can be paraphrased as follows.
- analyse what you currently do and determine if you are ready
- perform a cost-benefit analysis
- review the impact on people and the role of change management
- put together a business case and obtain funding and approval
Is this not a standard approach any company would adopt? Should Gartner not be providing more valuable insight than stating the bleeding obvious? For example, I would extol the virtues of the consultancy partner you work with and the experience they can bring to the table. In my opinion, more time should be spent on this during vendor selection than looking at the technology. And, what about finding a solution that fits with the skillsets and culture of your organisation?
In summing up, the insight that is provided is generic – very little if anything new can be learnt from the report that was not known or discussed before. Granted, if you are new to the xP&A concept, this provides a nice summary of points to consider. However, this is not the purpose of the report. In Gartner’s own words, “use this Market Guide to identify worthy candidates and as a primer to holding vendor discussions about capabilities and future plans.” In my opinion, the report fails to deliver this basic objective.
My conclusion is that the ‘Market Guide’ is the ‘New Coke’. Unfortunately, I did not like the ‘Old Coke’ either!
Gartner Market Guide for Cloud, Extended Planning and Analysis Solutions
By Robert Anderson, Greg Leiter, Published July 2021
Photo credit: vfhnb12 / Shutterstock.com