The Gartner research for Cloud FP&A was published on 6 October 2020. It can be accessed here. Please refer to my general article on Gartner MQs that provides some general observations and guidance on their usage. Here are my thoughts on this particular MQ.
Strategic Planning Assumptions
This section is something new in the 2020 report. Gartner states that “By 2024, 50% of new financial planning and analysis implementations, upgrades and replacements will be sourced from core financials vendors, due to superior integration and product bundling.”
There is no explanation of what a ‘core financials vendor’ is. If we look at other Gartner articles, we may deduce this means ERP vendors such as Oracle, Microsoft and SAP.
I am struggling to see this as the market currently stands today. Most of the vendors in the MQ have no direct relationship with ERP vendors, apart from Oracle and SAP. Yes, these two will leverage their ERP solutions and bundle their FP&A solutions, and you could argue this influences their position in the MQ. However, is this enabled by ‘superior integration’? What we are seeing is a resurgence of best-in-breed because advances in technology facilitate integration.
We also see the birth of what seems to be a new Gartner phrase, ‘extended planning and analysis’ or ‘xP&A’. Later in the report, it defines this as “a strategy where the ‘x’ denotes the breaking down of the traditional silos separating enterprise financial and operational planning processes in order to deliver new levels of transformative business value. The ‘x’ also represents consistent and continuous planning that extends beyond the finance domain into other areas of enterprise planning and analysis.”
In my experience, most FP&A vendors and organisations have been doing this for a while. Anaplan has used ‘Connected Planning’ as a strapline for a while and planful use ‘Continuous Planning’ so this is nothing new. Look out for ‘Gartners 2021 MQ for cloud xFP&A’ and let see whether the x-factor is anything new!
I still have beef with Gartner about on-premise and cloud and SaaS and the fact that, in its own words, “the capabilities of the on-premises offerings and any hosted on-premises options were ignored in the evaluation process”.
The method of deployment is a matter of choice for every organisation, whether it is true SaaS or hosted in the cloud or managed by a provider. What I am interested in is whether the solution works for the organisation. Yes, remote working is now a serious consideration but, beyond this, how it reaches the user is immaterial.
Gartner has tightened the components that vendors must support, now requiring them all to have financial budgeting and planning; financial forecasting and modelling; integrated financial planning; and management and performance reporting. From our point of view, this is a good thing. Previously, it only required two of the four. These are fundamental FP&A processes and should be the minimum core requirements of any enterprise solution.
The report mentions advanced capabilities that Gartner does not evaluate as part of the MQ. That includes AI and extended planning and analysis (yes that xP&A acronym appearing already). As they state, most vendors already deliver xP&A which, in my opinion, should be minimum requirements, but we need a clear definition of what AI is in planning and analysis.
Number of survey respondents
Gartner takes into account information gathered from various sources, “end-user clients, cloud FP&A reference customers, Gartner Peer Insights feedback, social media analysis and other sources”.
With the low number of responses received, there is the potential for the results to be skewed by ‘various sources’. What are the demographics of these? Given the low number of ‘full responses’, and the similarity of the results to the 2019 MQ, how much does each source influence the results?
There are three omissions from last year, none of which is unexpected. Workiva is a great platform, but it could never be considered an FP&A solution. Kaufman (Axiom Software) and Kepion are not vendors that we see in the UK market, so we can only conclude their market presence is small.
Centage gets an honorary mention, although it appears to be a US-based solution and I do not have knowledge of it.
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Let’s look at specific vendor strengths and weaknesses. The comments on Anaplanreinforce our view that this is a solution best suited to large organisations with complex requirements and needs. The higher cost and more prolonged than average implementation time reflect this. Differentiators are the ability to deal with complexity and advanced capabilities around predictive analytics.
Gartner is still cautioning that it receives a relatively low number of inquiries regarding IBM Planning Analytics. In the 2019 report, Gartner explained that IBM had moved “from the Leaders quadrant to the Visionaries quadrant due to a decrease in market competitiveness and recognisable market activity compared with other Leaders”.
It went on to explain that it shouldn’t be construed as reflecting the overall effectiveness of the solution. “Rather, it may represent a diminished level of market execution and presence, as compared with the Leaders in this Magic Quadrant, that could be taken into account when evaluating the solution”.
I predicted at the time that this evaluation would impact future sales opportunities and could result in a downward move on the MQ in 2020. Is this an example of the Gartner market influence or IBM’s continuing failure to effectively market what happens to be a useful planning solution?
Gartner describes Jedox as a flexible, capable and scalable solution, with strengths around the integration with the Microsoft ecosystem. In our experience, this rings true.
It is interesting to compare this to planful (previously Host Analytics) where their UK and European presence is limited and is noted as a caution. Again, a very functionally rich solution with a focus on mid-market and large enterprises.
Prophix is a solution with less capability than others and a focus on mid-market, where requirements are less complicated. Board has robust functionality around management reporting, but there are cautions around deployment and customer support.
We have seen a lot more of Vena Solutions in the UK market in 2020, and they continue to make an impression with their compatibility with Excel and Power BI – a central selling point. It is well suited to the mid-market, especially those organisations where there is an emotional attachment to Excel and a wish to leverage skills in this area.
Workday (Adaptive Planning) continues to grow and, despite a Gartner caution, has a strong presence in the UK. As you would expect, it integrates well with some of Workday’s other solutions. It has a high level of capability and is scalable.
All the above FP&A solutions offer some level of ‘financial consolidation’ capability, which would justify them describing their offerings as a CPM platform. However, we would recommend that you review this capability in-depth; it may be limited and less functional than a solution focused on this area.
OneStream continues to develop at speed and cements its position as a leading solution for large and global enterprises seeking a single CPM platform. While Gartner says that a high proportion of customers are in the US, we see a lot of activity in the UK market. The higher price and longer implementation times reflect the customer base that it serves.
You could make similar comments about CCH Tagetik or Wolters Kluwer. It is another leader in the single CPM platform space, aimed at large and global enterprises. One particular strength is their ability to integrate with SAP HANA. Their strong FP&A capabilities are reflected in survey respondents scoring. Gartner cautions are again geographically focused.
I have deliberately left SAP and Oracle until last. And this is where users can misinterpret the MQ graphic.
SAP can be seen to be on the middle-right, a ‘Visionary’ in the eyes of Gartner. In the words of Gartner they define this as, “in more mature markets, this status may reflect a competitive strategy pursued ….by a large vendor trying to get out of a rut or differentiate itself”. It scores “below the average for seven of the nine capabilities measured”. It also scores “below average for overall integration and deployment” and “below average for customer support and maintenance”. Compare this with planful; it is roughly on the same level for ability to execute that has reasonable customer satisfaction, high scores for deployment and great feedback on customer support.
And finally, Oracle. In respect of product capabilities they “have improved significantly since the previous Magic Quadrant, but not sufficiently to move out of the lower quartile”. When looking at interoperability, “surveyed customers identified integration with non-Oracle products as an area for improvement”. However, under the Gartner algorithm, Oracle is the highest for the ability to execute and completeness of vision.
Our final thoughts
Overall, there is some excellent information in the Gartner report, much of which we concur with. However, the usefulness of the graphical representation remains open to debate, as does the methodology used by Gartner to create it. I look forward to the upcoming Financial Close Report to see what that has to offer.
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Gartner (Greg Leiter, Robert Anderson, John Van Decker), “Magic Quadrant for Cloud Financial Planning and Analysis Solutions “, 6 October 2020.
Gartner (Robert Anderson, John Van Decker, Greg Leiter), “Magic Quadrant for Cloud Financial Planning and Analysis Solutions “, 8 August 2019.