Consolidation in the SEM/Corporate Performance Management (CPM) Technology Sector A market report, March 2004 IT software companies have been hit by the recent economic downturn. Many analysts are now predicting that this is over, mainly thanks to the upturn in corporate spending on IT. During this time many companies have downsized, some have restructured. Now many need to keep up with customer demand and believe that they must grow quickly in response to the perception that companies want to deal with a fewer number of large technology suppliers. The answer so far has been consolidation. Many of market leaders including Hyperion, Comshare and Cognos, and ERP vendors such as SAP and Peoplesoft were feverishly acquiring during the dot com days. We now appear to be in round two; Oracle’s hostile takeover bid for Peoplesoft being one example. As with consolidation in any industry, the smaller firms tend to be bought by the larger companies with the general exception of some niche/specialised players. Not all mergers and acquisitions have conformed to this trend however, with large market rivals Peoplesoft acquiring JD Edwards, in part as a action to defend itself from take-over from Oracle. During the first round of acquisitions, it was no longer seen to be good enough just to specialise in one area (e.g. Oracle’s recognition for their database management system). To increase market share, some vendors are increasingly able to offer clients a wide range of services and modules so they are seen to provide comprehensive CPM suites and/or provide services over and above the CPM market. In response to this, Oracle now offer e-business suites and outsourcing among many other products and services, which are also available from many of Oracle’s competitors. It is also important to note the market space described as SEM in 2000/01, has been coined CPM by Gartner, the research group. CPM is also synonymous with the term Business Performance Management. Gartner describes CPM as an umbrella term that describes the methodologies, metrics, processes, and systems used to monitor and manage an enterprise’s business performance. In their October 2002 research ‘Introducing the CPM Suites Magic Quadrant’, Gartner classified four types of vendor within the CPM/SEM area: integrated business application suite vendors, BI vendors, Best-of-breed vendors, and Hybrid vendors. Each of the different types of vendor approach the market in different ways. The integrated business application suite vendors (such as Oracle, SAP and Peoplesoft) dominate the transactional environment and now attempt to appeal - to existing customers in particular - with business intelligence offerings. These vendors have created and are expanding their own offerings to improve the drill down and analysis of information systems and platforms to produce better reporting. Some of the ERP vendors will promote these as Best-of Breed and can fit into CPM architecture like the one depicted below:
Consolidation in the SEM corporate performance management (CPM) technology sector
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