The New Brood of Best-of-Breed

Today's Best-of-Breed software market offers more to dazzle CFOs than ever before. The pace of innovation is fierce, slackening only when vendors pause to digest their gains after the waves of consolidation that periodically sweep over each sector.

The governance, risk, and compliance (GRC) category, for example, continues to attract new entrants and to generate a bewildering variety of applications for mandates ranging from email retention management to enterprise risk management. John E. Van Decker, research vice president with Gartner Inc., points to a burst of innovation around reconciliations management: “Financial governance software is starting to bring together process-management-type solutions for all of the activities that you need to do before you close the books. These may or may not be managed in larger systems, but you need some type of process to line up these activities and ensure that these things are done. A company may need to do hundreds of reconciliations to provide assurance that the numbers are accurate.”

Software initiatives of all kinds are under close scrutiny in the current tighter economic conditions, but the news hasn't all been glum for the point solution providers. The Economic Stimulus Act's bonus depreciation provisions were a boon for vendors in the fixed asset management space, whose products help companies master the intricacies of depreciation accounting and capital budgeting. And firms that can present their products as cost-containment tools are thriving.

Plus, a best-of-breed package can be an attractive option for companies that don't want to take on a mammoth project at this point. Many organizations are “looking for something that can provide incremental steps to value,” Van Decker notes. “We're also starting to see more use of software-as-a-service, where companies may want to do something on a 3-year basis, but with the understanding that by the end of that period they will have implemented a much larger set of applications.”

A TOAST TO BPM

Rumors of the death of the BPM market as a best-of-breed venue are certainly exaggerated, despite a round of buyouts that began about 18 months ago and left the “big three” vendors — Hyperion, Cognos, and Business Objects — in the hands of even larger organizations (Oracle, IBM, and SAP, respectively).

“There is indeed a demand for best-of-breed corporate performance management [CPM],” says Lee Geishecker, research vice president and general manager with AMR Research in Boston. “But the most important undercurrent of that statement is that Hyperion, Cognos, and Business Objects do not go away as offerings in this space.” IBM has positioned Cognos as a distinct entity. “Business Objects is being kept, along with its name, as an identified entity within SAP. Oracle does not intend to fold Hyperion into too much; they recognize that Hyperion had a well-established customer base that sits outside of the traditional Oracle base. So all three, in very different ways, are alive and well.”

In addition, the space abounds with full-fledged packages from smaller players as well as products that offer slices of BPM functionality, as a glance at our vendor list will show. There's plenty of market for these firms to sell into. A recent Gartner report notes that 50 percent to 60 percent of companies still use spreadsheets for planning and budgeting, and in many organizations that have deployed BPM, usage is limited to small, isolated initiatives that use only a subset of the tool's functionality.

Pervasive BPM is an elusive goal, but some companies are closing in on it. Take, for example, Moët Hennessy USA, the U.S. sales and marketing arm of LVMH's Moët Hennessy's Wines and Spirits Brands. The company installed a client-based system from Cognos about 8 years ago and moved to a fully Web-based version last year. Users include staffers in finance, sales, marketing, and operations, as well as executive management.

“When you've got all of those people accessing information, you need a good way to get there,” says Carl Dowell, CFO. “Right now, we're making access available through Web-based tools so that anyone in the organization has access to the data, and then we restrict use according to what each individual needs by using the Cognos Access Manager.”

The wine and spirits industry is heavily regulated, and importers and producers are not allowed to sell directly to end customers, so much of the data that Moët Hennessy uses comes from distributors and third-party sources. “We collect mountains of information about the types of customers we have, where they are, and the products they're taking,” says Dowell. The BPM system pulls the information out of an Oracle database and constructs specialized data “cubes” organized, for example, by brand, state, or accounts sold.

“By pulling different pieces of data, our marketing people can see what kind of return they're getting in specific accounts based on investments they've made,” Dowell reports. “Sales people may be more interested in finding out what accounts there are in a given geographical region that are not carrying our products right now.”

Proof enough that when BPM's done right, its impact can extend far beyond finance.