A complement to "Market Share: All Software Markets, Worldwide, 2010" and a subsegment to the business intelligence (BI) market, this report analyzes 2010 revenue growth rates, and market share in the corporate performance management (CPM) suites software market.

The global recession that swept the world in 2009 paralyzed many IT markets. CPM, which came from a position of being one of the hottest markets around, showed only 3% growth in 2009. Somewhat surprisingly, it grew more slowly than the mature BI platforms area, showing the segment's vulnerability to budget cuts, and the relatively high proportion of sales being attributed to new licenses.

In 2010, the global resurgence from stimulus packages, general improvement in the macroeconomy, and new product releases contributed to a recovery in spending. As a result, CPM suites growth accelerated to 12.8% in 2010, a significantly higher growth rate than enterprise software overall, but in line with overall BI growth.

• The CPM market rebounded in 2010, benefiting from the return of discretionary spending, but it is not the public image of growth that it used to be. CPM is realigning to be deeper in finance and less broad. The 12.8% growth is in line with BI growth overall.

• The CPM market is consolidating: The three "megavendors" (SAP, Oracle and IBM) own almost two-thirds of the market share between them (64%), an increase of 3% share. All three top vendors grew faster than the market average.

• There are only two "challengers" to the three megavendors that can deliver CPM on a global scale: Infor and SAS. Both grew more slowly than market.

• In addition to the top five, Gartner identifies only six smaller vendors that exceed $10 million in software revenue. But there are many small industry or country-specific players focusing on local regulatory conditions. Of these challengers, Host Analytics grew more than 100% year over year, showing a strong trend to support CPM with on-demand technology.

Table 1 shows CPM suites market share for the top vendors in 2010.

The fact that CPM growth did not reach the dizzying heights it did precrisis shows in part that the area is maturing, but also highlights the changing nature of the segment. CPM as a broad suite (as the name implies) supports both cross-corporate and domain-specific functionality with data tied together by metrics frameworks and strategy maps. CPM suites seemed to have, at least temporarily, lost some of their appeal in organizations during 2010. Instead, the focus shifted from corporate back to domain-specific, primarily dealing with the office of finance, and financial data in general. Corporate-level functionality, such as strategy management and profitability management, has mainly been sourced with best-of-breed applications or tools. The market is bifurcating to the three giants in the space on one end, and smaller tuck-in point-solutions on the other end. Only time will tell whether the all-encompassing CPM suite will expand beyond the reaches of finance, or whether it will morph into something else.

Compared with 2009, in 2010 money returned to the market, which resulted in bigger deals. New business came back, or in some cases, aged existing CPM projects needed updating or replacing, driven by postcrisis organizational changes, prompting repurchasing or expansion of functionality. The main benefactors from this trend were the three megavendors — Oracle, SAP and IBM — with capabilities to deliver on bigger projects.

A bifurcation in the market, which started in 2009, was further accentuated in 2010 where CPM got deeper rather than broader. The capital letter "T" can illustrate this trend, with the horizontal line being cross-functional breadth across many business functions, while the vertical line is depth in the office of finance — the core of CPM:

• The broad spectrum of functionality that is counted under the CPM umbrella (budgeting, planning, forecasting, profitability modeling and optimization, and strategy management) is meant to have an overarching corporate purpose (the horizontal line of the "T") beyond finance. Here, the boundaries were increasingly difficult to delineate. Broader CPM functionality blurred further with either BI platforms or business applications. IBM's TM1 is both a planning and analytic engine, with blueprint both for financial planning and other analytics. Oracle's scorecarding is embedded in the Oracle 11g BI platform released in 2010. Therefore, the larger vendors packaged some broader CPM functionality into other places, enabling them to capture broader projects in their ecosystems. Alternatively, small vendors with tuck-in functionality benefited — for example, Adaptive planning for only planning or Acorn for profitability modeling. The vendors that sold the broader horizontal piece of the "T" (for example, focusing on strategy management or profitability modeling) struggled more in 2010, as the value proposition was less easily recognized. The broader CPM-driven story was therefore disintegrating in 2010.

• The other part of the bifurcation was the rejuvenated focus of CPM on the office of finance functionality (the vertical line of the "T"), displayed in areas such as financial consolidation and close, financial disclosure, financial governance, "last mile of finance," reconciliation, and more support for the core financial management processes. Increasingly burdensome regulatory requirements, such as IFRS, fueled this trend. Technologies such as in-memory-enabled CPM to further dislocate from IT, reinforcing core financial requirements over corporate requirements. Financially focused CPM grew deeper. For example, this trend was the trigger for IBM buying OpenPages and Clarity systems in 2010, the leader in financial close; Oracle releasing reconciliation and disclosure management solutions; and SAP buying Cundus.

Oracle is the No. 1 in the CPM suites market and it accelerated that leadership during 2010, reaching 28% share, and growing above market rates at 19%. The Hyperion brand continues to be the most recognized brand in the office of finance, which gives it credence not just in Oracle-centric environments, but also in the open market. Oracle leveraged that strong portfolio, and 2010 was a year with focus on execution and continued integration. There were limited amounts of product innovation during the year, and Oracle hasn't made any major acquisitions in the space for some time. Apart from some component releases in reconciliation and disclosure, the main change on the product side was in BI with the release of Oracle OBIEE 11g, with scorecarding in it.

The prime advantage that SAP banked on during 2010 was its CPM product's close integration with the Microsoft and SAP environments. SAP-centric customers will consider SAP CPM, in particular Business Warehouse (BW) users. It is the only vendor enabling customers to use BW as the CPM platform. So the main focus and driver for growth for SAP has been cross-sell/upsell in the customer base. Despite impressive revenue growth, SAP added relatively few net new customers in 2010. SAP also has an advantage of native integration of the previously acquired Outlooksoft product (now BPC) with Microsoft environments, which is handy when Microsoft has no direct offering for CPM. The company has also turned a corner in sales execution, after the significant upheaval of sales forces postacquisition. Finally, more favorable macro- and microeconomic conditions in SAP sweet spots such as the DACH countries (Germany, Switzerland, Austria) and the manufacturing sector overall also helped put SAPs growth above average, grabbing 24% share.

IBM's stated strategic direction is to focus on Business Analytics, and use this umbrella term covering BI, analytics and performance management to drive growth in software and services. Therefore, software market share only tells part of IBM's CPM-story. Within its Business Analytics portfolio, TM1 is a strong engine for planning and simulation, and IBM increasingly focused its CPM story on that product during 2010, with good execution. TM1 is the foundation also for Cognos Express, targeted in CPM-driven scenarios in mid- and upper-midmarket constituents. IBM also acquired OpenPages and Clarity in late 2010, primarily for the financial governance and disclosure functionalities, adding several points on top of IBM's organic growth in 2010.

For Infor, there have been several changes in the past year. During 2010 there was significant renewal of staff in senior management levels, while there were continued speculations around an impending IPO. During the year, Infor also announced a new strategy to build an increasingly Microsoft-centric portfolio of portal and back-end technologies, while continuing to invest in Infor PM components, targeting new business as well as selling into the Infor business application base. Finally, beginning of 2011, the company announced the acquisition of Lawson. Although one or several of these strategy changes work themselves through, focus has been on execution in the interim. Lack of awareness of the Infor PM brand continues to be a challenge for the firm. Gartner estimates that Infor grew 10%, holding a 6% share.

SAS has a different approach to CPM, moving beyond only finance and planning, the area where most of CPM is focused. The model for its CPM initiatives is primarily in high-end sophisticated projects, with a customization on the back end. In addition to the "bread and butter" CPM functionality other vendors offer, they put more focus on areas such as profitability, strategy, and broader performance management. This broader approach (the horizontal part of the "T" described earlier) is visionary, and may or may not work in the future. In 2010, it was a contrarian position to market movements, and resulted in only 1% growth, giving SAS a 5% market share.

After the acquisition of Clarity by IBM late in the year, Exact Longview is now the biggest vendor behind the top five. But the shift in Longview prospective revenue to the bigger vendors is significant. With $21 million in revenue, Longview represents only 1% share, Although license revenue has grown, Longview is more or less in the same spot in recognized revenue as it was in 2008 when it was acquired. This is largely a result of realignments away from internal professional services to working with third-party partners on implementations.

Where Longview has a primarily (estimated to be more than 80%) North American-centric customers, Tagetik’s Italian roots have led to primarily (estimated to be more than 90%) EMEA-centric customers. But the company is on a mission to establish itself internationally also in other markets, direct and through partners, which started to show results in net new sales in 2010. The company still has some way to go to gain attention in some international markets, which Tagetik hopes will be remedied through investments in marketing and partnering. Tagetik is capitalizing on the opportunities created by Microsoft's absence from the CPM suite market. 

Host Analytics is unique in the market for a couple of reasons. It is the only fully software as a service (SaaS) CPM suites vendor that Gartner estimates has surpassed $10 million in revenue. It is also the only vendor Gartner identified as having triple-digit growth (102%). Host Analytics is one of the few SaaS-based CPM-vendors with end-to-end CPM functionality, allowing it to compete in "bake-offs" in RFPs with the established vendors. Adaptive Planning, another SaaS vendor, has also shown strong growth and customer expansion during the past year and is a competitor to Host Analytics in planning solutions for small and midsize businesses.

Table 2 shows key merger and acquisition (M&A) activity in the CPM suite market.

The following is a comprehensive (but not complete) list of vendors Gartner covers and considers in our CPM Market Share report:

• Vendors with more than $10 million in CPM software revenue (not counting professional services), broken out in "Market Share: All Software Markets, Worldwide, 2010": Oracle, SAP, IBM, Infor, SAS, Clarity, Exact Software, Tagetik, Acorn, Corporate Planning, Board and Host Analytics.

• Other vendors with fewer than $10 million in total CPM software revenue (not counting professional services): Actuate, Microsoft, Rocket Software, Bitam, ArcPlan, Tonbeller, Winterheller, Adaptive Planning. A3 Solutions, ActiveStrategy, Alight, ASgroupDillon, Basware, Bitam, Calumo, Carpio, CDC Software, Corporater Express, Epicor, Exie, Hypergene, Inphase, KCI Computing, Lawson, Merkur, Mondelio, MIK, Paris Technologies, ProDaCapo, Prophix, Satori Group, Targetor, Xlerant and Whitebirch.