Effective enterprise planning is critical to business performance and, as the era of digital transformation continues to unfold, harnessing the power of cloud-based Enterprise Performance Management (EPM) technology has become top-of-mind for finance leaders. Cutting edge features like multi-dimensional databases, web-based visualization, and machine learning are transforming the way finance organizations make decisions, anticipate change, and automate key processes. IDC’s recently published report, “Worldwide EPM Applications Software Market Shares, 2018: Cloud Reigns Supreme,” identifies the following five ways the EPM landscape is changing:
1. Goodbye on-premises EPM, hello cloud-based EPM
In 2018, the EPM market grew by 8.4 percent and cloud was the primary growth driver, according to IDC. Until recently, traditional EPM deployments took place on-premises and required costly investments such as hardware purchases, in-house installation, and ongoing management by an internal IT department. Today, Software-as-a-Service (SaaS) is the preferred choice of deployment. “Growth in the numbers of cloud deployments has significantly outpaced on-premises EPM,” according to IDC. But why is this the case? Cloud-native EPM solutions offer better performance, have faster implementation times, allow for self-governance, and give you instant access to the latest version with no negative impact on productivity or downtime for installation.
2. Demand for predictive and advanced analytics capabilities is on the rise
EPM vendors that endeavor to seamlessly embed analytics into their applications are leading the charge when it comes to market share growth. According to IDC, “advanced users are looking for algorithms and techniques that use data science to help them make more accurate forecasts and predictions.” Organizations across all industries “continue to cite a lack of sufficient number of internal data scientists. Analytics applications with advanced and predictive analytics are one way to address some of this skills shortage.” This is a strong indication that the growth in analytics applications is expected to continue.
3. Traditional spreadsheets continue to inhibit EPM growth
What is the greatest thing holding back growth in the EPM applications market? Traditional spreadsheets. It’s true that EPM, and particularly cloud-based EPM, is growing fast; but, manually-built and managed spreadsheets are still widely used by large organizations for EPM. While EPM applications are intended to streamline, connect, and automate enterprise planning, IDC notes that “users will often revert to using spreadsheets if EPM applications are [too] complex to use or have IT dependencies.” As more companies begin to migrate EPM to the cloud, the use of traditional, siloed spreadsheets for enterprise planning is expected to decrease significantly.
4. Legacy, on-premises vendors are losing market share; Cloud-native reigns supreme
In IDC’s snapshot of 2018 EPM vendor market shares, the trend is clear: on-premises vendors are losing market share to cloud-native EPM vendors. In fact, Anaplan was named the fastest growing vendor of the top ten players in the EPM applications market with over 47 percent year-over-year (YoY) growth. Although legacy vendors are working tirelessly to develop their own cloud EPM solutions, “migration to the cloud continues to serve as a short-term revenue inhibitor due to a change in the revenue recognition model by vendors undergoing this migration,” according to IDC. “Legacy, on-premises enterprise software vendors are deeply discounting cloud EPM offerings to encourage their user base to migrate to their cloud EPM platforms.”
5. Seamless connection of both on-premises and cloud data is expected by advanced users
When it comes to effective enterprise planning and consolidation, having real-time access to accurate data is crucial. For the cloud-native vendors like Anaplan growing fast in the EPM market, IDC notes connecting data means making it as “seamless as possible for customers to add new connections to data sources with minimal IT involvement, otherwise users will report to working on snapshots or extracts of data that don’t reflect the accurate state of the business.” This is one of the classic pitfalls of using traditional spreadsheets and unreliable, error-prone on-premises solutions for EPM.
Discover who shaped the year in EPM in 2018
This article only provides a snapshot of the transformation that took place across the EPM market in 2018. In this era of volatility, large enterprises will benefit most from leveraging EPM solutions with cloud-native architecture, such as Anaplan’s platform for Connected Planning, whereas legacy, on-premises solutions deployed in the cloud will continue to fall by the wayside. To take a deeper dive into where the market is headed, and be sure to review the full IDC EPM Applications Market Shares Report. It examines the top ten players in EPM, the specific vendors who commanded the most market share last year, and which vendors grew the fastest.