BPM 2.0

No matter how you slice or dice it, the business performance management (BPM) software market is vibrant and expanding. Vendors in this space are competing for customers by offering end-to-end product suites and by acquiring smaller providers to fill gaps in their product lines. The goal: to present themselves as the single source for solutions that meet all of their customers' BPM needs.

"The BPM market experienced just under 13 percent growth [in revenues] in 2005, with the total market valued at $1.6 billion," says Kathleen Wilhide, research director, BPM and compliance, at IDC in Framingham, Mass. Ongoing consolidation in this sector has spread beyond traditional borders to include M&A deals with business intelligence (BI) software providers. "In the last three years, BI/BPM market consolidation has resulted in approximately $120 million of revenue moving from niche vendors into the top 10 BPM vendors."

What's behind the BI/BPM consolidation? "Performance management vendors realized they needed to add BI tools to their product lineups so users could dive down deeper into the details of their company's performance data," says John Hagerty, vice president and research fellow at AMR Research, headquartered in Boston. "BI and BPM have become so synonymous with each other that we call it BI performance management."

A customer survey conducted in 2006 by BPM Partners in Stamford, Conn., showed that today's BPM buyers are looking for a complete solution that includes BI tools. "The BI tools enable the user to extend their BPM solution and customize it beyond what a BPM application alone can handle," says CEO Craig Schiff.

As the BPM market has matured, so has users' familiarity with the tool. "There's more of an understanding that it's not just a technology," says John Van Decker, research vice president of CPM and financial management systems at Gartner Inc. in Stamford, Conn. "In the past, initial implementations were about replacing spreadsheets with analytic applications for budgeting. Or, in many cases, a company would buy the BPM solution and put in on the shelf until they could figure out what they wanted to do with it."

Todd Schreiner, director, strategic finance, at Parson Consulting in Chicago, has seen the same evolution. "The buyer base is more savvy now and has higher expectations about what BPM can do for them," he says. "There's more focus on understanding how they want to use BPM within the context of a broader, longer-term plan, and that BPM is a philosophy, not a technology. Technology is just the enabler for realizing their vision."