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Into a market once dominated by enterprise resource planning (ERP) and supply chain management (SCM) vendors, business intelligence (BI) and performance planning vendor Cognos will release two new planning applications for manufacturers. Built on the Cognos 8 Planning platform, the new Sales & Operations Planning and Trade Promotion Management Blueprints provide prebuilt planning, process and policy models based on best practices. Cognos' move into defined operational performance planning brings to market new capabilities that should appeal to operations, while still benefiting the company's base in finance. Ventana Research believes that, particularly with its integrated planning, BI and performance management capabilities, Cognos is on a trajectory to impact the operational planning market.
For years, manufacturers have struggled to achieve integrated operational and financial planning - struggled mostly because they use spreadsheets to create operational plans. When individual departments create their own, each uses its own set of business assumptions and market perspectives. For example, Sales may develop its revenue forecast based on the current pipeline; finance creates an operating plan based on current-year budgets; Marketing creates trade promotion forecasts based on its demand-shaping activities; and Manufacturing bases its plans on asset utilization targets or the supply outlook. But these spreadsheet-based plans are not integrated, and the lack of visibility across departments and lack of a common planning framework can create big headaches - such as promoting and selling a product that the company can't supply enough of to meet the demand.
Progressive manufacturers have tried to tackle this problem using some form of dedicated enterprise performance planning software, often a sales and operations planning (S&OP) product provided by a supply chain management or enterprise resource planning vendor. These applications provide flexible views - mostly summaries of key activities in the detailed departmental plans - that go a long way toward reconciling the individual functional views of the business. But most of them lack adequate plan development capability and aren't integrated with business intelligence and performance management solutions. As a result, vendor-provided S&OP offers little visibility into the key performance objectives of the corporate scorecard and little top-down financial management capability such as plant profit and loss (P&L) for different market demand stimulation scenarios.
In a quiet move that will reverberate in the ERP and SCM markets, Cognos announced the release of two new products designed to help manufacturers improve the performance of their S&OP and trade promotions management (TPM). The new Cognos Sales & Operations Planning and Trade Promotion Management Blueprints provide prebuilt planning, process and policy models based on established best practices in planning, budgeting and forecasting. Built on the Cognos 8 Planning platform, the new Cognos Performance Blueprints add manufacturing to Cognos' growing list of industry-specific templates for pharmaceuticals and life sciences, financial services and the public sector federal government and higher education.
Key features in the new manufacturing blueprints include templates for functional roles, assumption capture for finance, sales, marketing, plant and materials, what-if scenario planning and performance management analytics for comparing outcomes so management can anticipate the impact of potential actions across business functions.
Integrated business planning and analytics tools that support performance management are attracting growing interest in both finance and operations. As organizations look to base their operational and financial planning on a common enterprise planning platform, they can look to only a handful of vendors to provide such capabilities: Applix, Cognos, Extensity and Hyperion. With the release of another industry-specific planning blueprint, Cognos is positioning itself ahead of these vendors but will need to differentiate itself against competing ERP and SCM vendors Adonix, i2, Logility, Oracle, SAP and Steelwedge, who have mature S&OP and TPM offerings. The challenge for Cognos will be to move beyond its traditional customers in finance to persuade the operations side of the house to adopt its new planning applications.
Successful financial performance planning requires an understanding how non-cyclical changes in demand, supply, capacity and products affect a company's ability to achieve performance objectives. Successful planning also includes the ability to re-plan quickly and uniformly across functional silos in order to respond effectively to those changes. Ventana Research believes Cognos' Planning and Performance Blueprints can support this requirement by providing a common planning framework for both finance and operations. Companies seeking improved business performance capabilities in these areas should consider these new Cognos offerings.
Related Research Notes:
Planning and Budgeting Remains Immature
Few companies have tied it to performance management.
S&OP - A New Approach to the Single Enterprise View
S&OP integrates fragmented plans to improve operational performance.
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2006 Ventana Research