Assessment

Cognos announced the availability of version 3 of Cognos Planning Series 7. The software is used to forecast, plan, measure performance and analyze important business activities. It can be used for traditional expense budgeting, but the software also enables managers of business units or functional groups to create operating plans and use these to drive their revenue, expense and capital budgets.

Typically, companies initially implement Cognos Planning to streamline their planning and budgeting processes, generating considerable time savings compared to the typical spreadsheet-based approach. They then use the time saved to make the planning process more of a management tool. Analysts are able to spend more time finding redundant or unnecessary spending. They expand its use to do detailed headcount planning, detailed sales forecasting, managing shared services allocations and other operational planning purposes. By linking these components into an integrated plan, managers find they can improve the accuracy of their forecasts and budgets.

Although this is an interim release, it incorporates important new capabilities that enhance the usability of the system. The company is now including "Plan-to-Perform Blueprints" as part of the package. Cognos Planning gives companies a great deal of flexibility to create planning models, but in the past, the downside of the flexibility has been the clean slate users confronted when starting their implementation. The "Blueprints" are templates incorporating best-practice configurations and processes that can speed implementation and increase the chance of a smooth introduction.

Cognos also added two administration improvements. One of these is the automation of links between plan components, which in earlier releases was performed manually. Those managing the planning process can determine when information from one component of the plan is pushed to others, even allowing flows to occur in real time.

This release now allows companies much more flexibility to manage the distribution of administrative tasks (setting permissions, managing security, etc.) across a corporation, eliminating potential bottlenecks. The administrative functions can be tailored based on functional roles and types of processes, and this can be done for each component of the planning process (e.g., sales, finance, HR, etc.). In our view, while some companies may want to centralize many administrative decisions, most will find delegating certain types of decisions locally is the best approach. All global companies that want to establish a fully integrated planning process will find managing plans regionally is the only practical option.

Market Impact

The improvements to this latest release of Cognos Planning enhance its usability and should increase its attractiveness to companies looking to make planning more of a Performance Management tool. Corporations are moving away from spreadsheets to run their budgeting and planning processes, but we think adoption of this type of software has been held back over the past two years, as U.S. public companies have had to devote considerable resources to achieving initial Sarbanes-Oxley compliance. We expect Cognos will maintain a leadership position in this market when competing with other budgeting/planning providers like Cartesis, Clarity Systems, Geac and Hyperion.

Recommendation

Ventana Research advises companies looking to move beyond spreadsheets to think beyond the time they will save using a dedicated planning/budgeting tool and consider how to transform it into a Performance Management tool. Ventana Research believes global 2000 companies should consider Cognos Planning when evaluating dedicated software. For those who wish to adopt a driver-based planning methodology, we recommend Cognos be on their short list.