Abstract

Over the last few years, there has been a rise in the number of companiesthat have

started adopting corporate performance management software. Performance

management software has usually been associated with bigger companies over the

years and this has been evident in the performance management software market that

has been developed, as the software vendors have mainly targeted their products at the

bigger companies.This has recently changed as smaller companies have also started to

adopt performance management software in their companies, therefore,

softwarevendors have started to design performance management softwares that are

suitable for smaller sized companies.Despite this the level of adoption of the software

is not very high and different reasons have contributed to this.

The purpose of the research is to attempt to find out what the current level of

penetration of corporate performance management software is in small &medium

sized companies and find out how much of an increase, if any, there has been in the

adoption of the software. It will also find out what the main factors are that prevent

these companies from adopting this software, and also determine if there has really

been a growth in the adoption of the last few years.

Keywords: Corporate Performance Management, Business Intelligence,

Small & Medium Companies, Software Vendor

1

CONTENTS TABLE

PageChapter 1: Introduction 6-11 1.1 Background and significance of research 6

1.2 Aims & Objectives 9 1.3 Methodology Overview 101.4 Dissertation Structure 10

Chapter 2: Literature Review 12-35 2.1 Introduction 12 2.2 Components of CPM system 13

2.3 Evolution of CPM Software 142.4 Current Level of Penetration of CPM software 15 2.5 Current CPM Software Market 172.6 CPM & Business Intelligence 21

2.6.1 Integrating CPM & Business Intelligence 242.7 CPM For SMCs 27

2.7.1 Small Business Performance Management 28 2.7.2 Benefits of CPM For SMCs 30 2.7.3 Factors Affecting The Penetration of CPM Software 30 2.8 Wrong Implementation of CPM Software 32 2.9 Chapter Summary 34Chapter 3: Research Methodology 36-48 3.1 Introduction 36

3.2 Research Philosophy 363.3 Research Strategy 413.4 Research Approach 443.5 Time Horizons 453.6 Data Collection Methods 453.7 Data Content Analysis 473.8 Chapter Summary 47

Chapter 4: Research Analysis & Findings 48-64 4.1 Introduction 48

4.2 Results from questionnaire 49

4.2.1 Current Level of CPM Adoption 50 4.2.2 CPM Adoption Over The Last Few Years 51 4.2.3 Factors Affecting CPM Adoption 52 4.2.4 Further Analysis of Factors Affecting CPM Adoption 52

4.3 Results From Previous Research 55

4.3.1 The Current Level of Penetration of CPM Software in SMCs

4.3.2 The Growth of CPM Software 56

4.3.3 Factors Affecting CPM Adoption 59

4.4 Limitations of The Research 61

4.5 Chapter Summary 62

Chapter 5: Conclusion 65-68

5.1 Introduction 65

5.2 Conclusion 65

Personal Reflection 68

References 69

Appendix A: Research Questionnaire 69

Appendix B: Dissertation Definition Report 80

Chapter 1

INTRODUCTION

1.1 Background and significance of research

The purpose of this chapter is to give a general background into the level of

penetration of corporate performance management software in small & medium-

sized companies This research question being asked is what the current adoption

level of the software presently is presently.

Performance management has been defined as a series of management

processes that include setting strategy and goals, defining key metrics,

measuring and monitoring performance against goals and metrics, and analyzing

and reporting on performance.

The mode of collection and analysis of information has evolved over the years.

There has been a constant evolution of information systems that collect and

analyse information for businesses. It was not just about collecting information

but it was about collecting reliable and useful information.

The information systems that analyze this data has evolved from just being

decision support systems to what they are today.

According to Batool (2006),before the 20th century, no business could collect the data for the analysis properly. In the 1970’s, decision support systems

were introduced in business initially, they later evolved to executive information

systems in the 1980s. By the 90s, improvement in the business intelligence was observed

with the improvement and further development of computer technologies. Advancement in

the management systemsand the application of technological advancementrevolutionized the

business planning, inter and intra organizational reporting and the decision analysis.The

revolution in the business management models and systems demandeda dynamic

methodology with the integration of all the current changesthat is now known as thecorporate

performance management (CPM) (Batool, 2006). Historically, this term is credited to Gartner

research that introduced it in the 2001. The alternative names to the termare Business

performance management, Enterprise performance management, etc.

Corporate performance management (CPM) is the most crucial aspect of the business

intelligence(BI) as it includes the overall monitoring and the management of a firm’s

performance. It is determined by employing the key performance indicators (KPIs) like the

total revenue, return oninvestment (ROI), operational costs, and other manufacturing costs.

(Searchdatamanagement.com,2006).The KPIs help in evaluating the functions, procedures,

management systems, and the other factors that are required for the overall management of

the organizational performance. The main features ofcorporate performance management

(CPM) has dynamic effects on the organizational functioning, the key characteristics are the

integration of organizational activities, the data automation processes, collaborative support,

insight analysis, andfocus on every activity so not to overlook any possible

exception.corporate performance management (CPM) has three levels,the client, business

applications, and the data management. corporate performance is achieved by following the

managements steps like strategic planning, performance evaluation, forecasting and future

planning, budgeting, partnerships and business intelligence (BI) (Batool, 2006).

According to Muhammad (2010), the Corporate Performance management is crucial to the

business and he reasons that how can someone manage business functioning until or unless

evaluates the current performance. The behaviours of people associated with an organization

greatly get influenced by the organisation’smeasurementsystem both inside and outside

thatorganisation.In order to shun the market competition,in the age of information technology

the companies are required to employ the measurement and management systems that are

derived from the organizational strategic capabilities so to survive and prosper in every

competition(Kaplan, 1996).

Business intelligence (BI) vendors are aware of the demands of the smaller companies and

are already targeting this market. The improvement in the BI performance at lower prices is

resulted from the prevailing competition for this sector that is aimed at smaller companies

(ButlerGroup, 2009).

Small & medium companies (SMCs) may not have the same performance

management needs of larger rivals, they also don't have the same budgets or

resources to employ the same CPM software tools that they employ.

The level of penetration of CPM software is quite low for a product that offers so

much benefit to businesses. The rate of adoption is even lower in smaller

companies. This situation is said to be improving be improving as

more companies are beginning to see the benefits of the software, but the

general adoption rate is still viewed as being relatively low.

According to Kugel (2008) a research that was conducted by Gartner among

Firms employing 10,000 or more personnel provided that the number of firms that invested in

CPM software is are as low as only about half. He further states that the number is even

lower in the firms employing comparatively very fewer personnel, as the majority of small

and medium-sized enterprises (SMEs) are still following the traditional spreadsheets and e-

mail for their budgeting.

Aggarwal (2010) also agrees with this as he states thatmany small

and medium-sized companies are still using the common applications like Microsoft Excel

spreadsheets, shared or linked folders, emails and other improvised tools for the sophisticated

and cohesive tasks such asstrategic planning, performance evaluation, forecasting and future

planning, budgeting , financial reporting, and the compliance functions.

Traditionally, the smaller companies due to their financial constraints are often foundlagging

behind whenever a new technology is introduced in the market as the software

developersnaturally target their latest softwaresat the large enterprises(ButlerGroup, 2009).It

further states that the cost is not only the factor leaving small and medium enterprises to lag

behind but also thesesoftwares, due to their sophisticated and dynamic applications obstruct

small business too as they consider it beyond their requirements. This makes the smaller

companies to lack the problem solving and multi-tasking experience in their organizational

functioning that can be achieved by adequately using relevant softwares and customizing

them to meet organizational requirements. In addition to them, there are also other factors

that obstruct SMEs to adopt this innovation that will have to be looked at.

This has led to the research questions which are (1) to find out what the current

level of penetration of corporate performance software is in general but focusing

on small & medium companies are (2) what factors contribute to the low adoption

rate if it is low and (3)if there has been an increase in the adoption of the softwareover the

last few years.

1.2 Aims & Objectives

The prime objective and focal point of the research is to investigate what is the level of

adoption of corporate performance management software is in small & medium enterprises. It

also aims at findingout the factors that contribute to its lowadoption rate by SMEs that has

been felt by previous researchers inthis field, and also to find out if the adoption rate has

improved over the last fewyears.

These findings assumedly will then enable to prepare recommendations about how the

adoption rate of the software can be improved in SME sector.

Aims & Objectives

1. To establish the hypothesis that CPM software use is comparatively lowin the SMCs

as compared to the large firms.

2. To explore different factors and causes for the low participation of SMEs and to

identify the mostcommon factors among all the SMEs

3. To evaluate whether the CPM software properly implemented by the firms that opted

it improve the management levels of their firms.

4. To ascertain the growth in the CPM usage and to analyse the growth rate in this

regard.

1.3 Methodology Overview

In order to achieve the above objectives, the student has chosen to analyse

previously collected (secondary) quantitative and qualitative data and also

qualitative data from a questionnaire (primary) that was filled out by

participants in research conducted by the student. An unbiased fair-minded

approach has been adopted to attain the findings using planned research

methods and methodology. A detailed breakdown structure of the methodology

and in depth discussion on several alternative research approaches will be

discussed in chapter 3 of the study.

1.4 Dissertation structure

Chapter 1, this introduction provides a relevant discussion and

background on the topic and highlights the importance of the study to the

researcher. The chapter also makes clear the primary and secondary

aims of the research.

Chapter 2, the literature review takes the opportunity to discuss what has

already been said about the subject matter by earlier researchers,

critically reviewing findings from their studies.

Chapter 3, the research methodology provides an outline of the research

approach to be taken towards the study and the processes used to gather

the information.

Chapter 4, aims to analyse the relevant data collected for the study and

present the main findings obtained.

Chapter 5, will then summarise the findings of the research in a final

statement. A personal reflection of the study, followed by references and

an appendices section are included in the closing stages.

Chapter 2

Literature Review

2.1 Introduction

This chapter is to provide a thorough review of the relevant literature that exploresthe level of

penetration of CPM software in small & medium companies .

The chapter will start by introducing what CPM software is, its components and

proceed to look at the current level of penetration of the software in small &

medium companies.

Different theories will be looked at regarding the level of penetration of the

software. Furthermore, different factors which contribute to the level of

penetration of the software will be explored and also the most common factors

identified. All these factors will then be verified by observation when

conducting personal surveys with the use of a research questionnaire.

Furthermore, different factors that contribute to the level of penetration of the

software will be analysed in order to identify the most common factors. Apart

from the factors that will be researched I will also hypothesize on what other

factors I feel may contribute to the low level of penetration.Historically, the primary usage of

CPM software forfinancial analysts in assisting in their budgeting processes, and it is very

much the same in this regard yet as the basic driver that makes organizations to adopt CPM

toolsis thatthey want improvement in their financial management process (Maxcer, 2010).

This should not restrict CPM into being just a financial tool that is used by finance

departments in companies. The findings from this research will also be used to make

recommendations on how it should be used throughout the company.

2.2 Components Of A CPM System

The major components of a CPM system are very much like the components in other

Management Information System (MIS). The basic components are the software, its users

and related hardware, and the business processes. The entire CPM components act together to

provide more than the mere parts. They provide with the values of information conveyance,

performance evaluation, and superior performance Gartner’s advice to firms considering

CPM backs this impression. A typical CPM package normallyconstituents both the

application-specific parts and the software tools that help in the development and integration

ofall the components(Athena solutions, 2007).

Following can be categorized as the application-specific components:

An organizational operational application like budgeting, strategic planning or forecasting

A model or any set of selected KPIs and data classification application to assist business operations

A modelemployedfor the data storage

A set designed for the reports, analysis, and evaluation

A model of ETL (extract, transform and load) procedures to transport data from the source systems to the application data storages.

The software tools like Business Intelligence (BI) sets and ETL tool are also among the CPM packages.

The business applications are implemented by using the software tools(AthenaSolutions,

2007).

Performance forecasting, departmental budgeting and organizational planning processes,

aswell as graphical evaluation to display and deliver corporate functioning are the main

features of CPM software.

2.3 Evolution of CPM

CPM has seen a transformation during the last couple of years. Corporate performance

management (CPM) has been defined consistently the same way since its introduction by the

Gartner Research in 2001. Basically, CPM is term spread over number of functions and

processes; it surrounds all of the procedures, approaches, and systems needed to evaluate the

performance of an organization for its better management (IBM, 2009).Pritchard (2008)

believes that the business Intelligence transactional systems developers have the realization

for the significance of the integration betweenbusiness Intelligence transactional systems

(BITS)and performance management software. He further uncovers that those customers who

were purchasing from the CPM vendors have also made heavy investment in implementing

transactional systems for the improvement in theiroperational capacity. Customers that went

to the trouble of tightly integrating their CPM and transactional systems were seeing benefits,

and they wanted to know why they couldn't get a complete solution from one vendor.

One of the first software vendors that was quick in addressing this challenge was Oracle,

White (2009) says that the Oracle executives had the realization that the quickestapproach in

marketing a full-featured CPM would be to get the biggest name in the market under board

and they opted Hyperion to start with this expedition. Other vendors too followed the trend

like SAP, opting for Business Objects, and IBM opted forCognos.White (2009) thinks that all

those acquisitions had a dramatic effect that changed the whole scenario of BI and

performance management vendor markets. Oracle believes that they basically pioneered in

bringing this change to the market so quickly and effectively that CPM, which was nothing

but a tool for the finance departments, became an important part of performance management

systems. The firms that have benefited the most and achieved the highest standards of

performance management successfully accepted that the involvement of the whole firm is

compulsory in this endeavour and that it cannot be achieved on relying on a single or few

departments alone; they have involved the entire firm in this project. Thus, wesee CPM

evolving to Enterprise-wide Performance Management which involves different levels of the

company (Pritchard,2008). Involvement of managers and employees from all the departments

and sections of the firm in Firm-wide performance management improvement endeavour is

very significant. All the small and big parts of the firm have to operate as one.Pritchard

(2008) further claims that for a long time as many years now, BI tools havebeen considered

as the technicalsolution inproviding firms with their performance information. However, he

thinks that the BI report is not something that makesexecutives to careabout, but it is in the

content of the report that matters to them. This means that if the firm fails in integrating

financial data with the nonfinancial data, what the BI orCPM tool can offer is assistance in

decision-making by making results more comprehensive. The limited adoption of CPM tools

may also be due to the fact that there are many firms who find it hard to diagnose if they need

improvement intheir organizational systems or they need to work on the operational

processes. CPM has evolved into an enterprise-wide tool that can be adopted at different

levels of the company. This application of CPM at different levels in a companywill involve

business intelligence (BI) which is discussed later in this dissertation.

2.4 The Current Level of Penetration of CPM software

CPM is an area of the business intelligence that comprises operational monitoring and

organizational management to evaluate an organization's performance by employing key

performanceindicators (KPIs) such as term revenues, return on investment (ROI) of the

period, overhead cost, and the operational costs. (Smart KPI, 2009)

The level of adoption of corporate performance management software has been seen to be

low in general (Kelly, 2010). According to McNamara (2010), CPM helps align

organizational activities and processes to the goals of the organization. He states that it will

help identify the organizational goals, results needed to achieve those goals, measures of

effectiveness or efficiency (outcomes) toward the goals, and means (drivers) to achieve the

goals. Patel& Hancock (2010) stated that the performance management can translate business

strategies into action. They further state that identifying performance measures that underpin

the strategy, and setting targets or milestones over the short, medium and long term provides

a basis for:

Gaining consensus on the strategy

Communicating the strategy throughout the organization

Cascading measures down through the organization

For such a tool that offers all these benefits that have been mentioned above, itsadoption level

is not at very high. This low adoption level is morecommon amongst small and medium sized

companies. According to Kugel (2007) during a survey of about companies with 10,000 or

more employees, only about half have invested in CPM software. That percentage goes even

lower for companies with fewer employees, with the majority of small and medium-sized

companies (SMCs) still doing their budgeting the same way it was done many years ago

using spreadsheets and email.

Furthermore, a lot of companies that already use CPM software are still notusing it to its

maximum potential. Another study by Kugel (2007) states that still, only about 50% of large

enterprises and 25% of small and midsized companies have adopted CPM software. And of

those that use it, most use CPM softwareonly for financial budgeting, planning and

forecasting, neglecting its other, morestrategic capabilities.

The use of spreadsheets is seen as more cost effective and less complicated to a lotof

companies, which has prompted them to ignore CPM software. A lot of the smallercompanies

still prefer to use spreadsheets as a front-end tool for their users to enterdata into a budgeting

or planning system. As stated by Chandler, Rayner& Van

Decker (2010), according to a Gartner research, nearly 50 percent of large enterprises and 75

percent of midsize companies still continue to use spreadsheetsor legacy applications to

handle their core management process for the purposes ofbudgeting, planning & forecasting,

financial consolidations, and financial reporting.

There are different reasons why they choose these methods such as cost issues

and easier usability of spreadsheets.Ratkowski (2009) states that companies that leverage

CPM enjoy a distinct advantage over companies that have not begun the process. He states

thatthese companies are proactive and can take corrective action before issues turn into worse

problems. CPM will enable them see where the company is lacking in performance and

address these issues before it becomes detrimental to the company’s success.

2.5 Current CPM Software Market

Even though the recession has not officially ended in most economies, mostcompanies are

still positive when it comes to spending on business intelligence. This has not stopped them

from investing in corporate performance management software according to Aucoin (2010).

They believe that this is necessary to help them get out the difficult economic times that have

been hit the markets in recent years. This is one of the reasonswhy there has been a growth in

the CPM software market even for smaller companies. Search Business Analytics (2010)

shows that there is more investment in business intelligence (BI), data analytics, corporate

performance management and data visualization tools to help companies get through the

tough times and put them in a position to flourish in the future. As software vendors now look

to cater to smallcompanies rather than just the large companies, the market has seen an

increaseover the last few years.

In its 2010 BI Magic Quadrant report, consulting firm Gartner Inc. stated that the

major software vendors for CPM are IBM, Microsoft, Oracle and SAP, and theycontinue to

dominate the BI software market over the years.

A total of 44% of the survey respondents reported that their organizations had

deployed, were implementing or planned to install corporate performance

management software. But more than half said that their companies had no plans to

deploy enterprise performance management software or other CPM tools

in the foreseeable future(Gartner, 2008).

There’s still a lot of room for growth in the CPM software market. As more small

companies get to see the benefits of the software, there can only be an increase in

the market for the software vendors.

Even though there has been a growth in the CPM software market over the last

few years. The market is still relatively small in comparison to other enterprise

applications markets, according to the recent Gartner Magic Quadrant report.

Most researchers in information systems say that adoption of CPM software remains

relatively low, despite the technology’s potential financial planning and management

benefits.

A worldwide report titled, "Market Share: Business Intelligence, Analytics and Performance

Management Software, Worldwide, 2009," by Gartner discovers that the entire BI market will

grow at the rate of 4.2 percent per annum from 2008 to roughly $9.3billion in 2009. It was

also found that the BI platforms having 64.2 percent market share of and enjoys proportionate

revenues out of the total worldwide BI software revenues. In addition to these findings, it is

also being found that the Corporate performance management (CPM) suites having 20.8

percent market share, while the analytic applications and performance management software

together having 15 percent of the total market share.

In 2009, SAP Business Intelligence software ranked first in revenue with $2.1 billion among

all other competitors.No doubt, the adoption rate is still very low, whereas the market for

CPM software has tremendously grown over the years. The same can also be said for the

smaller companies.

According to Gartner, Worldwide Business Intelligence, Analytics and

Performance Management Software market grew by 4% in the year 2009. As

seen in the tables below(tables 2.1 & 2.2), there has been an increase in the BI

and CPM market over the last few years;

Table 2.1Worldwide BI, Analytics and Performance Management Revenue Estimates for 2009 (Millions of U.S. Dollars)

Company  2009 2009 Market Share2008 2008 Market Share2009-2008 GrowthSAP 2,084.122.4 2,096.123.4 -0.6Oracle 1,351.114.5 1,284.014.4 5.2SAS Institute 1,324.614.2 1,286.614.4 3.0IBM 1,135.612.2 996.5 11.1 14.0Microsoft 739.1 7.9 681.5 7.6 8.5MicroStrategy 295.0 3.2 280.0 3.1 5.4Other Vendors 2,392.425.7 2,322.326.0 3.0Total 9,321.9100.0 8,946.9100.0 4.2

Source: Gartner (April 2010)

All three subsegments of BI showed growth. BI platforms showed slightly

stronger growth than CPM suites and analytic applications and PM, excluding

CPM (see Table 2 below).

Table 2.2Worldwide BI, Analytics and Performance Management Revenue Estimates for

2009 by Subsegment (Millions of U.S. Dollars)

Subsegment  2009 2009 Market Share2008 2008 Market Share2009-2008 Growth

BI Platform5,982.4 64.2 5,706.563.8 4.8

CPM Suites1,937.1 20.8 1,869.420.9 3.6

Analytic Applications and Performance Management

1,402.4 15.0 1,371.015.3 2.3

Total9,321.9 100.0 8,946.9100.0 4.2

Source: Gartner (April 2010)

Table 2.3Worldwide BI, Analytics and Performance Management Revenue Estimates for

2008 by Subsegment (Millions of U.S. Dollars)

Segments     2008 Revenue

2008 MarketShare (%)  

2007  Revenue

 2007 MarketShare(%)

2008-2007 Growth (%)

Analytics Applications and Performance Management

 3,055.1      34.7 2,458.6 34.0 24.3

BI Platforms 5,746.4   65.3 4,773.7 66.0 20.4Total

8,801.6

100.0

7,232.4

100.0

21.7Source: Gartner (June 2009)

Both the BI platform and the analytic applications and performance management

(including corporate performance management) areas performed strongly (see

Table 2.3), with growth rates of 20.4 percent and 24.3 percent, respectively.

2.6 CPM and Business Intelligence

Business Intelligence is a process for increasing the competitive advantage of a

business by intelligent use of available data in decision making(Wiki 2009).

MIT(2005) describes business inteligence as the use of high-level software for

business applications. More specifically, the collection of cutting-edge technologies

that help to make systems more intelligent.

Businesses rely heavily on data and the information it delivers about their

companies. This information is collected and used to aid decision making and

improve performances by the use of business intelligence.

Business intelligence (BI) applications gather information about business

processes and activities to make it available to business users, enabling them to

make more informed decisions and take more effective action.

BI and CPM is not the same thing. BI is used as the term that is used to

describe the technology that is used to access, analyse and report on data

relevant to the company. It encompasses a wide spectrum of software including

ad-hoc query, reporting, on-line analytical processing (OLAP), dashboards,

scorecards, search, visualization and more.

CPM, however, is not just about technology. CPM involves the processes, methodologies,

metrics and technology (applications and software tools) used to monitor, measure and

manage a business. The business processes may include financial, marketing, sales, customer

relationship management, supply chain management or others (Search Business Analytics,

2010).White (2009) in his journal says that it is the combination of BI and CPM that brings

significant benefits to the business. He further states that CPM enables a business intelligence

system to tap into and monitor business process events flowing through operational systems.

These monitored events are used to measure and manage business performance. The

integration of process event monitoring with BI is a key component of the overall BPM

platform that enables a closed-loop solution.

Table 2.4

SOURCE: TDWI(2009)

Table 1 compares traditional BI with BI used for CPM. It demonstrates how

BPM forms the underpinnings for many of the BI developments that have been

stated.

Specifically, CPM helps BI cause operational decision making to become more

proactive and timely, and support a wide range of business users.

It is widely believed that the integration of BI and CPM is the key to ensure that the

benefits performance management software are maximised. An illustration of this,

according to Pritchard (2008),is that CPM users have seen that integrating

performance management systems with BI systems like ERP (enterprise resource

planning)and CRM (customer relationship management) could give a manager in

sales, for example, better visibility into his/her realm, from demand generation to

revenue recognition. The manager can analyze performance trends across regions,

products, and time periods against both stated goals and potential, with what-if

modelling to project the performance of ongoing sales and marketing tactics.

Pritchard (2008) also gives another example where, integrating CPM with SCM

Supply Chain Management (SCM) and Human Capital Management (HCM) could

allow a Chief Operations Officer to monitor employee productivity trends

throughout the supply chain, which he could use in activities such as aligning

compensation plans to production output and sales performance.

The importance of BI to CPM cannot be over–emphasized, a report in TDWI

(2008), an online magazine states that you cannot do BPM without BI. This

statement highlights the fact that BPM needs BI to be successful. An example of

this can be seen by a survey by Pricewaterhousecoopers (2009) which states

that more than 50% of the companies which are not using BI are unsatisfied with

their data delivery. On the contrary, from all companies which have BI in place

more than two-thirds are satisfied with their data delivery. This highlights the

importance of business intelligence to corporate performance management

when implementing the software to ensure that its benefits are maximized.

2.6.1 Integrating CPM and BI

BI plays a pivotal role in CPM solutions. Whilst some areas of functionality may

not be seen as compulsory, it is almost impossible to conceive of a CPM solution

without BI. The foundations of BI, which are ad hoc query, reporting, and

analysis are used in conjunction within CPM in order to accurately measure both

operational and financial activity and performance, providing the necessary

context against which decisions can be made (ButlerGroup, 2009). The BI market

is responsible for the development of some of the most advanced CPM tools that

are available.

BI and Corporate performance management integration means that companies

can closely link insight from analytical tools with business objectives and

processes. This can be done by integrating applications or by vendor-merged

applications, which will shows that both technologies are inextricably linked

(Smalltree, 2006). It further encourages companies to move toward a type of

"process-centric BI," and deploy it across the enterprise from executive management

to operations departments. The aim is to enable better daily decision-making.

Today business intelligence is being generated by information producers who

often do not know how to leverage Business Intelligence in core business

processes. In addition most business intelligence is static, i.e., it is not directly

used to manage business operations or drive new business initiatives.

Corporate performance management in a business involves strategic planning,

the combination of strategic and near-real time operational analytics(business

intelligence) are what is needed to manage a business effectively.

Managing a business involves three main things:

Strategic planning

Tactical analysis

Operational decisions (Ferguson 2010)

Figure 2.5Source: Business Strategies Inc (2005)

As seen in Fig. 2, the three main levels of managing a business are highlighted.

Integrating CPM and BI will enable proper performance management, as it will

ensure an enterprise-wide performance management which is across all levels of

the company. This means that BI being integrated with performance management

will help the company manage performance at different levels from corporate

strategy, which is long-term, to operational decisions which involves day-to-day

activites in the business.

This is also stated by Ferguson (2010) who believes that “what is

needed is objectives driven business management using scorecards and

dashboards at the strategic level that are integrated with Business Intelligence

tools and analytic applications that support business measurement at tactical

and real-time operational levels”.

BI software vendors now incorporate CPM into their BI suites as BI software isused as part

of an overall CPM solution.

That said, BI is the perfect platform for CPM, and the two technologies areconverging in

vendor tool set and are deployed in tandem at many companies. BI systems have the

technology for tactical and operational analytics, whereas CPMsystems are designed to

display the outcome of that analysis within the context of the company’s goals. Ferguson

(2010) Puts it this way, “BI systems tell companieswhere they've been and where they are;

CPM puts that information in the context of where they want to be. CPM systems help

employees use BI information to changetheir behavior or take actions that will help meet the

organization's goals. It helps"cascade down" high-level strategy to the individual worker's

goals”.Presently, Business Intelligence processing involves business managers making

decisions that feed into operational systems. The data is then extracted from the operational

systems, integrated and loaded into data warehouses where reporting and analyses are

produced using Business Intelligence tools to measure businessperformance.

According to Ferguson (2010) some would call that business performancemanagement but he

says that this is just business measurement and not businessperformance management.He

further states that Business intelligence and performance management solutions need to

leverage existing IT infrastructures andpre-existing assets and offer the option of flexible,

incremental deployment. Thisenables companies to gain value from their investment today

and meet future demands as the business grows. Business users employ their business

expertiseand guided analysis to evaluate the actionable business information produced by the

CPM and BI systems in order to determine what decisions, in case of any, need to be made to

improve business operations and performance. Applying business expertise to business

information creates business knowledge. This knowledge can then be fed back to the business

processes that created the transaction data and business information being analyzed, and the

business processes enhanced asappropriate. In some situations this feedback loop can be

automated (Smalltree, 2006).

An example of a scenario of the benefits of the use of integrating BI with CPM is a company

that wants to review customer behavior so that they can aim special offers at certain

customers to get those customers back before their competitors do. By doing this, the

company can use Business Intelligence to optimize business and improve corporate

performance in the company.

2.7 CPM for Small & Medium Companies

There are now a lot of affordable CPM software options that have entered themarket recently,

which makes it in reach of small and medium-sized companies. The major vendors like IBM

and Microsoft have introduced lower-priced platforms aimed at the mid-market, and SaaS

CPM software vendors like Host Analytics are also an affordable alternative as well for small

Companies (SearchBusinessAnalytics, 2009).

2.7.1 Small Business Performance Management

Small and medium companies (SMCs) have a lot to gain from evaluating theperformance of

their workers. Implementing CPM software for a small business isa good and effective

business practice.

In order to successfully implement performance management software, small andmedium

companies first of all, need to be aware of its applicability and importance.

A lot of theory has been written about the benefits of performance management butthere can

be little success unless SMCs are convinced of the software’s applicabilityto their business.

It has been found that access to accurate data, both financial and non-financial, on the

performance of competitors or similar businesses is a prime need for SMCs. It has been

suggested that the establishment of networking partners should provide managers with much

needed information for the evaluation and development of business performance (Bergin,

2008).

A lot of smaller companies usually undergo quick growth and change. Performance

management can be an effective tool for planning and implementing change processes that

lead to organisational improvement when the knowledge gained isconverted into a detailed

action plan to improve competitive advantage (Voss, Ahlstrom, & Blackmon, 1997).

Performance management software can help smaller business managers stay on topof

productivity given changes in job descriptions or location, and hiring newemployees.

If CPM is not maximised to its full potential by the companies that do adopt it, theywill fail

to get most of the benefits that the software offers. This appliesto SMCs as well as the

benefits of the software are highlighted in the next section.

2.7.2 Benefits of CPM for small and medium companies

The most obvious benefit is that will help measure job performance. Staffperformances can

be evaluated and they can be given feedback on areas thatneed to be improved upon. A

system that rewards staff for good performance is encouraged. Staff can see a direct

correlation between performance and financialrewards.

Also, another benefit of performance management software is that it helps thebusiness gain

strategic advantage over its competitors. Companies can find theirweaknesses and have them

compared with other companies and also specificallywork on improving the areas where they

have problems.

For most SMCs that are always striving to expand, it drives the growth of thecompany. TTSB

(2010) states that motivated employees’ value structure, development and a plan for growth. 

An effective performance management systemcan help an employee reach their full potential.

This is positive for both the employeeand for the overall growth of the company.

Kelly (2010) states that with CPM software, companies can more easily add newmetrics,

tweak existing ones, and react to changing market conditions. It alsostates that a common

CPM platform is needed to ensure that different departments are using the same formats for

financials and makes collaboration andcommunication between the finance department and

the rest of the company simple.

It can also help to measure other areas such as customer satisfaction. Areas that need

improvement will be looked and can be rectified. The customer interactionwith the members

of staff will be improved thus creating better customer satisfaction.Another benefit is an

improvement in productivity of individual staff. The performancemanagement tools allow for

individual metrics, which will let the company’smanagement to set attainable goals for

improved productivity.

Providing enterprise-wide reporting and performance analysis initiates fact-based recognition

of a problem and workflow issues. Management coaching isimproved when a performance

management system gives data on individualperformance (ehow, 2011).

SMCs will benefit from adopting a suitable CPM suite for their business. With all the benefits

that have been listed there are still barriers to its adoption. The factors that prevent SMEs

from being willing to adopt CPM are next discussed.

2.7.3 Factors Affecting The Penetration of CPM Software

There are a number of factors that affect the level at which CPM software isbeing

implemented in small and mid-sized companies. The most common factor that influences the

adoption of CPM software or any BI software is cost. Butler (2009) states that smaller

organisations often get left out in the first wave of technology development as the BPM

software vendors target their latest software at large enterprises, in the hope of attracting

commensurate licensing deals.

Such a move leaves the smaller companies being unable to acquire BPM softwarefrom the

software vendors as they do not have the resources that the largercompanies have.

A research by Ventana (2007) also showed that most executives where worriedabout the cost

of implementing BPM and feared that it was too expensive toadopt. Another survey by

Ventana (2010) shows that lack of resources (60%) and lack of a budget (43%) are the two

most common barriers to improving BI and performance management. The top two people

issues were cited as lack of awareness (36%) and lack of executive support (26%).

Complexity is also another issue that greatly affects BPM software adoption.BeyeNetwork

(2007) states that BI tools and applications are difficult to use for those people that do not use

them regularly or are not conversant with the data they provide. It also states that the IT

industry (vendors) is constantly addingnew features and functions to their products, which is

often at the expense ofusability. This creates a situation where the companies have a software

suite that is overly complex and contains features that only few people in the organization

need or know how to use. As stated earlier Kugel (2007) says that the companies that use

CPM, mostly use it only for financial budgeting, planning and forecasting, neglecting its

other, more strategic capabilities. I believe that the reason for this is due to the fact that the

software programs are complex and not easy to use which causes these companies to ignore

the more strategic capabilities of the software.

Most of the time this causes the implementation process of CPM software to beabandoned as

it usually fails to deliver what the company expected of it.Ratkowski (2009) says that studies

show that 31.1% of software projects cancel before being completed. One of the reasons for

the adoption process being abandoned was the software not being implemented properly as

the users found it difficult to use.Poor Planning and Evaluation by smaller companies is said

to also be a problem in implementing performance management. Smaller companies tend to

be poor strategic planners and seldom and inconsistently review their business

performance(Cassar& Gibson, 1999).

Bergin et al Monkhouse (1995) states that SMCs barely use non-financialmeasures let alone

employ more complex and time consuming benchmarkingtechniques.Another issue I think is

a problem is that most companies are simply just worried about change. Implementing

something that is not familiar to the company usually brings about a certain degree of

trepidation. It is in the human nature to be worried or fear something that they do not know.

Adoption of CPM software is no different.

If the adoption of CPM is not embraced by executives of these smaller companiesthere is a

high probability that it will not be adopted in their businesses. My point is justified by a

research by Gartner (2007) which indicates that 64% of recently surveyed CIOs(Chief

Information Officers) say that their managers do not have the right information to run the

business. This shows that there might be conflicting views in the company regarding

implementing CPM. The fact that the senior management does not approve of it does not

mean that this is the view of the whole company.

Alternatively, it could also be a situation whereby the senior management iswilling to adopt

BPM but is met with resistance by lower management in the company.As with any change

project it is important that all affected parties in the company are properly informed on the

proposed change and any misconceptions are addressed. According to a research by Venatana

(2007) many executives shy away from performance management because they think it’s

going to be a lengthy and expensive process.  The research says that executives fear that

CPM is a “flash in the pan” and will consume corporate resources, ending in an

implementation that doesn’t make much difference for the business. If they are well-informed

about this, it might change their views on CPM.

2.8 Wrong Implementation of CPM

CPM is often misused by a lot of companies. They fail to maximise its benefits which is why

a lot of companies have not seen its true value. A lot of the companies that were interviewed

for the survey that were using CPM were ignoring a lot of the other capabilities of the

software. A major reason for this is that a lot of the companies did not have the software

installed by a software vendor. They are ignorant of the full capabilities of the software as

full training and guide steps have not been given. As always the small companies try to cut all

possible costs, which is why a softwarevendor isn’t usually contacted for installation and

implementation of the software. Kelly (2010) states that of those companies that are using

CPM, most use CPM software only for financial budgeting, planning and forecasting,

neglecting its other, more strategic capabilities.It has been said that through 2011 at least 50

per cent of companies implementing CPM systems will fail to improve performance

management processes across the organization (Gartner, 2008).

This means that many potential benefits of CPM will not be realized by companies. Which

creates a market that should be explored by software vendors.According to Kelly (2010) there

are two other areas incorporated in CPM that are less well adopted? The first is profitability

modelling and optimization, which includes activity-based costing applications that enable

users to model the impact on profitability of different cost and resource allocation

strategies.The second underutilized CPM capability is strategy management. Such

applications, including balanced scorecards would help organizations tie key strategic metrics

to workers' daily activities to make sure that company’s goals are achieved. Gartner(2010)

states that only about 60% of large enterprises and lessthan 30% of midsized organizations

have adopted CPM applications thus far. It also states that most of the companies that have

embraced CPM technology are installing finance-oriented point products instead of full-

fledged enterprise CPM systemsfor use by multiple departments or business units. This

shows that the capabilities ofthe software are either not understood or are just ignored.

A number of companies that have failed in their attempt to implement CPM software can

attribute this failure to wrong implementation of the software in the first place. This fact is

further looked at in Chapter 4 when the results from the research questionnaire are analysed.

2.9 Chapter summary

This chapter look at current literature on the present level of CPM adoption in firms today. It

looked at what a CPM package comprises of and its functions. The current CPM market is

also analysed to see the changes that have occurred over the years. The literature shows that

the market has grown over the last few years. It also looked at the relationship between CPM

and BI, distinguishing both from each other as they are often mistaken to be the same thing. It

stresses that both CPM andBI should rather be used together to be successful and states how

they should both be integrated to ensure that the benefits of the software are enjoyed by the

companies.

The benefits of CPM to SMCs are also researched on, and the main factors thatprevent

adoption of the software in SMCs in particular have been determined.Factors such as poor

planning and evaluation, software cost and complexity aresome of the reasons that these

companies are not adopting the software.

Chapter 3

RESEARCH METHODOLOGY

3.1 Introduction

The main aim of this chapter is to identify the research approaches that will beused during

this research. The different methods that were used in the research to get information will

also be addressed at by the student. According to Wisker(2008) “the choice of methodology

and the methods for your research follows on naturally from your worldview and philosophy,

and from the clear definition of a title and the research questions that underpin your

research. Different disciplines tend to favour different methodologies”. This means that the

most effective approach for researching and understanding a selected topic will depend

mainly on a variety of factors. In all, the methodology is based from the perspective of the

researcher affecting the research questions asked, the forms of data collection methods,

modes of analysis and argued findings, the discussion in this section will be similarly

structured to the “Research Process Onion” identified by Saunders et al (2003) as: research

philosophy, research approaches, research strategies, time horizons and data collection

methods. The main aim of this chapter is to show the different methods that were used to get

the research data and the theoretical assumptions that will be applied to the research study.

3.2 Research philosophy

The concept of a research philosophy is based upon the assumptions of theworld and the

nature of knowledge viewed by the researcher, or in other wordsthe opinion of how research

should be conducted and the development of that knowledge (Hussey and Hussey, 1997:

Saunder et al, 2003). The way the researcher views the development of knowledge

determines the entire course of the research project, with this in mind each view is acceptable

and is not ‘better’ than another. Through accommodating and understanding the

philosophical viewpoint of the researcher, allows provision to be made in comprehending the

school of thought and practical reasoning.

For this research, choosing an overall research philosophy is a choice between

two primary alternatives, a positivist or a phenomenological philosophy.

Hussey and Hussey (1997) identify the alternative types of philosophies below

(see Table 3.1).

Fig 3.1

Table 3.1 Alternative Research Philosophies

Positivistic Paradigm Phenomenological ParadigmQuantitative Qualitative

Objectivist SubjectivistScientific HumanisticExperimentalist InterpretivistTraditionalist Constructivist

Source: Hussey and Hussey (1997)

The research philosophy that will be adopted by the student will be a combination of

positivistic research and phenomenological research. This is so, as both quantitative and

qualitative data will be analysed in the research.

Positivism, as described by Saunders et al (2003) is adopting the stance of a natural scientist,

“working with an observable social reality and that the end product of such research will be

law-like”. An objective ‘value free’ stance is taken towards the study allowing impassive

elucidations to be made on the gathered data.

Positivism seeks to test theoretical generalizations through quantitative and experimental

methods (Patton, 1990). This applies to the research been carried out as the student intends to

validate previous theories that have been written down by other researchers on the chosen

topic.The epistemology of positivism contains the following additional assumptions

identified by Bryman and Bell (2007) as: “(1) Only phenomena and hence knowledge

confirmed by the senses can genuinely be warranted as knowledge, (2) The purpose of theory

is to generate hypothesis that can be tested and that will thereby allow explanations of laws

to be assessed, (3) Knowledge is arrived at through the gathering of facts that provide the

basis for laws, (4) Science must (and presumably can) be conducted in a way that is value

free and (5) There is a clear distinction between scientific statements and normative

statements and a belief that the former are the true domain of the scientist”.

Phenomenological paradigm on the other hand relies on qualitative methods,which capture a

more complete picture of individual lived experience instead ofa narrow perspective of

generalizations (Lincoln and Guba, 1985).Phenomenological paradigm is more consistent

with the ideals of a multicultural approach for studying and understanding the experiences,

perspectives, and identity development of a small sample of the experience-rich participants

of this study (Gorski 1998).Phenomenological methods are particularly effective at bringing

to the fore theexperiences and perceptions of individuals from their own perspectives, and

therefore at challenging structural or normative assumptions. Adding aninterpretive

dimension to phenomenological research, enabling it to be used as the basis for practical

theory, allows it to inform, support or challenge policy and action (Lester 1999).

The characteristics of positivism and phenomenological paradigm are as displayed in the

table below:

Table 3.2 Features of Alternative Philosophies

Positivistic Paradigm Phenomenological Paradigm

Results in the quantitative data Results in the qualitative dataEmploys large samples Employs small samplesCares for the hypothesis testing Cares for the generating theoriesCollected data is to-the-point and kept short

Collected data is generalized and more descriptive

The research location is imaginary The research location is actualHighly reliable Not very reliablePeriod for the validity is short Period for the validity is longResearch generalises from selected sample to general population

Research generalises from one sample to another sample

Source: Hussey and Hussey (1997)

Summarising the reasons behind the choice of a combination positivistic and

Phenomenologicalphilosophy by the researcher:

The researcher is interested in the interrelationships of the objects ofstudy (Collis and

Hussey, 2003)

The research will involve both quantitative and qualitative data

The researcher is not only interested in figures both also the reasons forthose figure

The researcher is unbiased, independent and unaffected by the research The observable phenomena are already discussed (works by, regulatory

boards, economists, finance academics and professionals)

The data collected will be unaffected by the research activity;

The man criticisms of the positivistic approach stated by Hussey and Hussey

(1997) are:

It is not possible to separate people from their social backgrounds and cultural

affiliations.Another important consideration is that every individual has a perception

of his activities and that perception is very crucial in understanding that individual.

Many relevant and interesting findings can get ignored in employing a highly

structured research design.

Researchers lack in the objectivity and tend to become a part of their observation.

This way they introduce certainindividual interests and values to their research.

Capturing complex phenomena in a single measure is at best misleading.

Phenomenological approach also has its criticism, which is that the sample sizefor the

research should be a large sample to improve credibility.It can be hard to get over to people

that a single-figure sample is valid - and there can be confusion between methods such as

theoretical sampling, used to ensure that participants are drawn from a spread of contexts, and

statistical sampling which is concerned with quantitative reliability and often with differences

between contexts (Lester 1999).

The chosen philosophy of Positivism and Phenomenological approach being combined for

the research is done so that the researcher answers questions not only by stating figures but

also answer the question as to why those figures are.Phenomenological research is based

much more on asking ‘why’ or ‘how’ than‘how often’ or ‘how much’(Edinburgh Business

School 2008).

The researcher intends to find figures on the current level of use of CPMsoftware insmall

companies. This will involve the positivistic approach. Also, the reasons for the current level

of adoption of the software will be explored. This will involve the Phenomenological

approach as it will aim to find out why or why small companies are not adopting the

software.

3.3 Research strategy

The strategy used towards the research is of significant importance to the studyas it must be

suitable to effectively achieve the goal of the stated objectives and answer research questions

asked. Similar to the research approach, the research strategy of the project is closely

associated with the philosophy employed, however the mixing of strategies is usually

expected and dependent on the assumptions of the researcher (Saunders et al, 2003: Hussey

and Hussey, 1997).

A simplified definition of the research strategy as, a general plan of how the researcher will

go about answering the research question(s) set, specifying the intended sources of

information and considered constraints (such as, data access, time, location, money and

ethical issues) (Saunders et al, 2003).

The different types of research strategies according to Saunders et al (2003) are

Listed as:

Experimental

Survey;

Case study;

Grounded theory;

Ethnography;

Action research;

Cross-sectional and Longitudinal studies (Time horizons);

Exploratory, Descriptive and Explanatory studies;

From the list above, the research strategies that will to be used in this dissertation report will

be a mixture of grounded theory, exploratory, descriptive and explanatory studies, the

favourable use of these being that each strategy complements and enhances the use of

another.A grounded theory approach (also known as theory building) is primarily an

inductive approach as data is collected before a theory is deduced. A theory is conceived

following the inquiry and observation of data which helps to form a prediction(s) of the

phenomena, these predictions are then tested through further observations which may confirm

or cause modification of the theory

(Saunders et al, 2003). The adoption of this theory allows the researcher toalternate between

inductive and deductive thought as the data may be inductively gained although a deductive

approach applied, overall the purpose ofthis theoretical framework is to arrive at a theory that

is faithful to and whichilluminates the area under investigation (Hussey and Hussey, 1997).

The exploratory strategy involves conducting research into an area where therehas been few

earlier studies with the intent of assessing the phenomena in a newlight, this approach is

generally used when causes of events need discovering (Saunders et al, 2003: Wisker, 2008).

The reason for of this type of approach is to identify patterns or existing hypotheses, as

opposed to testing or confirming a hypothesis, moreover during pattern recognition new

pieces of information are often uncovered leading to changes in direction of the study (Ghauri

and Gronhaug, 2005: Hussey and Hussey, 1997). The researcher usually has little

understanding regarding the topic and takes the opportunity to discover new themes and

ideas, moreover, the approach relies more heavily on qualitative techniques although

quantitative can also be used (Hair Jr. et al., 2003).

According to Wisker (2008) the descriptive strategy aims to investigate an occurrence and to

capture it with detailed information, aiding the creation of anaccurate translucent

understanding of the phenomena. Noted by Saunders et al. (2003), descriptive strategies hold

a clear place in business research, encouraging the evaluation of collected data and

synthesising of ideas, howeverit is important to avoid its overuse. Data collected using this

strategy is usually qualitative and statistical techniques are used to summarise the information

(Hussey and Hussey, 1997). By gathering relevant detailed data and providing a clear picture

of the event allows the researcher to expand on the topic of interest through the use of

exploratory and explanatory strategies?

The explanatory strategy seeks to identify and establish the cause-and-effect relationships

between variables in relation to a topic, importantly the researcher must control the variables

used during research activities as quality of relationship explanation is affected (Hussey and

Hussey, 1997). The emphasis here is to study a situation in detail so the researcher can

explain the relationships between the variables (Saunders et al, 2003). This approach can be

successfully combined with descriptive and exploratory research strategies, also helping to

explain the ‘why or how?’ of an event.

3.4 Research approach

The research approach used in the study will be a combination of both inductive and

deductive approach. Generally, deductive research includes testing atheory while the

inductive research is generating a new theory. It is found that many people try to link

deductiveresearch with quantitative research instruments such as surveys, experiments,

etc.associates inductive research with Qualitative research instruments such as interviews,

ethnographic work, etc.According to Saunders et al (2003) it is often advantageous to

combine these approaches with the same piece of research.More importantly, the research

approach adopted is not only dependent on the employed philosophy but also on findings

from the researcher’s interviews.

The use of the research questionnaire to conduct surveys is one of the approaches that will be

used. It will be done by personal interviews and mailed questionnaires to different

respondents.

The questionnaires will be designed to ensure that they achieve its desired results, which is to

attempt to answer the research questions. The questionnaires are piloted to ensure that;

· Everyquestion sufficiently worded so to achieve the wanted results

· Theorder of the questions is wisely designed by keeping the nature and the sensibility of every question preserved.

· All the respondents have understood questions very well.

· In case of removal of some questions from the questionnaire, the additional specifying questions are required to replace them.

· The instructions to interviewers are clear.

After completing the final draft of the questionnaire, respondents will be contacted from a

combination of different online business directories ofcompanies. About a 100 companies

will then be chosen based on mainly their size and also their sector. The size of the

companies will be companies that have less than 250 employees as this is the threshold for

measuring small & medium sized companies according to National Archives 2009.

3.5 Time horizons

The time horizon of the project refers to if the researcher wants thestudy to be a ‘snapshot’ of

phenomena taken at a particular time or contain similar characteristics as a ‘diary’ spanning

over a given period of time. For the purpose of labelling, the snapshot approach is called

cross-sectional and the diary approach called longitudinal. Emphasised by Saunders et al

(2003), these time perspectives are independent from the above mentioned research

strategies. The appropriate time horizon adopted for this particular study is the cross

sectional approach, which aims to provide a snapshot of the current level of penetration of

corporate performance management software in small companies, factors contributing to this

and the growth of adoption of the software. The cross sectional approach is suitable for this

type of study as constraints of time and resources are present. Also another benefits the

carrying out data collection is necessary only once before it is analysed and reported, the

approach also allows a snapshot to be taken of an on-going situation (Collins and Hussey,

2003).

3.6 Data collection methods

The dissertation selected is a research project that will involve the use of bothprimary and

secondary data (data that has been previously collected for otherpurposes, however is

available for re-analysis (Saunders et al, 2003).

The advantages of using both primary and secondary data is that it will give methe

opportunity to compare results from my own research with the previousresearch work that

has been done by other researchers on the topic.

Commonly, research questions are answered using a combination of bothprimary and

secondary data, however, due to numerous strengths it is advised to initiate studies using

secondary research “do not bypass secondary data. Begin with secondary data, and only

when the secondary data are exhausted or show diminishing returns, proceed to primary

data” (Churchill, 1999).

The primary data will be gotten from the questionnaire will be sent out todifferent

respondents. The questionnaire will be sent via e-mail and also via a one-on-one interview

session in certain cases.

Also for this research study, the information for the secondary data will begathered from the

following;

Newspapers

Academic journals

Committee reports

Conference papers

Textbooks

Online Articles

The documentary secondary data will be a combination of both quantitative andqualitative

data to ensure a beneficial mix of objectivity and subjectivity; correspondingly the balance

will depend upon the analytical requirements and the overall purpose of research (Hussey and

Hussey, 1997).

3.7 Data content analysis

After collecting the required data for the study the researcher is now in position

to begin analysis. The purpose of content analysis is to identify, examine and

interpret patterns within the data, thus enabling the researcher to draw meaning

and conclusion from it. By systematically identifying detailed characteristics in

the data overall understanding of the phenomena is developed. However, the

search for understanding can take many forms and is primarily reliant on the

type of data used (Ghauri and Gronhaug, 2005).

Keeping the above in mind, it is important to carry out analysis on both

quantitative and qualitative data in order to grasp an even-handed

understanding of the phenomena and interpret accurate findings accordingly.

Content analysis is to be conducted on all appropriate secondary data from

which research questions and objectives can be best answered and a conclusion

can be drawn.

The results from the questionnaire will be analysed by highlighting the common

factors that are thought to cause low penetration of Corporate Performance

Management software in small companies. The current level of the use of the

software will be looked at to validate the theory on its low adoption level and

alleged increase in adoption.

3.8 Chapter summary

This chapter has shown the different research strategies and data collection

methods that will be used. It shows the research methods that were used, how

the research tools were developed and how respondents were chose to take part

in the explanatory research.

This chapter has also presented the various research philosophies and

approaches which may be adopted for study, whilst identifying those relevant for

this particular research. From all that has been stated above, it can be said

that the methodology of the dissertation has been fully stated and the different

procedures in the research process have been stated.

The use of inductive approach in the research would have been more effective if the

sample for the interview involved a larger number of companies. Due to time

constraints and lack of response, the number of companies involved in the research

was not at the level expected. This, I feel is a critique of this approach as it needs a

large number to make the results more credible.

With that being said, the number of respondents used in the research was

considerably high even if it was not at the intended level. This ensures that the

results gotten were more credible.

In the next chapter the main research findings from the data analysis will be

looked at. It will aim to address the research the questions and also answer them

by analysing results from the researchers questionnaire and comparing the

results from previous research been done relating to the research question.

Chapter 4

RESEARCH ANALYSIS & FINDINGS

4.1 Introduction

The purpose of this chapter is to conduct an analysis of the research data and to

present the main findings relevant to the specified aims of the study. The causes

of the low adoption rate of CPM software will be identified. The rate of

growth of adoption of the software has also been looked at over the last few

years.

The research analysis will be divided into two parts. The first part of the analysis

will focus on results of the research questionnaire that the student handed out to

different small and medium companies in the UK.

The second part of the analysis will be based on previous research that has already been

carried out on the research question and also make a comparison between these results and

the results that the researcher has gotten from the use of the research questionnaire. The

findings are derived from conducting the previously mentioned methodology of the study

which involves analysing a questionnaire that was carried out in relation to the topic and also

analysing previous surveys carried out by other researchers in this field. The analysis of data

is presented and examined in the chapter exploring what the current adoption level is for

corporate performance management software in small and medium companies. Also explored

are the factors that contribute to the low penetration of the software in companies and the said

growth of the use of the software over the last few years.

4.2 Results from questionnaire

The figures below represent the results from the questionnaire that were used

for the survey carried out by the researcher. There are three main findings that

the result aims to show. These are;

the percentage of small and medium companies adopting CPM software

if there has been an increase in adoption over the last few years

the barriers that prevent adoption of CPM software

4.2.1 Current Level of CPM Adoption

USE CPM23%

DONT USE CPM63%

PLANNING TO IMPLEMENT CPM

15%

Percentage of CPM Adoption

Fig. 4.1

The pie chart shows the percentage of small companies that adopt CPM software.

The survey was conducted via a questionnaire with a total of 88 companies

responding to the survey.

As seen above 62% of small companies in the survey are currently not using CPM

software. Only 23% of the companies are currently using the software and a

further 15% were planning on implementing it soon.

4.2.2 CPM adoption over the last few years

Less than a year

1-2 years 2-5 years More than 5 years

Don’t' know0

10

20

30

40

16 30 35 15 3

Time of CPM Adoption

Perc

enta

ge%

Fig 4.2 showing year when the companies started adopting CPM

The figure shows that most of the companies that are now adopting CPM just

started adopting it recently. 35% of the companies said that they started using

the software between 2-5 years ago, 30% said that they adopted it between 1-

2years ago, while 16% only started using it less than a year ago.

This shows that in total about 81% of the company’s in the survey adopted the

software at least 5 years ago or less.

4.2.3 Factors affecting CPM adoption

0

10

20

30

40

35 3016 15

3

Factors Affecting CPM Implementation

Fig. 4.3

From the survey, the highest rated factor affecting CPM software was cost issues

with 35%. This was closely followed by complexity of the software(30%). 16% of

companies stated that there was a lack of support from the top

hierarchy(executives), in order for the software to be implemented.

An interesting finding was that some of the respondents,(15%) had previously

tried to implement the software but had failed which was one of the reasons they

were not currently adopting it. 10% stated that they did not have the in-house

facilities to adopt it.

4.2.4 Further Analysis of Factors Affecting CPM Adoption

Some of the factors that were said to contribute to the low adoption of CPM

software were further analysed to provide further insight and understanding to

the researcher.

The cost factor was further analysed, as the respondents were asked to state

where they had cost issues. The biggest issues they had with the cost was the

cost of training. 30% of the respondents believed that the cost of training their

staff to use the software was an issue. A further 27% believed that the software

itself was too expensive to purchase and beyond their reach. The cost of

maintaining the software was also seen as another reason with 24% saying it

was expensive to maintain while 9% said that they believed that the cost

implementing the software would outweigh the returns.Fig 4.4 shows a

graphical representation of these figures below.

0

10

20

30 27 3024

93

Cost

Perc

enta

ge%

Fig. 4.4 showing the different cost issues in percentage

The next factor that was further analysed was the complexity factor. As stated

earlier 30% of respondents had said that complexity was a barrier to them

adopting CPM software. This percentage was further dissected to examine what

the complexity issues were. The chart (Fig. 4.5) below shows the results of the

survey on complexity issues with CPM software.

57% of the respondents stated that integrating the software with the company’s

existing systems was an issue. One of the respondents even stated that they had

used CPM software on a trial basis at their company and were unable to

integrate it with the company’s processes which forced them to later abandon

adoption plans. A further 31% stated that the features of the software where

complex and needed training for their staff on how to use the software.

12% also indicated that aggregating data from different departments in the

company to be measured was an issue

integration issues57%

staff need training31%

aggregating data from different sources

12%

Complexity

Fig. 4.5 showing different aspects of complexity in precentage

4.3 Results from previous research

4.3.1 The Current Level of Penetration of CPM Software In Small Companies

As mentioned earlier, the current level of penetration of CPM amongst

companies is low in general. For a software that offers so many benefits the

adoption level is low in companies. The figures are even lower when it comes to

smaller companies.

Industry analysts say that adoption of CPM software remains relatively low,

despite the technology’s potential financial planning and management benefits.

Kugel (2009) says that Excel spreadsheets are still the king of forecasting,

budgeting and planning for most companies. He further states that cost

considerations and an ingrained spreadsheet culture are standing in the way of

wider CPM adoption. However, he noted that relying on Excel and email for

budgeting and planning has various downsides. In addition, the available choices

in the CPM market are increasing, giving more options to companies looking for

the right financial performance management software to meet their business

needs.

A Ventana (2007) survey states that still, only about 50% of large enterprises

and 25% of small and midsized companies have adopted CPM software.

Furthermore, in another survey by SearchBusinessAnalytics (2009) a total of

44% of the survey respondents reported that their organizations had deployed,

were implementing or planned to install corporate performance management

(CPM) software. But more than half said that their companies had no plans to

deploy corporate performance management software or other CPM tools in the

foreseeable future.

Fig. 4.1

:Source: SearchBusinessAnalytics (2009)

These figures are similar to the results obtained from the survey conducted by

the researcher via the research questionnaire which showed that only about

23% of small companies were currently adopting CPM software.These figures show that a lot

of companies are still ignoring CPM software especially smaller companies. The different

reasons why this is the case will be further looked at during the rest of this chapter.

4.3.2 The Growth of CPM software

There has been a substantial growth in the adoption of CPM in companies. This

growth has also transcended to the smaller companies. Even though the

adoption rate is not at the expected level, it is still growing amongst companies

as more and more companies start to realize its importance to their businesses.

According to Gartner (2008) the highest priority in business intelligence is given to the

corporate performance management (CPM). A rapid growth is observed in the last two years

in the market for CPM developers, which brings many analytic applications together to create

a featured CPM tool (Gartner 2008). It also forecasts that the studying the present trend, the

market will see a tremendous compound growth at the rate of 14.4 percent over the next years

through 2011. Rayner et al.&Torode (2009) states that growth is expected to continue if the

current economic conditions last. It further uncovers that the both large and small firms are

busy in making more investments in the performance management applications like CPM that

not only offers a complete overview of a firm's organizational and financial performance, in

addition to it,more important, it is a mean by which users somewhere outside the organization

can also get a clear forecast and analysis of the recorded data to adapt with the occurred

changes so to plan a better future.

Table 4.1

Growth in percentage in number of people involved in CPM processesSource: BARC 2009

Table 4.2

Number of people involved in performance managementSource: BARC 2009

The table(Table 4.2) shows that number of people involved have significantly improved in performance management market for the last three years. Table 4.1 shows

the percentage increase of the number of people that are now involved in

performance management.

The fact that more people are involved in performance management shows that 

even the smaller companies  are now more  serious  about  managing 

performance. 

The trends reflect the facts that smaller companies are catching up across

many performance management  processes,  while  medium  and  large  firms 

focus  on  some  of  the  gaps  and  current  priorities  such  as  strategy 

management,  compliance  and planning.  The table also shows that the number

of people involved in all processes has risen by an average of 30%. There are big

individual increases in small companies for performance management processes

such as; Strategy Management, Planning, Other Reporting & Legal Consolidation.

There was a 66% increase in other reporting, 72% increase in Strategy Management

in medium sized companies and in  large  companies  for  planning  (60%),  legal 

consolidation (55%) and compliance (61%). 

The increase in the number of people involved in performance management

processes increases the need for the use of CPM software. Rayner et al Torode

(2009) states that more companies are starting to put more stock in performance

management, and this is evident from the increase in number of people involved in

the processes.

It can also be argued that an increase in the number of people associated with the performance management processes does not necessarily mean an increase in

adoption of the actual software. From interviews that were conducted with the

questionnaire, I believe that this increase in the number of people involved in

performance management processes will improve the adoption of the software.

One of the respondents stated that before they started adopting CPM software, the

Involvement of people in the performance management processes was not as much as it was when they started adopting CPM software.

For this reason I believe that an increase in people involved with the performance

management process can only lead to an increase in adoption of the software.

4.3.3Barriers To The adoption of CPM Software In Companies

There are a number of barriers that are real and perceived at the same time, which obstruct

the businesses in the implementation of corporate performance management software . The

types of barrier may vary due to the size of the company. Large companies have adopted

CPM software to gain and maintain competitive advantage over their competitors. This can

also be the case for small companies, however, small businesses are naturally slow in

adopting CPM in their own operations for different reasons which will be looked at in this

section of the chapter.

Fig 4.3(Factors affecting CPM adoption)

Source: BARC 2009

The chart shows that the current economic downturn is seen as causing the

biggest challenge for most companies. Thirty- five percent of the survey

participants identified economic turmoil/ the financial crisis as the main driver

of their current challenges

Economic turmoil and the financial crisis are currently seen to be posing the

biggest challenges to firms. The problem for companies is that generally they

cannot control or even influence those external factors. While the credit crunch

and the global economic downturn are causing many problems for companies

today they are likely to be a temporary phenomenon.

The survey data also shows that internal and external influences have increased

the demands on performance management significantly. More content, more

requests for information and business restructuring drive internal change while

compliance, auditing procedures as external factors have led to an ever

increasing complexity in performance management processes.

As chapter one shows, the complexity of performance management has

increased significantly due to increased internal and external requirements.

Alongside new requirements, one reason for this might be the number increase in

the people who are involved in performance management - over the last three

years there has been an average increase of about 30 percent across all

processes. Strategy Management (52%), Compliance Management (46%) and

Planning/Budgeting/Forecasting (42%) show the biggest individual increases

The chart below shows the results from interviews conducted with different

companies into the factors that affect CPM adoption in their companies

0

10

20

30

40

35 3016 15

3

Factors Affecting CPM Implementation

Fig. 4.4 Showing the barriers to CPM adoption in small companies

From the survey, the highest rated factor affecting CPM software was cost issues

with 35%. This was closely followed by complexity of the software(30%). 16% of

companies stated that there was a lack of support from the top

hierarchy(executives), in order for the software to be implemented.

An interesting finding was that some of the respondents,(15%) had previously

tried to implement the software but had failed which was one of the reasons they

were not currently adopting it. 10% stated that they did not have the in-house

facilities to adopt it.

4.4 Limitations of this research

This section looks at certain limitations of the research and ways that the research

could have been improved upon.

During this research, there was limited available literature in this particular topic. It

would have been more helpful to get the views of more researchers as this would

improve the credibility of the research work.

Due to the very small nature of the study organisation the results could not be

generalized without the same theories and methods being replicated in other

organisations.Due to time constraints a larger number of companies could not be included in

the survey that was carried out. This would have given more credibility to the results that

were obtained from the analysis of the survey.Further research based on multiple companies

and over a longer period of time would address these limitations.

4.5 Chapter Summary

This chapter shows the results elicited from the questionnaire used for the research

and also results from surveys that other researchers that have conducted similar

studies in the research area.

The first finding was the current level of adoption of CPM software. From the survey

conducted by the researcher and also analyzing previous work, it has been seen that

the current level of adoption of the software is low. There was a similarity between

results gotten from the questionnaire with the results gotten from previous research

in that area. Both sets of results showed that not more than 30% of companies were

adopting the software.

A lot of the companies that were interviewed still were not adopting CPM for different

reasons that were stated.

There was a conflict between the results of the researcher and that of previous

research regarding the main factors that are barriers to CPM adoption.

From analyzing previous research carried, BARC (2009) lists the economic

downturn, financial crisis and globalization as the biggest factor to CPM adoption.

This is quite different from results gotten from the research questionnaire that was

used for this research.

According to the results from the research questionnaire, the main factors for the

low adoption level were seen to be complexity of the software, cost of the software

and the general perception by small companies that the software was not for them.

The view that the economic downturn is a factor for low adoption is not shared

by all, Butler (2009) believes that companies are rather investing in BI and CPM

to beat the economic recession. He states that together, the two software disciplines

(BI and CPM) can help companies keep a tight rein on their business during the

downturn.

With that being said, there is a bit of similarity in both sets of results from the

researcher and that gotten from previous research as the cost factor, which was

stated as a factor from the results of researchers questionnaire, is also seen as one

of the factors stated by previous research(i.e financial crisis) and could be seen as a

common factor for low adoption in both sets of results.

The final research finding from the research shows that the adoption level of the

software is growing despite its low adoption. The research findings from the

research questionnaire showed that a lot of the companies that are

implementing the software only started implementing it between 1-5years ago.

This finding is backed up the previous research findings that there has been an

increase of the adoption of the software over the years.

From the exploratory research conducted, BARC (2009) which is shown earlier

in this chapter shows an increased number of people who are involved in

performance management over the last three years in small companies.

The recent increase over the last couple of years of small companies that are now

adopting CPM software could be due to the fact that the software vendors are

now catering to the needs of small companies as well. CPM software that are now

within the reach of the smaller companies are now being created as this market

is still being explored.

One of the respondents in the survey stated that during the company’s trial

period of a CPM suite, they had a lot of applications that they did not require for

their business. The increase in customized CPM software, I believe has made

more small companies to start adopting it. Datamonitor (2009) states that BI

vendors are aware of these trends and are already targeting this market. It says

that competition for this sector has already resulted in better BI performance

that are suited to smaller companies for lower prices.

This trend will continue as more small companies begin to see that the software

is beneficial to them and within their reach.

The next chapter is the conclusion to the research which will conclude all of the

research work that has been done and the findings of the research.

Chapter 5

CONCLUSION

5.1 Introduction

The aim of this chapter is to highlight the final thoughts and findings of the

researcher and to draw the study to a close, making any necessary

recommendations where required. The section will clarify and align the main

findings of the study to the specified research objectives.

It will also state future recommendations that are necessary to ensure that more

small businesses embrace corporate performance software in the future.

5.2 Conclusion

This research attempted to find out what the current level of use of corporate

performance management software in companies focusing on small & medium-sized

companies. Another was also to find out what the factors and barriers are to

the adoption of corporate performance management software in SMCs and

determine if there had been an increase over the last few years.

The ability of a firm in answering the fundamental questions about the firm’s performance

liesin the information collection, operational integration, and data analysis. It is now being

observed that the BI and CPM has been brought within the reach of more enterprises that

fuels mid-market demand.Datamonitor (2009) in their report found that the growth in the

demand from Small and Medium Enterprises (SMEs) is the main factor for the growth in

medium-term market for BI. It further says that many BI vendors have already sensed these

market trends and are actively targeting the mid-market. The competition in the sector gives a

positive effect and the same goes for this sector as italready resulted in better BI performance

at lower prices. This has helped encourage the smaller organizations to adopt

corporateperformance management software as cost is one of the major barriers to the

implementation of the software in organizations. With these new changes being made by

vendors, it must contribute to the growth of the adoption of the software, as the study found

out that there has been an increase in its use over the last few years.

The conducted research shows that there is a rise in the adoption of corporateperformance

management software over the last few years, although the level of use is still not at the

expected level for such a software that offers so much benefits. The research showed that

most of the companies that have started using CPM, started using over the last few years.

Also the increased number of people in performance management in small and medium

companies as shown in the findings, shows the focus that smaller companies are showing

towards performance management.

The main factors for the low adoption levels were found out to be complexity,

cost, long implementation(time-consuming) and bad perception of the software.

As stated earlier, smaller organizations often get left out when software vendors

develop performance management software as the larger companies generate

more revenue for the vendors in terms of purchasing their software.

The software vendors should aim to make the software less complex for the

smaller organizations. Complexity of the software was listed as one of the major

barriers to the implementation of the software. One way of doing this would be

for software vendors to provide software packages that are already integrated

with business intelligence applications. This is necessary as the integration of

business intelligence applications and corporate performance management

software will help companies link closely insight from analytical tools withbusiness goals and

functioning. On the other side, the vendors of these scheduling programs through which the

CPM is incorporated argues that these software, by integrating different scheduling toolds,

have now only made CPM more capable and strong. Also, has further enhanced the access of

those involved in project management to the scheduling and management componentare still

considered very important in every job.

With this being said, the software vendors need to be careful not to add

applications that are of no use to the smaller organizations as their needs will be

different to the larger organizations. This sometimes leads to complexity as one

of the respondents in the interview complained about a particular CPM suite

having a lot of applications that their company did not need to make use of.

The software should be made more affordable to these smaller organizations as

the cost of implementing it as has been seen as a major barrier to its adoption.

Reports show that software vendors have started taking steps to address this

by providing software packages that are more affordable. Kelly (2010) states

that there are affordable CPM software options that are now in the market

recently, which puts it in reach of small and medium-sized companies (SMCs).

He states that the big software vendors have introduced lower-priced platforms

aimed at the mid-market.

There also other vendors such as Host analytics that are offering affordable

alternatives that are targeted at smaller companies .

Chandler, Rayner& Van Decker (2010) states that Host Analytic in particular

incorporateSaaS (software as a service) solutions in their CPM suite. Theyfurther state that

Small and meium sized enterprises SMEs have monopoly over the adoption of Software as a

service (SaaS). There are numerous reasons in this regards such as this approach is quick to

implement and does not ask for heavy investments as highly updated IT infrastructure is not

required to run it. I f it is compared with the conventional on-premises software applications,

it is more affordable and is easy to run and not at all with complex functioning . These

reasons are the driving factors credited to the the good and quick reception of SaaS in

theCPM model market.

But among the organizations that are using CPM tools, a growing number are

looking to the software for help with more than just forecasting, budgeting and

planning. In addition, on-demand CPM software is helping small and medium-

sized companies overcome barriers to adopting the technology.

With all being said, the software vendors also need to make smaller companiesaware of the

capabilities of CPM software. They need to make them aware that many CPM tools can do

much more than just budgeting and planning as othercapabilities of CPM software such as

strategy management and profitability modeling have been under-utilised in the past. This,

and success stories of companies that are implementing CPM can help change the companies

bad perception of the software. The vendors should keep these words in mind when

developing the software for SMCs; Simplicity, Affordability, Practicality and Less

Implementation time.

If these issues are addressed by software vendors, I believe that more small and medium-

sized companies will embrace CPM software and adopt it in their companies which will

increase its adoption rate significantly.

Personal Reflection

Relevance of research to the student

The rationale behind the selection of the topic is due to the personal interests incontemporary

issues within that concern business intelligence and corporateperformance management

software adoption in businesses. I have an interest in thegrowth and transformation of small

businesses and this research has been helpful ingiving me insight into ways of helping small

businesses achieve this growth. Also, as a masters student studying information systems

management I have an elementof interest to attain knowledge, understanding and awareness

of businessintelligence software and how companies are currently using them. Further, I

believethat this topic will be favourable towards grasping an insight into the business

intelligence sector in which I have the ambition to work and build a successfulcareer in

future.

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