• Strategy
  • CFO Magazine

See It Now

New budgeting-and-planning software offers increasingly sophisticated visual aids: dashboards and scorecards.

The crop report, along with metrics taken from the dashboards of managers in other departments such as human resources and sales, will probably end up on Krens’s dashboard. “The department heads know their business better than I do, so they’re developing their own metrics,” he notes. “I’ll glean one or two from each to get a full view of the company.”

Red Light, Green Light

The view on many B&P dashboards can be color-coded, to help users spot variances and avoid nasty surprises. On LendingTree’s “Packer chart,” for example, a 5 percent or better favorable variance to budget is green, says Hall, while a 5 percent or worse unfavorable variance is yellow.

Most dashboards feature a traffic-light setup, with a red signal flagging sizable negative deviations. That sort of eye-grabbing visibility can cause problems, however. “If a certain business sector is having a bad quarter, you can end up with too much red on the screen,” notes Beckman Coulter’s Willenbrecht. That can stir up hard feelings among employees. “Some people say it’s too distracting,” he adds.

Indeed, some users say the technology can be overwhelming at times. Not surprisingly, vendors that tout dashboards and B&P software as part of a corporate performance-management suite tend to trumpet the full—and we mean full—capabilities of their products. In some cases, screens contain 20 or more charts, graphs, and visuals. “The [vendor's] argument,” says Lee Geishecker, research vice president at consultancy Gartner, “is, ‘Your business is complicated, and our software gives you everything you need.’”

Sometimes, more than you need. Progress Rail, an Albertville, Alabama-based railroad services and products specialist (2002 revenues: $900 million), recently deployed a dashboard product from SAS. CFO David Klementz says the company’s management is pleased with the product so far. In fact, he says the next phase of the rollout will involve adding a greater degree of “resolution” (granularity) to the information presented on screen. But, Klementz cautions, it’s crucial to balance resolution with perspective. It’s important to keep the data useful, he explains, but users could end up with a system that’s impossible to manage if there are too many metrics being tracked.

Finance executives know exactly what Klementz is talking about. They’re also pretty familiar with long, costly rollouts of software. Mark Dani, financial systems analyst at Accelrys Inc., says the San Diego-based scientific-software maker recently decided to move from Excel-based budgeting to an enterprisewide approach—a big step up. But, he says, officers wanted an application that would be readily picked up by employees. They settled on Active Planner, a program marketed by Best Software Inc. “It has an Excel-ish look,” notes Dani. “We wanted the learning curve to be minimal.”

That appears to top the wish list for many shoppers of dashboards and B&P offerings. Controller Rogers says that when Jim Beam’s managers began shopping for a B&P product, they looked at an extremely powerful offering from a well-known business-intelligence (BI) vendor. But they decided not to buy it. How come? “You need Jedi [knights] to run the stuff,” claims Rogers.

What’s Wrong with Quicken?

Ultimately, Jim Beam purchased a B&P program from Clarity Systems. The application cost $50,000, compared with $250,000 for the app from the spurned BI vendor. Initially, the dramatic price difference was a cause of concern for Jim Beam’s management. “The [Clarity] software was so cheap,” says Rogers, “we wondered if we were buying Quicken to close our books.”

In reality, the wildly varying prices probably say more about marketing strategies than software. Most ERP vendors, for instance, don’t sell B&P apps (or performance dashboards) separately. Rather, they market the programs as modules within larger, enterprisewide packages. The vendors stick to enterprise pricing as well: dashboard deployments with those software makers can run as high as $500,000.

Niche players offer more-reasonable prices, often below $250,000. In fact, according to an AMR Research study of dashboard rollouts, 37 percent of respondents said they had budgeted less than $100,000 for their dashboard and scorecard projects.

But shoppers who have come to expect serious discounting from software vendors may be in for a bit of a surprise when dealing with B&P outfits. Unlike customer relationship management software, planning apps are in demand right now. “[B&P] vendors are not that hungry,” says AMR Research’s Hagerty. “There’s some ability to negotiate, but the vendors are not giving it away.”

On the other hand, high sticker prices might have a silver lining—if, that is, they prod buyers to make better plans for buying planning software.

John Goff is technology editor of CFO.

See a chart of selected programs from B&P vendors


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