Companies in need of financial forecasting don't have to look far. Vendors of business-intelligence tools, enterprise resource planning applications, and "pure-play" budget-planning software are continuously improving the financial-forecasting capabilities of their products. The question for IT managers is which technology approach to take.

Business-intelligence vendors say they provide better forecasting tools because of their data-analysis expertise. Enterprise app vendors argue that because much of the data used for forecasting comes from their systems, it's only natural that they provide the forecasting tools as well.

Earlier this year, Cognos Inc. acquired Adaytum Inc., a budget-planning and forecasting software developer. Rival Business Objects SA responded by forging links between its software and financial-planning apps from Comshare, SRC Software, OutlookSoft, and others.

Hyperion Solutions Corp., with a product line that spans data analysis and financial planning, recently acquired the Alcar Group and its financial-modeling tools, which are used to analyze and model the financial impact of critical business decisions such as acquisitions and capital spending. Hyperion plans to link the Alcar software with its flagship Hyperion Planning software.

Earlier this year, Information Builders Inc. added forecasting algorithms to its financial-reporting applications, and it's developing an easy-to-use forecasting tool, due later this year, for a broader range of employees. Oracle will debut a version of its Oracle Financial Analyzer budgeting and forecasting software later in the year that taps into the online analytical processing capabilities built into the Oracle9i database.

One project on PeopleSoft Inc.'s drawing board calls for integrating its supply-chain forecasting software with its business-planning and budgeting software, so users can factor supply-chain data into financial forecasts. SAP offers forecasting capabilities in its Strategic Enterprise Management planning and performance-monitoring tool.

Analysts say the push by business-intelligence and enterprise application vendors into this space threatens to crowd out budget-planning and forecasting vendors such as Comshare, Longview Solutions, and SRC. But those vendors aren't sitting idle. Comshare and OutlookSoft, for example, have boosted the predictive-analysis capabilities of their software by tapping into the analytical services built into the Microsoft SQL Server database.

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