Cartesis Adds Budgeting and Planning

VentanaMonitor™

Summary

Cartesis recently announced Release 9 of its flagship product Magnitude, which integrates a budgeting and planning application aimed at larger companies and those with complex business structures. The budgeting and planning software is available as a standalone application. The software’s spreadsheet interface for budget contributors allows companies to obtain all of the benefits of using spreadsheets for the process (such as cutting user training time, allowing employees to instantly integrate existing models, and incorporating basic driver-based planning), while eliminating the inherent issues with spreadsheets by connecting the data to a relational database at the backend for management and storage.

Ventana Research advises companies to adopt dedicated budgeting and planning applications, rather than continuing to use plain spreadsheets for the purpose. Plain spreadsheets waste valuable time that should be devoted to making the process a more effective management tool (to gain better insight into performance, improve accuracy, and achieve greater alignment of objectives and resources across business units). We recommend that Global 2000 companies, and those with any business model complexity, that are considering dedicated budgeting and planning tools evaluate Magnitude.

Assessment

Cartesis’s strategy has been to differentiate its offerings by focusing on the requirements of larger and more complex businesses. These organizations must accommodate large numbers of users, operate complex business models such as multiple and overlapping distribution systems, and conduct business in multiple jurisdictions using multiple languages and multiple currencies. Magnitude for Budgeting is designed to scale to these requirements. Beyond the ability to handle large numbers of concurrent users and budget elements, scalability means the system can deal with complex reorganizations and restructurings in mid-period in just about any way management would like.

The software allows companies to collect budget contributions from employees over the Web and roll these up automatically. Unlike spreadsheets, Web-based dedicated applications like Magnitude enable budget administrators to eliminate the effort wasted in collecting, rolling up, and reconciling spreadsheets. This allows them to focus on the content of the budget (doing internal benchmarking), to include a wider range of contributors (ideally down to the lowest level of budget authority), permits more give and take in setting objectives and allocating resources, and makes budget innovations — such as a shift from an annual to a rolling quarters method — easier to implement.

Magnitude for Budgeting allows companies to incorporate Excel as an add-in. This offers several important benefits. First, it reduces training costs and productivity lost, because almost everyone involved in the process is familiar with spreadsheets. Second, budget analysts can transfer existing models directly into the process, rather than having to convert or transform them as they do with other applications. These models can introduce a driver-based planning capability to the budgeting process — although it falls well short of comprehensive driver-based planning. Third, it enables users to do ad hoc analysis while working with the budget (think if it as an attached scratch pad), and they can re-use this analysis period to period. Many budget contributors accustomed to having this ability in the existing Excel-based systems will appreciate not having to give it up.

Magnitude has all of the administrative features that will appeal to those managing the process, particularly in larger organizations. Keeping tabs on where contributors are in the process becomes essential when corporations have large numbers of contributors doing multiple iterations (for clarification, different scenarios, and so forth). Magnitude offers a robust workflow management and monitoring capability to do this. In addition, it has the usual high-end administrative functionality, such as being able to split permissions to view or change data between past and future. For example, an individual may see base salary by pay grade for upcoming periods but not actuals. The system also incorporates the high levels of security that corporations have come to expect for strategically sensitive applications such as this.

Market Impact

Ventana Research thinks the budgeting and planning software market is close to its tipping point in the evolution away from spreadsheets. We estimate that 60% of Global 2000 companies continue to use spreadsheets as the main ‘platform,’ but we expect this to decline to 10-20% within 4 to 5 years. Finance executives are reluctant to spend money on IT, but they also are reluctant to be out of step with their peers. Adding a budgeting capability to the Magnitude suite should benefit Cartesis, as its introduction coincides with what we expect to be a vigorous expansion of the market. Having two critical elements of the financial control market should help the company in competing with Hyperion, although the latter continues to benefit from having significant share-of-mind in financial organizations with its Hyperion financial performance management suite. SAP’s SEM is also a potential competitor, but despite this software’s technical brilliance, few large companies use it for budgeting and planning because of the effort and expense of implementing it.

Recommendation

We advise all Global 2000 companies that have some combination of complex business models, large numbers of operating units, or significant multinational operations to evaluate Magnitude for Budgeting, particularly if they want to manage to a worldwide consolidated view — and especially if they wish to transition to a rolling quarters budgeting process. Users of Magnitude for legal consolidation in particular should consider the benefits of integration. Companies that use spreadsheets for budgeting and are finding their existing legal consolidation process too cumbersome should also consider deploying Magnitude as a suite.