David johnnie

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 CONTENTS TABLE Page Chapter 1: Introduction 6-11 1.1 Background and significance of research 6 1.2 Aims & Objectives 9 1.3 Methodology Overview 10 1.4 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 14 2.4 Current Level of Penetration of CPM software 15 2.5 Current CPM Software Market17 2.6 CPM & Business Intelligence 21 2.6.1 Integrating CPM & Business Intelligence 24 2.7 CPM For SMCs27 2.7.1 Small Business Performance Management28 2.7.2 Benefits of CPM For SMCs30 2.7.3 Factors Affecting The Penetration of CPM Software30 2.8 Wrong Implementation of CPM Software32 2.9 Chapter Summary34 Chapter 3: Research Methodology 36-483.1 Introduction 36 3.2 Research Philosophy 36 3.3 Research Strategy 41 3.4 Research Approach 44 3.5 Time Horizons 45 3.6 Data Collection Methods 45 3.7 Data Content Analysis 47 3.8 Chapter Summary 47 Chapter 4: Research Analysis & Findings 48-644.1 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 Years51 4.2.3 Factors Affecting CPM Adoption52 4.2.4 Further Analysis of Factors Affecting CPM Adoption52 4.3 Results From Previous Research55 4.3.1 The Current Level of Penetration of CPM Software in SMCs 4.3.2 The Growth of CPM Software56 4.3.3 Factors Affecting CPM Adoption59 4.4 Limitations of The Research61 4.5 Chapter Summary62 Chapter 5: Conclusion65-68 5.1 Introduction65 5.2 Conclusion65 Personal Reflection68 References69 Appendix A: Research Questionnaire69 Appendix B: Dissertation Definition Report80 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. 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 To establish the hypothesis that CPM software use is comparatively lowin the SMCs as compared to the large firms. To explore different factors and causes for the low participation of SMEs and to identify the mostcommon factors among all the SMEs To evaluate whether the CPM software properly implemented by the firms that opted it improve the management levels of their firms. To ascertain the growth in the CPM usage and to analyse the growth rate in this regard. 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, quot;
Market Share: Business Intelligence, Analytics and Performance Management Software, Worldwide, 2009,quot;
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 20092009 Market Share20082008 Market Share2009-2008 GrowthSAP2,084.122.42,096.123.4-0.6Oracle1,351.114.51,284.014.45.2SAS Institute1,324.614.21,286.614.43.0IBM1,135.612.2996.511.114.0Microsoft739.17.9681.57.68.5MicroStrategy295.03.2280.03.15.4Other Vendors2,392.425.72,322.326.03.0Total9,321.9100.08,946.9100.04.2 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 20092009 Market Share20082008 Market Share2009-2008 GrowthBI Platform5,982.464.25,706.563.84.8CPM Suites1,937.120.81,869.420.93.6Analytic Applications and Performance Management1,402.415.01,371.015.32.3Total9,321.9100.08,946.9100.04.2 Source: Gartner (April 2010) Table 2.3 Worldwide BI, Analytics and Performance Management Revenue Estimates for 2008 by Subsegment (Millions of U.S. Dollars) Segments 2008 Revenue2008 MarketShare (%) 2007 Revenue 2007 MarketShare(%)2008-2007 Growth (%)Analytics Applications and Performance Management 3,055.1 34.72,458.634.024.3BI Platforms5,746.4 65.34,773.766.020.4Total8,801.6100.07,232.4100.021.7 Source: 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 quot;
process-centric BI,quot;
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 2.5 Source: 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 helpsquot;
cascade downquot;
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 ParadigmPhenomenological ParadigmQuantitativeQualitativeObjectivistSubjectivistScientificHumanisticExperimentalistInterpretivistTraditionalistConstructivist 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 ParadigmPhenomenological ParadigmResults in the quantitative dataResults in the qualitative dataEmploys large samplesEmploys small samplesCares for the hypothesis testingCares for the generating theoriesCollected data is to-the-point and kept shortCollected data is generalized and more descriptiveThe research location is imaginaryThe research location is actualHighly reliableNot very reliablePeriod for the validity is shortPeriod for the validity is longResearch generalises from selected sample to general populationResearch 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 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 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 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. 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 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 processes Source: BARC 2009 Table 4.2 Number of people involved in performance management Source: 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 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

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