Why the future of workforce productivity demands democratized planning, new CPM models

October 31 2019
by Conner Forrest


Growing business complexity necessitates the use of planning tools, including corporate performance management (CPM) software, to help manage and optimize budgets, headcount, resource use and productivity. In the current workforce productivity market, however, these tools are underused; often addressing more of the finance department's needs rather than those of other lines of business. However, within those other lines of business there is often an equal need to more effectively manage resources against their plans, to be accountable for the financial management of those plans, to therefore have more people more involved in a more accessible planning process, and for that to be connected upwards into the organization's strategic planning.

In many ways, that finance-focused trajectory misses the mark because it leaves other potential end users high and dry, while instead opting to satiate traditional business needs. Still, there have been some use cases emerge and an identity shift happen among CPM stalwarts that seem to support the notion that CPM is expanding to address novel use cases for a new swath of end users. These users want more transparency and clarity in the planning process and some vendors are rising to the challenge. This report will explain what users want from the shifting CPM paradigm, the major problems in the market today, how different vendors are facing the challenge and what comes next.

The 451 Take

In order for CPM and planning tools to successfully engage with the modern workforce and support the liquid enterprise paradigm of work, we believe they need to be democratized throughout user groups and disaggregated across lines of business. These vendors are evolving to address a broader spectrum of use cases, but still have a long way to go in terms of extending their product portfolios and partner ecosystems to make a stronger impact among new personas and serve as a foundational piece of the WorkOps model.

What the enterprise demands

CPM software is deeply rooted in finance. Long the bastion of financial analysts and experts, many CPM products began life primarily as financial planning and analysis (FP&A) tools. FP&A software is used by finance professionals to support budgeting, forecasting, financial analysis and scenario modeling processes – often providing key evidence and insights that inform corporate strategy and growth initiatives.

The obvious value of financial analysis relative to business execution makes it clear why most planning or CPM tools began with finance in mind. For a long time, the standard belief was that financial performance was business performance. With its financial roots and bent toward numbers, it makes sense that a select few personas in finance became the owners of CPM and gatekeepers of planning. However, these tools eventually began to ingest data from adjacent business areas like operations and human resources in an effort to provide more granular detail around the financial details of costs associated with those areas.

In many cases, CPM products now deliver insights that affect other BUs outside of finance, which has created a clear disconnect in planning ownership. CPM and planning tools are providing strong analysis of these adjacent BUs (operations and HR especially), while still designed with finance professionals in mind as the key users and stakeholders. Now, our data shows us that more knowledge workers want to share in the ownership of this function.

In the recent 451 Research Workforce Productivity & Collaboration survey, which we fielded in April and May, we asked managers about the biggest pain points for developing and executing plans within the teams they manage. Some 22% of the respondents said that their biggest challenge was 'ensuring ownership over the planning process.' Here are some of the other top responses.

Figure 1
Figure 1: Pain points for developing and executing plans within teams 451 Research's Workforce Productivity & Compliance, Work Execution Goals & Productivity Challenges 2019

Managers want more of their employees involved in owning the planning process. We see from the data above that managers also want to lessen the time it takes to develop plans, integrate lessons learned from previous plans into future plans and more easily track the outcomes of plans, for example. This is an issue of ownership.

We believe that as these tools begin to take in data from different areas, their ownership should disaggregate across the lines of business they are analyzing. This helps address the aforementioned needs while increasing planning participation overall. but it also helps to support the WorkOps paradigm of work by contextualizing continuous execution for more knowledge workers.

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Figure 2: The WorkOps paradigm

Improved ownership supports another demand we are seeing in the market for clearer line of sight from strategy to execution. When we asked our Workforce Productivity respondents to list the ways they could clarify how performance goals relate to overall business strategy, 40% (the highest number) said it would be to more actively communicate its business strategy to employees. The second-highest response (32%) said it would be to allow employees to contribute to the business strategy, while the third highest (31%) said it would be to more effectively track individual performance goals against its business strategy.

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Figure 3: Clarifying how performance goals relate to overall business strategy 451 Research's Workforce Productivity & Compliance, Work Execution Goals & Productivity Challenges 2019

And it's not just managers who want this increased ownership. As noted in a previous 451 Research report, 32% of employees want a say in how the corporate strategy is put together and defined. Ultimately, users want increased ownership of planning, improved line of sight from strategy to execution and more involvement in defining that strategy. CPM/planning vendors are taking the first steps toward addressing these needs and have planted the seed for what future innovation will look like in the space.

How vendors are evolving

While no one vendor has evolved into what 451 Research would consider a fully-contextual, cross-organizational planning platform, many of the top vendors in the space – and exciting upstarts – have begun to alter their approach to planning and CPM. These minor shifts in planning strategy and CPM deployment give us a glimpse into the many angles through which this shift can be approached.

Extending ownership often requires a widening of the lens through which a company views planning. That means additional input and contextual planning for new personas. One way that vendors are changing the way they think about planning is by expanding their data inputs and analysis outputs to take many other aspects of the business into account. The most common adjacent sector that we see beyond finance is operations, and many vendors have already begun working with operations data in their software. However, these same vendors are beginning to expand into new KPIs as well.

As noted in our previous report about the future of CPM, stalwart Anaplan has taken up the mantle of Connected Planning, under which it houses planning tools for finance, sales, supply chain, workforce, marketing and IT. Workday-owned Adaptive Insights – another CPM veteran – is growing to become the planning arm of Workday and underpinning its move from a SaaS HR tool to a 'cloud ERP system for finance, HR and planning.'

HR and workforce analytics are critical to corporate planning and are a logical next step for data ingestion and KPI measurement. In our Q2 Workforce Productivity & Collaboration survey, we asked respondents which ways their company needed to improve strategically. The top answer (42%) was in their ability to recruit, retain and develop employees. Second to that (32%) was in their ability to develop an overall vision and strategy for their business.

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Figure 4: Ways your company needs to improve strategically 451 Research's Workforce Productivity & Compliance, Work Execution Goals & Productivity Challenges 2019

If CPM vendors are shrewd, they'll go after workforce analytics and talent planning KPIs because it helps to solve a distinct need within organizations. These metrics, if properly tied to finance, can better inform recruitment strategies and help businesses think more productively about internal mobility as well. The recently combined Adaptive Insights and Workday is a good example of this, as the pair is working on a planning function closer to the HR execution. Anaplan, Prophix, CCH Tagetik and Jedox all offer a form of workforce, people or personnel planning as well.

What's even more disruptive is a new breed of planning vendor coming about focused solely on strategic workforce planning and analytics – often including scenario-modeling tools. Vendors including Conentra, Visier, OrgBuilder and OrgLab have disrupted traditional talent management by providing a granular view into the impact of hiring and attrition on productivity, company strategy and team dynamics. Additionally, companies like Yva and PredictiveHR are using machine learning and artificial intelligence (AI) to predict impacts of hiring and attrition, which could also become a powerful data point for future planning initiatives.

The aforementioned vendors comprise a market sub-segment that we and some vendors refer to as organization planning and analysis (OP&A). OP&A, which approaches planning from a talent-first angle, creates new CPM/planning owners in HR and talent management. As we expect M&A activity to grow in the CPM space, 451 Research believes that vendors in this category will be some of the most valuable targets.

Another shift that vendors are making in the space is in their delivery of planning and CPM tools. Seattle-based Kepion takes a modular approach to CPM and BI, allowing users to create their own apps that contextualize CPM for specific users in the organization while still working from a single source of truth. This modular approach and contextualization of data – especially when combined with no-code solutions – will be crucial to democratizing ownership in CPM and bringing in new personas.

Another example of innovative CPM delivery is Workiva, a company that also leans heavily on the connected planning narrative. Workiva uses a connectivity ecosystem to connect all aspects of the reporting process and then allow users to automate processes and present the most relevant, contextual data in a way that can be easily digested at any board meeting. Working as the connective tissue of multiple inputs (including some other CPM vendor partners) is another unique approach that lays the foundation for a vendor like Workiva to become the disaggregate planning vendor of record for companies that already have another product or solution in place.

What must come next

CPM ownership is deep and narrow – focused on finance and operations professionals in its implementation and tooling. New paradigms have emerged in concepts like OP&A, which seems to be somewhat of an HR-centric approach to FP&A. However, OP&A relies on similar planning and analytics methods as FP&A and thus it is available only to a select few who understand those tools or can license them, meaning that we aren't yet on the way to a democratized CPM.

Adding new data sources and KPIs are essential. Operations and HR/talent are a good starting point, but CPM vendors must extend out to include the remaining front-office and back-office areas that could benefit from a more effective way to plan and strategize. The danger here is tokenization, or vendors adding these metrics to satisfy a marketing narrative. It is critical that, as the new metrics/data sources (and thus new personas) are added into CPM products, the functionality must eventually extend to be as deep as the functionality is for finance and operations. Modularity and no-code automation tools can help with this, but it will also require pre-built planning templates, intelligence and scenario modeling for all BUs.

As it stands, the CPM market is currently mostly analogous to the connected planning theme of many vendors where FP&A is the hub to which all other spokes connect and remains the highest-value segment. Honestly, this may never change, and finance will always be the number one key driver for business. However, new KPIs and data sources with a modular delivery approach can help frame data in way that makes it more valuable to users outside the financial function while holding on to that aligned execution model that underpins the liquid enterprise.

In the quest to continue broadening their products, we believe the next data source and KPI targets will be in resource management and work management, and possibly learning and development (for skills management). This could lead vendors into the next sub-segment that 451 Research has dubbed productivity planning and analysis (PP&A), creating owners across lines of business in lay managers, project managers and hiring managers, for example.

The next stage in CPM's evolution will see three movements: acquisitions, expanded partner ecosystems and revamped tooling. M&A activity will likely grow over the next few years as larger CPM and planning vendors begin targeting adjacent companies in OP&A to build out their workforce planning offerings. Expanded partner ecosystems will allow for a wider pipeline of relevant system data that can power more relevant planning – especially if a company is pursuing a modular strategy like Kepion or a connective tissue strategy like Workiva. Finally, tooling will begin to shift. Better dashboards and consumerization of CPM UI will combine with low- and no-code solutions and mobile-first design, to make CPM and planning more accessible for non-technical users and for users in various business functions.

It will be years before this vision of CPM is fully realized, but once it is, businesses will be able to more strongly support the vision and strategy of their entire workforce while simultaneously planning more efficiently for shifting marketplace demands and workforce dynamics.