Critical Capabilities for Government Budget Planning Products

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Critical Capabilities for Government Budget Planning Products

7 September 2011 ID:G00214312 Analyst(s): Massimiliano Claps

VIEW SUMMARY Global ERP and corporate performance management vendors have developed packaged solutions for government budgeting and planning officers. This research analyzes the strengths and weaknesses of those products.

Overview
Enterprise resource planning (ERP) and corporate performance management (CPM) product vendors offer budget planning solutions to the government sector. This research provides government finance officers, CIOs and other IT executives with an analysis of critical business capabilities, market penetration, go-to-market approaches and solution architectures of the following global vendors: CGI, IBM, Oracle, SAP, SAS and UNIT4.

EVIDENCE
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Key Findings
Budget constraints provide a burning platform to apply more managerial approaches to budgeting processes, such as strategic mapping, what-if scenario analysis, management dashboards and collaborative planning. The majority of government budget officers still rely primarily on Excel for their budgeting activities, but more comprehensive products have emerged to provide suites of capabilities, such as budget preparation, forecasting analysis and modeling, scorecards and dashboards, financial consolidation, publishing of budget documents, and financial reporting. ERP vendors (such as CGI, Oracle, SAP and UNIT4) and CPM vendors (such as SAS and IBM) are the primary providers of government budget planning solutions.

Recommendations
Government agencies that are planning to modernize IT solutions that support budgeting processes should: Perform a fit-gap analysis of the functional capabilities that software vendors offer against the business processes that they need to support. In particular, government agencies should focus on the capabilities that are specific to the public sector, such as managing complex collaborative planning workflows, to link expenditure estimates with text that outlines assumptions and policy objectives, and to forecast staff costs by employee and position. Establish a change program to ensure that the culture and skills of the organization are able to effectively apply new tools that facilitate the planning and monitoring of key revenue and expenditure drivers, and their causal relationship with outcomes, and not just focus on control and the auditing of appropriated expenditures.

The U.S. Government Accountability Office recently published a harsh critique of the lack of consistency and transparency of data across federal government departments: "Despite the progress identified above, critical gaps in financial management performance remain. Weaknesses in basic financial management practices continue to prevent four major agencies, and the Government as a whole, from achieving a clean audit opinion. The cost of maintaining effective financial operations is increasing, driven largely by the growing and high costs agencies are incurring to modernize agency financial systems. While Federal agencies have mobilized resources to meet the new and growing demand for real-time transparency into where recovery-related and other Federal dollars are going, more work is necessary to sustain these solutions in a cost-effective manner over the long term. Federal agencies reported approximately $125 billion in improper payments in FY 2010 and continue to maintain thousands of unneeded real property assets on their books. These instances of Government waste compromise the integrity of Federal programs, lead to damaging inefficiencies, and erode citizens' trust in Government" (see www.gao.gov/financial/fy2010/10frusg.pdf).

CRITICAL CAPABILITIES METHODOLOGY

"Critical capabilities" are attributes that differentiate products in a class in terms of their quality and performance. Gartner recommends that users consider the set of critical capabilities as some of the most important criteria for acquisition decisions. This methodology requires analysts to identify the critical capabilities for a class of products. Each capability is then weighted in terms of its relative importance overall, as well as for specific product use cases. Next, products are rated in terms of how well they achieve each of the critical capabilities. A score that summarizes how well they meet the critical capabilities overall, and for each use case, is then calculated for each product. Ratings and summary scores range from 1.0 to 5.0: 1 = Poor: most or all defined requirements not achieved 2 = Fair: some requirements not achieved 3 = Good: meets requirements 4 = Excellent: meets or exceeds some requirements 5 = Outstanding: significantly exceeds requirements Product viability is distinct from the critical capability scores for each product. It is our assessment of the vendor's strategy and its ability to enhance and support a product over its expected life cycle; it is not an evaluation of the vendor as a whole. Four major areas are considered: strategy, support, execution and investment. Strategy includes how a vendor's strategy for a particular product fits in relation to its other product lines, its market direction and its business overall. Support includes the quality of technical and account support as well as customer experiences for that product. Execution considers a vendor's structure and processes for sales, marketing, pricing and deal management. Investment considers the vendor's financial health and the likelihood of the individual business unit responsible for a product to continue investing in it. Each product is rated on a five-point scale from poor to outstanding for each of these four areas, and it is then assigned an overall product viability rating. The critical capabilities Gartner has selected do not represent all capabilities for any product and, therefore, may not represent those most important for a specific use situation or business objective. Clients

What You Need to Know

This document was revised on 19 January 2012. The document you are viewing is the corrected version. For more information, see the Corrections page on gartner.com. Budgeting processes are changing in government. A more insightful approach that enables executives to understand and manage the cause-and-effect relationship between expenditure and policy objectives has to be implemented to improve government service delivery and internal productivity. This business transformation is not new, but the budget constraints that have affected many government jurisdictions, particularly in North America and Europe, have made it more urgent in the past three years. Government finance officers and CIOs recognize the need to modernize legacy budget systems based on spreadsheets that show limits in terms of scalability, user-rights management tools, workflow and calculation rule automation, and integration with other applications. Global ERP and CPM vendors have started to offer more comprehensive suites of capabilities for government budgeting in the past five to 10 years. Government IT executives who consider these solutions should be aware that: ERP-based solutions' core strengths were traditionally in budget execution, such as financial accounting and reporting, while they provided less comprehensive capabilities for collaborative planning and forecasting, strategic performance management, and business intelligence (BI). CPM-based solutions' core strengths are in reporting, forecasting, analysis and dashboards, while they provide a less comprehensive capability to maintain full consistency with financial accounting and other back-office systems, such as revenue administration, and are less flexible when it comes to inserting and editing text, which are key to explaining budget assumptions and related policy objectives. Global ERP vendors, such as Oracle and SAP, have expanded their role in the CPM market through acquisition or organic growth; thus, they have integrated those tools into a unified offering for budgeting and planning, or are marketing multiple products.
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Analysis
Introduction

should use a critical capabilities analysis as one of several sources of input about a product before making an acquisition decision.

2011 Gartner, Inc. and/or its affiliates. All rights

A budget is a financial plan to formally appropriate funds to cover expenditures for delivering services, reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be and to forecast revenue flows over a certain period of time. Once authorized by a legislature, a reproduced or distributed in any form without Gartners president or a cabinet, the budget is used for audit and evaluation purposes to ensure that programs prior written permission. The information contained in are executed according to plans, and to hold program and mission executives accountable for delivering this publication has been obtained from sources believed public value. In essence, in between elections, budget execution processes are the main mechanisms to to be reliable. Gartner disclaims all warranties as to the ensure transparent and effective decision making to enforce fiscal discipline, prioritize resource accuracy, completeness or adequacy of such information allocation based on strategic outcomes, diagnose problems, and evaluate reforms that enable and shall have no liability for errors, omissions or inadequacies in such information. This publication improvements in service delivery efficiency and effectiveness. Transparent financial management processes from budget planning to execution must rely on consistent data points, which are difficult to consists of the opinions of Gartners research get, especially if governments rely on fragmented IT solutions. Gartner estimates that up to 80% of budget officers, especially in smaller government jurisdictions, still rely primarily on spreadsheet tools, particularly Microsoft Excel, or custom-built solutions that use spreadsheets and online analytical processing (OLAP) tools as key components, to support their analysis, forecasting and budget preparation activities. Users' familiarity with the tool, its flexibility and the low total cost of ownership are key reasons why Excel is still the preferred solution. However, there is increasing pressure to adopt more sophisticated tools that can offer improved scalability and user rights management, as well as broader functional capabilities for example, to drill down from reports and dashboards into detailed assumptions, to consistently link text to data, to automate sophisticated forecasting, analysis and consolidation rules, and to integrate with other applications. In the past five to 10 years, ERP and CPM software vendors have started offering suites of capabilities that try to satisfy those business requirements more comprehensively.
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organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartners Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see Guiding Principles on Independence and Objectivity on

Product Class Definition

For the purposes of this study, budgeting is to be intended as a suite of capabilities, including (but not limited to) budget preparation, forecasting analysis and modeling, publishing of budget documents, and other CPM capabilities, such as reporting. Although this research does not necessarily recommend a product suite approach, best-of-breed products aimed at supporting only one of those capabilities were not included in the analysis. Usually ERP and, even more so, CPM suites provide additional capabilities, including scorecards, dashboards, reporting and financial consolidation (see "Top Processes for Corporate Performance Management"); these capabilities are not the primary focus of this research, so they will be analyzed as "ancillary" capabilities that support the budget planning process. Government budgeting and planning tools can be integrated with: Budget execution systems, such as accounts payable, accounts receivable and general ledger. Other back-office systems, such as human resources, payroll, pension and benefits administration, revenue administration, capital project management and treasury management. None of these product categories are analyzed in this study because they are not usually part of government budgeting and planning suites, even if some vendors offer the whole portfolio of products and some out-of-the-box application integration interfaces.
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KEY MARKET TRENDS

Government budgets can be classified into three broad categories: Line item budgets: The main objects are the inputs of the forecast and analysis; thus, the focus is to track the usage of resources by capping the appropriated expenditures. Program-based budgets: These focus on the missions and activities that government performs; thus, they help to plan the allocation of resources by policy purpose. Performance-based budgets: These focus on the outputs and outcomes of certain activities; thus, they help to manage the productive use of resources to achieve a certain goal. Governments have traditionally planned and managed their resources through line item and programbased budgets, mostly focusing on operating expenditure line items, such as human resources. The planning horizon was usually one fiscal year, and plans were mostly based on incremental appropriations from the previous year. This approach to budgeting helped to control inputs and ensure that resources were reserved for policies that could benefit the collective, not reserved for special interests. However, this approach to budgeting is showing its limitations in a more complex world, where service delivery happens through collaboration among various missions, programs, jurisdictions and levels of government, and through the cooperation between the public sector and private and nonprofit organizations. The cash constraints generated by the great financial crisis of 2008 gave a further push toward a more flexible and managerial approach to government budgeting, because the application of the traditional paradigm, based on politics and compliance, produced indiscriminate, across-the-board cuts. As a result, there is a burning platform to apply approaches that have been discussed for a long time, such as performance-based budgeting, wherein policies are articulated in the form of outputs and outcomes, and zero-based budgeting, wherein operating and capital expenditure line items are forecast, ranked and appropriated by discussing (from scratch) the evidence of the relationship between their cost and contribution to outputs and outcomes for the budget period, instead of being appropriated on an incremental basis every year. Fiscal year budgets remain the control mechanisms, while multiyear plans can be revised based on the analysis of the performance against set strategic, financial and operational objectives. IT is following and, at the same time, enabling the application of more innovative approaches; in fact, new software tools allow jurisdictions to use methodologies (such as strategy maps and scorecards, what-if scenario analysis, management dashboards and collaborative planning) that were not applicable (or very costly and time-consuming to use) with a budget planning process based primarily on paper, or a process with inconsistent spreadsheets. The ability to set rules to automatically run calculations and simulations and to validate entries, consolidate data, and control fund balancing and classifications can reduce the cycle time of budget processes, and make outputs more consistent and more transparent for reporting, analysis and audits. In essence, budgeting and planning software products enable the design and execution of more consistent budget planning processes.

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There are two groups of software application vendors that provide commercial off-the-shelf (COTS) products for budgeting, forecasting and planning: ERP product vendors, including global companies such as Oracle and SAP, and small and midsize companies that target a specific geography, such as CGI, Tyler Technologies and SunGard in North America, and Advanced Business Solutions in the U.K. These solutions' core strengths were traditionally in budget execution, such as financial accounting and reporting, while they provided less comprehensive capabilities for strategic performance management and BI. CPM product vendors (see "Magic Quadrant for Corporate Performance Management Suites") such as SAS and IBM. CPM solutions' core strengths are in reporting, analysis and dashboards, while they provide a less comprehensive capability to maintain full consistency with financial accounting and other back-office systems, such as revenue administration, and are less flexible when it comes to inserting and editing text, which are key to explaining budget assumptions and related policy objectives. As global ERP vendors have expanded their role in the CPM market through acquisition, such as Oracle and SAP, or through organic growth, such as Microsoft, they have integrated their tools into a unified offering for budgeting and planning, or are going to market with multiple products. Currently, Microsoft does not provide a budgeting and planning solution, but it is developing one and plans to launch it by year-end 2012; the solution architecture will be a combination of Dynamics AX and Microsoft Excel. CPM and ERP products provide spreadsheet-like interfaces and integration with Microsoft Excel to ease the migration from legacy systems. Open-source BI solutions, such as Pentaho or Actuate's Eclipse BIRT, are being used in government to support performance management processes, but they cannot be considered comprehensive budgeting and planning suites yet. Alternative delivery models, such as cloud computing, have had a limited impact on this market so far, due to the complexity of the business rules that collaborative budget planning processes require, and to the sensitive nature of some of the data; however, a recent survey conducted by the U.S. Office of Management and Budget indicated that three federal agencies are considering moving their capital planning to the U.S. General Services Administration's private cloud solution eCPIC. eCPIC is not a budget planning suite; however, this is the first indication of interest in alternative delivery models. Some small local governments, such as in Galt, California, and in Skagit County, Washington, have implemented a software as a service (SaaS) CPM product provided by Adaptive Planning. The level of interest in cloud-based solutions could be further triggered by the current context, wherein governments are looking for alternatives to cope with budget constraints that limit the CIO's ability to win funding for enterprisewide product suite adoption. Even when governments can afford to buy comprehensive budgeting and planning solutions, achieving the full benefits from deploying them requires much more: Changing laws that prevent the application of performance-based, or zero-based, or multiyear budgeting methodologies, and/or to hold executives accountable for tighter budgetary and strategy disciplines enabled by new tools Changing the organizational culture and skills from focusing on auditing the expenditure of resources against appropriated funds, to a culture of effective and efficient service delivery and long-term strategic policy outcome management, wherein tools are used to identify and monitor the key drivers of revenue and expenditures and their causal relationship with outcomes Harmonizing accounting principles and reporting requirements to enable multiyear, cross-program and cross-jurisdiction consolidation and analysis, as well as tighter integration with budget execution systems and other ancillary systems used by finance officers
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Critical Capabilities Definition

Budget preparation: This includes the ability to collaboratively define and update planning assumptions, distribute expenditures over the planning period, and allocate resources based on top-down, middle-out and bottom-up rules, thereby allowing collaboration across multiple parts of a government agency or jurisdiction to define, revise, and approve assumptions and appropriations. Text editing capabilities must be robust to annotate assumptions and policy objectives; in particular, it is important that there are no strict limits to the number of characters and the number and types of documents that can be attached to clarify planning assumptions. The system should have the ability to maintain multiple versions of the budget across multiple parts of a government agency, and should also have scenarios for different budget versions, with the ability to check in and check out budget elements by subagency and to set security to different rights/levels by scenario (user management). Additionally, the system should have workflow capabilities with incremental budget approval capabilities during yearly or incremental budget processes across multiple government agencies. Forecast and analysis modeling: This includes the ability to forecast revenue and expenses, and to run what-if analyses, to calculate the risks and benefits of various scenarios; to perform trend analysis and predictive analysis of the impact of budget appropriations on macroeconomic and social indicators (for the fiscal year and for long-term planning); and to analyze the root causes of expenditures through activity-based and other cost management methodologies. To support in-year incremental budget reforecast activities, the system should have a reforecast subsystem that allows budget review activities that accommodate an analysis of different budget scenarios without impacting the production budget system tables. Costs of personnel usually absorb well above 50% of expenditures in most government jurisdictions; therefore, salary and benefit forecasting and analysis by employee and by position are particularly important. Capital planning is important for government entities that manage investments in fixed assets, such as departments of transportation, departments of housing, departments of correction and, in general, local governments; optimized capital planning tools should be integrated with project management functionalities so that they can source data to validate assumptions by cost center, and then transfer data after approval to streamline project execution and control. Fund budgeting can be particularly complex because various categories of expenditures can be matched by different funding sources, such as general revenue, grants or debts. Publishing: This includes the ability to publish (on paper and electronically) budget books that transparently present all quantitative (for example, tables) and qualitative (for example, text and figures) details of the budget; budget officers should be able to update all the information on short notice because of the politically volatile and iterative workflows that characterize the budget approval process. Publishing should enable the consolidation of account information from different programs and missions, or separate legal entities, such as public corporations or public-private

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partnerships, whose financial information is necessary to provide a transparent view of the government financial situation. The publishing function should be able to source data from multiple systems of record, including core financials, other budgeting systems, human resources and payroll systems, image repositories, GISs, procurement systems, reporting systems and ad hoc data stores, such as Excel and personal database files. As open government data initiatives have expanded worldwide, the ability to publish data electronically not just in PDF, but also in HTML, XML, comma-separated values (CSV) and Excel formats has become more important, but is not yet critical. Other CPM capabilities: This includes ancillary capabilities that are used for budget execution, but can also support midyear revisions and support data for planning: Scorecarding: To create and display strategy maps and other diagrams describing policy objectives, and the ability to design hierarchies of goals and align them with expenditure and revenue forecasts and analyses in a cause-and-effect relationship that can be monitored over time. Dashboarding: To render a summarized graphical representation of the data, such as a chart, gauge and stoplight, to provide a positive or negative trend indicator for each metric. This also includes the capability to drill down from dashboard graphics to any source system through BI. Reporting: To create reports that allow budget officers, executives and auditors to compare quarterly, year-to-date and annual results to budgets, forecasts, history, proposed budgets by program, geography, sources of funds and so on. This usually requires complying with mandatory reports, which vary by country, such as the U.S. state and local government's Comprehensive Annual Financial Report (CAFR). Data management: This includes tools to load data from multiple sources, clean and standardize data, create or update data into existing tables and pull data from the data warehouse. Rule management: This includes the ability to set rules to automatically run calculation and simulation, and to validate entries, consolidate data, and control fund balancing and classifications.
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Use Cases
Budget analysis: This is the set of activities and processes carried out by budget analysts, which consists of analyzing previous years' expenditure trends and the economic context, defining a first set of assumptions, and using them to estimate revenue and expenditures, and then providing support for political discussions about the prioritization of strategies and programs by simulating the outcomes of different scenarios, trying to find the most efficient way to distribute funds and other resources among various departments and programs. Analysts use budget preparation capabilities to receive submissions of operational and financial proposals from executives, then use forecasting and analysis capabilities to review them. For their analysis, they use financial reports, scorecards and dashboards from previous years. Estimates and underlying assumptions are consolidated and sent back to agency heads for discussion, and then approval by the legislature. Collaborative planning: This consists of the iterative processes that take place between budget analysts, executives within their departments, local branches of their departments and the cabinet officers, or the legislature that appropriates budget funds. Budget preparation capabilities are at the core of these processes. Dashboards and reports support the discussion. Budget publishing enables the updating of budget book documents, which is especially important at the end of the budget cycle, because last-minute changes invariably occur. Common services enable budget administrators to set and change the rules and workflows of these processes, and to set and change user rights management. Performance monitoring: During the budget execution period, managers and analysts monitor and control the budget by reviewing financial and operating reports, scorecards and dashboards to see whether allocated funds have been spent efficiently and effectively. If deviations appear, then budget analysts study the variations and suggest revised courses of action that managers discuss and approve. Among common services, data management capabilities are necessary to generate reports that include data from multiple sources; workflow capabilities are necessary to define rules about content and deadlines for reports. Auditing: This consists of the activities carried out by the legislature or audit offices to control the compliance (usually after the end of the budget period) with expenditure limits, the accountability of managers to efficient service delivery, and the evaluation of purposes, missions and outcomes to assess the delivery of public value. Financial reports, including consolidated views, along with dashboards and scorecards are key to these business processes. Auditors may also control compliance with the budget approval process, so access to budget preparation capabilities is necessary to check whether rules were set and followed in compliance with the law (see Figure 1).

Figure 1. Weighting for Critical Capabilities in Use Cases

Source: Gartner (September 2011)

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Inclusion Criteria
Vendors that make more than $100 million of revenue annually. Products that were installed (as of January 2011):

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In government agencies in more than one country. In government agencies in the U.S., but at least in five states and at multiple levels of government (for example, state and local or state and federal). This second criterion is designed to capture vendors that have a widespread presence in the U.S. market, which is currently the largest and one of the most mature for budget planning COTS; however, the overall focus of this research is global. Products that provide a suite of two or more of the following capabilities: budget preparation, forecasting analysis and modeling, publishing of budget documents, and ancillary CPM capabilities. This market study focuses on all levels of government worldwide: federal, central, international, state, provincial, regional and local; therefore, products used only by other public-sector institutions (such as healthcare providers, education, public corporations, local utilities, commercial enterprises or nonprofit organizations) were not considered. Based on the inclusion criteria, a number of ERP and CPM vendors were not part of this evaluation; nonetheless, they offer some budget planning or more generic CPM capabilities and could be considered by governments: Advanced Business Solutions (formerly COA Solutions) in the U.K., TechnologyOne in Australia, Adaptive Planning and Tyler Technologies in the U.S., Visma in Northern Europe, or international players such as Board International, Lawson (now part of the Infor group) and Tagetik. Infor meets the inclusion criteria, but decided not to participate to this survey; therefore, Gartner had insufficient data on management and resources to arrive at a fact-based analysis in time for this publication.
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Critical Capabilities Rating

"Critical capabilities" are attributes that differentiate products in a class in terms of their quality and performance. Gartner recommends that users consider the set of critical capabilities as some of the most important criteria for acquisition decisions. This methodology requires analysts to identify the critical capabilities for a class of products. Each capability is then weighted in terms of its relative importance overall, as well as for specific product use cases. Next, products are rated in terms of how well they achieve each of the critical capabilities. A score that summarizes how well they meet the critical capabilities overall, and for each use case, is then calculated for each product. Ratings and summary scores range from 1.0 to 5.0: 1 = Poor: most or all defined requirements not achieved 2 = Fair: some requirements not achieved 3 = Good: meets requirements 4 = Excellent: meets or exceeds some requirements 5 = Outstanding: significantly exceeds requirements Ratings are the result of three sources of information: Each vendor fills out a questionnaire to indicate whether certain product functionalities are available out of the box in the current version, or whether they require configurations, customizations or partner components. Vendors are asked to indicate how long those functionalities have been available. Vendors are interviewed to dig deeper into some functionalities as well as the vendors' overall product road maps. Gartner interviews at least two reference customers for each vendor. No interviews could be conducted for IBM. The ratings (see Figure 2) refer to Gartner's analysis of current product versions and do not represent opinions of future releases (although some of those are discussed in the qualitative profiles for each vendor).

Figure 2. Product Rating on Critical Capabilities

Source: Gartner (September 2011)

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To determine an overall score for each product in the use cases, the ratings in Figure 2 are multiplied by the weightings shown in Figure 1. These scores are shown in Figure 3, which also provides our assessment of the viability of each product. (Also see Figure 4 and Figure 5.)

Figure 3. Overall Score for Each Vendor's Product Based on the Nonweighted Score for Each Critical Capability

Source: Gartner (September 2011)

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Figure 4. Product Score in Use Cases

Product viability is distinct from the critical capability scores for each product. It is our assessment of the vendor's strategy and its ability to enhance and support a product over its expected life cycle; it is not an evaluation of the vendor as a whole. Four major areas are considered: strategy, support, execution and investment. Strategy includes how a vendor's strategy for a particular product fits in relation to its other product lines, its market direction and its business overall. Support includes the quality of technical and account support as well as customer experiences for that product. Execution considers a vendor's structure and processes for sales, marketing, pricing and deal management. Investment considers the vendor's financial health and the likelihood of the individual business unit responsible for a product to continue investing in it. Each product is rated on a five-point scale from poor to outstanding for each of these four areas, and it is then assigned an overall product viability rating. Source: Gartner (September 2011)
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Figure 5. Product Viability

Source: Gartner (September 2011)

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The weighted capability scores for all use cases are displayed as components of the overall score (see Figure 6).

Figure 6. Product Score for Overall Use Case

Source: Gartner (September 2011)

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Vendors
CGI
Company background: CGI provides professional services, outsourcing and software capabilities to government and commercial customers. CGI makes approximately $4.2 billion annually and employs about 31,000 personnel; approximately 95% of its revenue is generated in the U.S. and Canada. The government and healthcare markets represent 45% of its annual revenue; Gartner estimates that state and local government revenue represent less than 10% of the total. Products: CGI provides enterprise applications, such as ERP, and agency-specific applications, such as environmental, healthcare and revenue collection solutions. AMS Advantage is CGI's flagship ERP product for the state and local government marketplace. A Web-based solution, AMS Advantage 3.8 spans the functional areas of financial management, HR management, payroll, procurement, budgeting and BI. The firm now offers grant life cycle management, collections and performance management dashboards as part of AMS Advantage 3.8. AMS Advantage Performance Budgeting is the module dedicated to budget planning. The solution is completely built for government; it includes strategic planning and budget formulation capabilities that are specific to employee and position, as well as capital planning and performance management capabilities when integrated with the rest of the AMS Advantage ERP suite. The user interface, based on budget request forms, provides comprehensive capabilities to combine budget figure line items with justification text, performance measures, extended narratives and attachments. Publishing capabilities ensure real-time updates of all budget components stored in the system (for example, tables, text and figures), and making changes to one component simply requires rerunning the budget book publishing process. CGI's latest product development includes enhancements that help to create and align budgets with performance plans throughout the year to report on costs in conjunction with the achievement purposes of budget plans. AMS Advantage 3.9 is expected to include further enhancements for budget officers, such as out-of-the-box CAFR reporting and further management dashboards enabled by Enterprise Intelligence360, which is CGI's BI platform powered by SAP BusinessObjects. Customer base: CGI's AMS Advantage Performance Budgeting footprint is used by approximately 100 customers in the U.S. local government market; 26 of those are using version 3.8. Overall CGI penetration in the U.S. government market is beyond 300 customers. CGI does not market AMS Advantage Performance Budgeting beyond the U.S. state and local government market. Go to market: With a dedicated government sales force, CGI sells directly to government customers. It provides the front-end consulting, integration and application hosting services to the customer. CGI offers application hosting services for larger agencies and has developed a targeted cloud service offering for midsize local government organizations. However, as of May 2011, none of CGI's AMS Advantage Performance Budgeting customers were using any of those delivery models. Technical architecture: AMS Advantage is a Java-based and Web-based system that uses open architecture standards such as Java Platform, Enterprise Edition (Java EE). CGI has invested in developing a service-oriented-architecture-based solution by leveraging IBM WebSphere BI and using the Web Services Description Language (WSDL) standard. The company recommends infrastructure running IBM HTTP Web servers, application servers running IBM WebSphere, and database servers spanning Oracle, DB2 and SQL. While the implementation schedule will vary based on client size and solution breadth, the general range for the implementation of one major ERP module is six to 12 months.

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CGI solution strengths and challenges: Strengths Product and product road map are entirely dedicated to government agencies. Consulting, system integration and support services have strong government budgeting solution expertise. Enterprise Intelligence360 provides a strong solution for scorecard, reporting and dashboarding capabilities. Challenges: Lack of presence outside U.S. state and local governments. No service partnerships to support growth outside the core segment. Dependency on software partner tools, such as SAP BusinessObjects, for the most advanced BI and data management capabilities. Need to invest in the implementation of the AMS Advantage application suite to take full advantage of reporting capabilities, and to easily source data for forecasting and analysis from general ledger and other modules.
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IBM
Company background: IBM is a global IT vendor. In 2010, it generated more than $99 billion in revenue and employed 436,000 people. IBM provides hardware, software and professional services to more than 170 countries worldwide. It also has a government practice in every region of the world (see "Vendor Rating: IBM"); Gartner estimates that between 10% and 15% of IBM's annual revenue comes from the government market. Products: IBM offers two versions of budgeting, planning and forecasting (BP&F) solutions: one for large governments based on IBM Cognos TM1 (planning and analysis) and/or IBM Cognos Planning (planning); the other for midsize jurisdictions and agencies based on IBM Cognos Express, which is a purpose-built CPM solution composed of four modules (which can be purchased and implemented separately): IBM Cognos Express Planner for BP&F, IBM Cognos Express Reporter for reporting and ad hoc query, IBM Cognos Express Advisor for free-form analysis and visualization, and IBM Cognos Express Xcelerator for Excel-based business analysis and optimization. IBM Cognos TM1 is a 64-bit in-memory OLAP analytic engine that is designed specifically for planning, analysis and forecasting, with client deployments for Excel and managed contribution solutions. IBM Cognos TM1's 64-bit architecture allows for large-scale data analysis and high participation planning and forecasting. These plans can be risk-adjusted by purchasing IBM SPSS, which provides statisticalbased forecasts as baseline forecasts that can be augmented with IBM Cognos TM1. IBM Cognos Planning and IBM Cognos TM1 can be integrated out of the box with IBM Cognos Business Intelligence to extend planning solutions with scorecarding and dashboards to monitor performance and reporting. IBM Cognos has developed methodological blueprints to help accelerate implementation in government, such as data models for Earned Value Management Performance, Municipal Performance Management, Workforce Planning Performance, and Federal Budget Planning & Performance Framework (developed in partnership with Grant Thornton). These blueprints can be downloaded for free by Cognos' licensed users; however, there is no application support for these blueprints, they may not include all the desired functionality, and they may require additional design and configuration. Users must consider that they will need to buy licenses for Cognos Business Intelligence if they need more advanced capabilities, such as data extraction from multiple sources, linking dashboards with scorecards and deploying workflows with event-based alerts. The input of text descriptions and charts is less developed than some of the other vendors because planning forms have text size and editing limits. To enable the publication of budget books, governments should consider IBM Cognos Financial Statement Reporting (FSR), a solution that became part of the IBM portfolio with the acquisition of Clarity Systems; Cognos FSR tracks the status of each section of the document, with due dates and responsibility assignments, and allows a variety of output options, such as Microsoft Word, Microsoft PowerPoint and Adobe PDF. Gartner expects to see enhancements to the modeling and user experiences, as well as broader deployment methods. Customer base: IBM has government customers in all geographies using the Cognos BP&F solutions, although these products have a stronger penetration in North America and Europe. Some examples include the Austrian Ministry of Finance, the HR Service Center in Hamburg, Germany, the U.K. Ministry of Defence, the North Carolina Office of State Budget and Management, the U.S. Department of Labor and the U.S. Navy Naval Facilities Engineering Command. Go to market: IBM sells its product directly through IBM software sellers and IBM Global Business Services, and has the capability to support implementation. IBM Cognos Express is sold primarily through channel partners. IBM engages with multiple partners global ones, such as Deloitte and Grant Thornton, that also contribute to solution development, and local implementation partners that help to deliver the solution in specific geographies. IBM does not offer alternative delivery models, such as hosting, or cloud-based services for its BP&F solutions. Technical architecture: IBM Cognos products run on all common operating systems (OSs), databases and application servers. IBM Cognos TM1 has native in-memory analytics. IBM solution strengths and challenges: Strengths A configurable enterprise planning and analysis solution that is augmented with performance blueprints to meet the specific needs of vertical requirements, like government agencies. Cognos BI scorecarding, dashboarding and reporting capabilities. Global delivery and partnership capabilities. IBM-Cognos-Express-based solution for midmarket government agencies that can only afford smaller investments. Challenges

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Need for customers to explore the capabilities of different options to understand what is best and avoid purchasing unneeded functionality. Standardized platform that might require some customization for collaborative planning when it comes to discussing, writing and displaying large text boxes that outline the planning assumptions and objectives.
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ORACLE
Company background: Headquartered in Redwood Shores, California, Oracle is one of the largest global software vendors, with revenue of $35.6 billion and approximately 108,000 employees worldwide for the fiscal year ending 31 May 2011. Gartner estimates that between 10% and 15% of Oracle's revenue was generated from the government sector. Products: Oracle recently expanded its public-sector performance management offering, which is based on Oracle Hyperion Enterprise Performance Management Applications, to include the Oracle Hyperion Public Sector Planning and Budgeting module and offer public-sector-specific content, such as preconfigured position and employee budgeting, calculation logic and rules, and prebuilt task lists. The Hyperion Enterprise Performance Management Applications suite is composed of multiple integrated yet independent applications that can be implemented along with Oracle Business Intelligence Enterprise Edition (OBIEE) tools for dashboards and reporting. The Oracle Hyperion Planning application provides collaborative budget preparation, forecasting and what-if analysis. Microsoft Office integration functionalities, budget publication and reporting as well as the Oracle Data Integrator tool, which can be used to configure integrations with any data source, including customer databases and ERP modules such as financials, human resources, projects and grants are all part of the basic license. Besides the extraction, transformation and loading (ETL) capabilities offered by Oracle Data Integrator, Oracle has developed adapters to source data from SAP, Oracle E-Business Suite and PeopleSoft Enterprise Financial Management and Enterprise Human Capital Management, but these must be purchased separately. Loading of flat files is also supported. The latest version of the product (v11.1.2.1) has improved publishing; the capability is based on Oracle Hyperion Financial Reporting and can be used to create complete PDF budget books and plain HTML budget websites. Oracle Hyperion Smart View for Office can be used to drag and drop tables and text into Excel and other Microsoft Office applications for publication in PDF format; the document created is updated in real time before being converted into the final PDF or HTML for publishing. While customers use Oracle Hyperion Smart View for Office for the creation of Microsoft Office documents, no customer has fully implemented the budget book publication capability of Oracle Hyperion Financial Reporting as of July 2011; without this tool, the publishing workflow still requires some manual processing. The latest version of Oracle Hyperion Planning, and the public-sector module, includes the flexibility to edit large text associated with the budget amount for budget analysts and publishing. Oracle Hyperion Planning is a mature product with an established customer base; the Oracle Hyperion Public Sector Planning and Budgeting module was released in April 2010; thus, Gartner estimates that it has only a handful of live customers. Customers with which Gartner spoke indicated that the scorecarding and dashboarding capabilities have a very intuitive user interface for data entry, and that the metadata enables building a real single version of the truth; however, high-level budget and finance executives sometimes find the navigation burdensome because of the need to switch between screens and drill-downs to compare key performance indicators (KPIs) and trend lines. One customer mentioned some inconsistencies in the secondary service offering, such as training provided by Oracle University. Gartner expects these to be addressed as the Oracle Hyperion Public Sector Planning and Budgeting module matures. Customer base: Oracle does not disclose customer numbers; however, its customer base includes midsize and large government jurisdictions, such as ENAV (the Italian air traffic control service), the U.S. state of Massachusetts, Washington, D.C., and the government of Newfoundland and Labrador in Canada. Go to market: Oracle sells directly to large governments, and provides consulting services for product configuration and customization of functionalities. In those market segments, Oracle partners with global IT service vendors, such as Deloitte, KPMG and Accenture. In the midtier market segment, Oracle relies primarily on alliance partners and value-added resellers. Oracle delivers the solution to some of its government customers through application hosting. The progress of integrating Sun Microsystems' product set into Oracle's portfolio has resulted in further advances toward cloud computing (see "In a Change of Heart, Oracle Endorses Cloud"); however, the Oracle Hyperion Public Sector Planning and Budgeting module is not available in a SaaS mode. Technical architecture: Oracle's products run on all common OSs, databases and application servers. Implementing the complete suite of Oracle Hyperion Enterprise Performance Management Applications can vary from between 12 months and 24 months, depending on the complexity of processes, KPIs to track, the need to integrate with legacy systems and the number of departments or jurisdictions that participate. Oracle solution strengths and challenges: Strengths Comprehensive interface for managers and analysts to support collaborative planning. Consistent go-to-market approach to ensure that prospects perceive Oracle Hyperion Enterprise Performance Management Applications as the primary solution in this market, and do not get confused with legacy Hyperion, Oracle and PeopleSoft applications. Scorecarding, dashboarding, forecasting, and analysis and reporting capabilities. Dedicated product and business development team. Partnership network with well-developed Hyperion skills. Challenges Need for customers to explore the capabilities of different modules within Oracle Hyperion Enterprise Performance Management Applications and Oracle OBIEE to understand what the best combination is and avoid purchasing functionalities that are not needed. User interface is not optimized for high-level finance and policy executives who need summary views across multiple KPIs. Early stages of adoption of the most recent product version.

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SAP
Company background: SAP is one of the largest global software vendors. In 2010, it generated $16.7 billion in revenue and employed approximately 53,000 people (see "Vendor Rating: SAP"). Gartner estimates that the government market represents approximately 5% of SAP's global revenue. Products: SAP offers two solutions for government budget planning: SAP Public Budget Formulation (PBF): This solution was originally designed from scratch for very large U.S. federal and state agencies. It is based on SAP NetWeaver Business Warehouse architecture. It provides good version control of large budget books and enables easily made text changes. It offers comprehensive operating expenses and forecasting capabilities, especially for position and employee estimates, through a collaborative process that allows it to analyze multiple scenarios and control the consistency of forms, workflows and data; for example, sophisticated analysis tools for activity-based costing have been discussed with some of the existing customers, but not yet developed. PBF does not provide as comprehensive a solution for dashboarding and scorecarding; hence, the lower than average score in "other CPM capabilities." However, customers with which Gartner spoke indicated that the performance of the reporting functionality was enhanced in the latest version. SAP BusinessObjects Planning and Consolidation (BPC): This is part of the SAP BusinessObjects enterprise performance management portfolio, which includes risk management, cost management, strategy management and analytic applications, and it is available for the SAP NetWeaver technology platform or the Microsoft platform. It is well-positioned for small and midsize government entities, or for specific programs within a large agency that uses PBF for the consolidated, enterprisewide budgeting process. Compared with PBF, BPC offers more robust capabilities for activity-based and capital budgeting, as well as for dashboarding, scorecarding and reporting. It does not handle text as well as PBF for publishing or budget analyst notes. SAP has deployed an implementation accelerator with prebuilt data templates and workflows (SAP BPC for Public Sector) that customers are already using in Europe, and it has been sold to customers in the U.S. The two solutions offer some duplicate capabilities, in particular for position and employee forecasting and budget consolidation. Some users of SAP PBF have started to deploy SAP BusinessObjects to enhance the dashboarding, scorecarding and reporting capabilities, but the integration is not intuitively deployable out of the box. Customer base: Approximately 15 government agencies and departments are using or implementing PBF in the U.S.; one federal government customer is implementing the solution in Australia. More than 100 public-sector entities worldwide are using BPC. Go to market: SAP sells directly to Tier 1 and Tier 2 governments, and provides services for product configuration and customization of functionalities. In those market segments, it partners with large IT service vendors such as Accenture, Capgemini, Deloitte and IBM. PBF is primarily targeted at customers in the U.S. and Canada, but SAP is considering expanding its business development efforts in Germany and Australia. BPC is targeted at customers globally. Pricing is lower for BPC to suit the needs of midtier governments. SAP offers application hosting and a SaaS version for BPC, while PBF is available only for on-premises implementations from SAP, and a hosted version is available from AT&T. Technical architecture: SAP products run on all common OSs, databases and application servers. SAP solution strengths and challenges: Strengths PBF's collaborative planning, consolidation, text handling and publishing capabilities. BPC's scorecarding, dashboarding, forecasting, and analysis and reporting capabilities. Well-established partnership network among system integrators and other software vendors (such as Microsoft) that offer complementary products, in particular for BPC. Challenges Customer perception of lack of clarity over different capabilities and value propositions of PBF and BPC. Limited penetration of PBF beyond the North American market. No customer has implemented PBF without having modules of SAP ERP and SAP NetWeaver Business Warehouse already in place; thus, governments should carefully evaluate the architectural implications of this product.
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SAS
Company background: SAS is a $2.43 billion business analytics software solution vendor with 11,920 employees. The government sector represents approximately 15% of SAS's worldwide revenue. SAS allocates more than 20% of its revenue to research and development. Products: SAS Financial Management, SAS Strategy Management and SAS Activity-Based Management are the three products that SAS offers to build public-sector budgeting solutions. Recent solution innovations (including, for example, "supplemental schedules") have been added to the planning templates to enable line item detail, workforce management and budget revision transaction management, automated correlation analysis included with strategy management features, improved dashboard reporting, and automatic allocation capabilities enabling collaborative top-down, bottom-up planning. New capabilities for the near future entail improved comments management to expand the use of text-driven budgeting and collaboration, additional BI reporting interoperability for the reporting process, and interoperability between traditional performance management features and statistical predictive features to encourage a more diverse understanding and use of descriptive statistics for forecasting. Customers indicate that the flexibility of BI capabilities for the ETL of data from multiple sources and for reporting are very robust; hence, the excellent score in the "data management" capability. Some customers complain about the complexity of the tools that cause a steep learning

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curve, and the high costs to configure rules and fully leverage the power of all BI and analytical capabilities. Customer base: Governments worldwide are using SAS tools for budget planning and execution; in fact, recent contract wins include the International Monetary Fund, the Italian Ministry of Interior, and Citizenship and Immigration Canada. Go to market: SAS has approximately 100 business development staff members who are responsible for direct sales in the government sector worldwide; they are also responsible for targeting the publicsector budgeting opportunities. SAS has a number of professionals who are exclusively dedicated to implementing budgeting solutions; these professionals are aligned by technology/solution group, rather than by industry. SAS also partners with other vendors, such as Accenture and Deloitte, to deploy these solutions. Some customers have implemented SAS's budgeting solution in a hosted environment, but SAS does not yet offer a cloud-based version. Technical architecture: SAS products run on most all common OSs, databases and application servers. SAS solution strengths and challenges: Strengths Robust and highly customizable data management, forecast and analytics, strategy management and reporting capabilities. Development of public-sector-specific applications. Well-developed partnerships with global system integrators. Challenges Collaborative planning and handling of text are improving, but not yet at the same level of some other products analyzed herein. Cost and level of skills required to fully leverage the capabilities can discourage users with limited resources.
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UNIT4
Company background: Headquartered in the Netherlands, UNIT4 is a global provider of ERP and financial software solutions. In 2010, it generated approximately $570 million in revenue and employed 4,200 people. The public sector, including government, healthcare and education customers, accounted for 28% of total revenue. The company changed its name from UNIT4Agresso to UNIT4 in 2010 (see "UNIT4: Continuing to Grow in the ERP Software Market"). Products: UNIT4 started to develop software applications for core finance and accounting capabilities in the 1980s, and has since expanded its portfolio to include budgeting and performance management, procurement, project accounting, HR, and payroll and grant management. It has grown rapidly over the past five years as the postimplementation change capabilities of its Vita architecture have become better known, and as it has directed its resources to targeting a market segment that it defines as "Businesses Living In Change" (BLINC). The flexibility of UNIT4's organizational tree and other rule changes have resulted in a higher-than-average score in the "rule management" capability. The Agresso Business World planner is a UNIT4 solution for government budgeting; it provides forecasting capabilities for employees, including integration with payroll and capital expenditures; however, more complex analytical capabilities such as trending, risk analysis and fund source modeling require some customization or the support of a partner solution. Also, the scorecarding capabilities are primarily provided through partners. Two of the customers with which Gartner spoke still use Excel for the collaborative planning process and then upload information into Agresso Business World through an out -of-the-box application interface. Integration of data from multiple data sources outside of Agresso Business World requires customization; hence, the lower-than-average score in the "data management" capability. In August 2011, UNIT4 acquired Exie, a Norwegian software vendor specializing in CPM with a public-sector presence in its local market. The acquisition has the potential to strengthen UNIT4's CPM capabilities, so customers should carefully understand the road map for integrating the new product into the UNIT4 portfolio. Customer base: UNIT4 has more than 1,500 government customers, most of them in the U.K., Germany, the Netherlands, Spain, Norway and Sweden. Approximately 600 of them use the Agresso Business World planner module. Local governments are the primary target segment for UNIT4, but there are also some midsize central and federal government agencies using it, such as the House of Commons in the U.K. and the Office of the Commonwealth Director of Public Prosecutions in Australia. Go to market: UNIT4 focuses directly on a "rapid change" segment of the market that it defines as BLINC. It sells directly to governments and takes responsibility for its own implementations and functional enhancements, offering two pricing arrangements: time and materials or guaranteed maximum price. Only in some cases, such as in Europe, has UNIT4 partnered with local system integrators. Typically, clients have the full system live six months to 12 months after contract signing. In 2010, UNIT4 introduced the Vita Cloud Angel, an on-demand solution (see "The U.S. Local Government IT Solution Vendor Landscape, 2010") that some customers are already using. More recently, UNIT4 launched the Shared Journey initiative, which makes it easier to establish shared services through more flexible architecture and licensing agreements. Technical architecture: The latest release, UNIT4's Agresso Business World v.5.5, uses C++ and C# on the .NET framework. The Web component is primarily based on HTML. It supports all the most common browsers, and runs on Microsoft and Oracle Database servers. UNIT4 solution strengths and challenges: Strengths Flexibility of business process modeling of the Vita architecture. Integration with budget execution, project management and payroll modules of the Agresso Business World suite.

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Reporting. Challenges Ancillary capabilities, in particular scorecarding and dashboarding, are not at the same level of some of the other CPM vendors.

its website,

Limited out-of-the-box capability to integrate with disparate data sources; in fact, UNIT4's Agresso Business World planner is designed to be sold in conjunction with the overall ERP suite, not as a best-of-breed product.
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3/6/2012