Anaplan -“A new paradigm for analyzing, modeling, budgeting, planning, and reporting in the cloud”

13th June 2011

The historic failings of the performance management industry are familiar territory to the founders of Anaplan, a new cloud based analytical platform and the subject of this latest FSN Product Review, by Gary Simon.  Presented with the unique opportunity and resources to take a completely fresh approach to business analytics these veterans of the CPM sector decided to leverage their deep experience of formerly supplying one of the most successful budgeting, planning and forecasting products of its day to develop from scratch the next generation of performance management system.

CONTENTS

 

INTRODUCTION

THE BENEFITS OF THE CLOUD ARE WELL ESTABLISHED

THE TRADITIONAL APPROACHES HAVE LAGGED BEHIND

The CPM approach

The spreadsheet approach

ANAPLAN REACHES NEW HEIGHTS – THE ‘MARE’S TAIL’ OF CLOUD COMPUTING

One environment

‘In memory’ computing

Multi-threaded processing

Keeping the modelling logic simple

Keeping lists clean

Excel familiarity

Simplicity of pricing

SO WHAT DOES ANAPLAN DO?

Initial set up

Security 

Modules

Charting and DashBoards

Using the model

Workflow

SUMMARY

 

 

 

 

INTRODUCTION

In recent years the world has faced unprecedented levels of change.  Geo-political, economic, business and regulatory change have combined to create a ‘perfect storm’ in which organisations of all sizes and hues struggle to maintain their footing, accurately forecast performance and execute on their strategy.

Dependable business information is the key to maintaining corporate composure against the backcloth of constant volatility and turmoil. Indeed, as companies face more torrid conditions they seek to forecast performance more frequently in order to gain early insights into trends and factors that could change the course of their fortunes. Whether a market is rising or on the wane business analytics is crucial to taking the right decisions. Yet few companies can claim confidently to have the right information, in the right place and at the right time. Why not?

Despite huge investment in ERP, Business Intelligence (BI) and Corporate Performance Management (CPM) systems organisations still find it extraordinarily difficult to provide cogent and actionable information on which management can take decisions. Management reporting processes are frequently fractured and ill-defined, exacerbated by complex systems architectures held together with thousands of spreadsheets.

A key failing has been the complexity, inaccessibility and cost of large scale performance management systems some of which were designed more than two decades ago. Many of these so called suites of software have been ‘thrown’ together as a result of successive acquisitions and despite efforts to integrate products from different stables they remain inefficient, ‘clunky’ to use and expensive to maintain.

Added to which an overreliance on spreadsheet-bound processes presents its own set of challenges. Business problems are generally multifaceted and hence multi-dimensional (time, geography, product group, currency etc), frequently requiring decision makers to take complex views of performance across the enterprise.  The two dimensional spreadsheet is ill-equipped to support such deep analysis. A lack of process support allied to the inability to manipulate and report on large volumes of data ‘on-demand’ severely limits its usefulness as an analytical tool.  So is there a better way?

The historic failings of the performance management industry are familiar territory to the founders of Anaplan, a new cloud based analytical platform and the subject of this product review.  Presented with the unique opportunity and resources to take a completely fresh approach to business analytics these veterans of the CPM sector decided to leverage their deep experience of formerly supplying one of the most successful budgeting, planning and forecasting products of its day to develop from scratch the next generation of performance management system.

THE BENEFITS OF THE CLOUD ARE WELL ESTABLISHED

The business benefits of the so called “cloud” are well established and attractive to businesses of all sizes. Contemporary research frequently points to the rising popularity of the cloud as a computing platform. It is not difficult to understand why.

The notion that somebody else can do the ‘heavy lifting’ when it comes to provisioning applications and infrastructure is appealing for organisations that wish to focus on their core business and avoid the distractions of information technology.

In essence operational responsibility is ceded to a third party organisation that maintains the application in the cloud, i.e. off-promises over the web in a dedicated and secure computing facility. This confers a number of advantages over traditional on-premise approaches.  For a start, users can access the applications using nothing more than a web browser on a low specification computer, laptop, mobile device or smart phone and the applications are available on-tap 24/7 from anywhere in the world. This freedom to access applications on demand is not only hugely convenient but also has advantages for organisations with mobile workforces.

It also benefits organisations with unpredictable or ‘lumpy’ growth. The infinite scalability of the model means that adding another batch of users does not require additional investment in infrastructure in advance since this is borne by the supplier. Furthermore, the cost of distributing the application more widely (an important consideration in business analytics) can be quantified with a high degree of certainty and extra capacity purchased and brought on stream only when needed. Valuable in-house IT resources are liberated from maintaining, upgrading, securing and supporting applications hosted in the cloud leaving them more time to devote to legacy systems.

THE TRADITIONAL APPROACHES HAVE LAGGED BEHIND

The CPM approach

Despite the overwhelming advantages of the cloud, many traditional CPM vendors have lagged behind. They have been slow to engineer their applications for the cloud and many have simply re-purposed existing applications inefficiently for the cloud rather than developing them specifically (as Anaplan has done) to take advantage of this more agile environment.

Part of their reluctance to embrace the cloud fully may be rooted in the erosion of the more traditional software license model. CPM suites can cost hundreds of thousands of dollars upfront with ongoing annual maintenance charges ranging from 15 to 20 percent.  By contrast, cloud vendors typically charge a small rental per user, although as discussed later, Anaplan has taken a more innovative approach to this area as well.

But the biggest drawback of the large CPM suites is that they are an amalgam of different solutions acquired over a period of time from different suppliers. For example, it is not uncommon to find in some suites that the cornerstones of CPM, i.e. budgeting, planning, forecasting, financial consolidation and reporting are drawn from completely different origins.

Over time the traditional vendors have attempted to integrate the different solutions they have acquired but inevitably this is inefficient and presents significant challenges for customers trying to resolve different versions of legacy solutions.  The most fundamental requirement of an analytical platform is that each of the CPM applications should share the same data and metadata (structural information such as account codes, organizational hierarchy, cost centres).  This is not only vital to preventing wasteful duplication of data but it also crucially ensures the integrity of the underlying data, i.e. consistency of information across business processes and in all reporting dimensions. A unified platform also lends itself to a common user interface, easier reporting and greater staff productivity - something that the large CPM vendors frequently struggle to provide. This is most evident in the difficulty that many organisations experience in trying to link their operational and financial plans. The fractured nature of traditional solutions reinforces barriers between different functional areas of the business denying users complete visibility of their processes and rendering collaboration virtually impossible.

THE SPREADSHEET APPROACH

Designed as a personal productivity tool, spreadsheets are ill-equipped for the heavy processing demands of a performance management environment. They quickly become overburdened with data and are unwieldy to manage and maintain. Business logic is defined in complex algorithms and macros which are difficult to understand by anybody other than the original developer and this exposes an organisation to considerable operational risks, such as the inability to maintain a critical application, or the risk of error.

Limited pivot tables are a poor substitute for multidimensional databases and the inability to drill down, ‘slice and dice’ data, renders spreadsheets inappropriate for anything but the simplest of analytical requirements. Yet it is important not to lose sight of the simplicity of the spreadsheet and the ease with which it is possible to build a useful model. Anaplan seeks to replicate the ease of use of the spreadsheet but without compromising analytical capability and control.

ANAPLAN REACHES NEW HEIGHTS – THE ‘MARE’S TAIL’ OF CLOUD COMPUTING

Armed with two decades of business knowledge serving the CPM market Anaplan’s founders set about creating a new paradigm for the way that performance management should be deployed, leveraging considerable advances in technology to take their product into new realms.

So what have they done differently? What were the guiding principles in Anaplan’s ‘blueprint’ for the future?

One environment

The centrepiece of Anaplans design is that the business model for an entire organisation should be created in one computing environment and probably in one model. At a stroke this overcomes the limitations of other systems that duplicate data and metadata. One model, shared by all applications (budgeting, planning, forecasting, reporting) means that there is only one place to visit for transaction data (usually balance level information) and the metadata which describes the structural information about the organisation. This means that provided they have the appropriate security permissions, different functions share in the same information and that there is no scope for misunderstandings or contention in the use of data.

‘In memory’ computing

Considerable advances in raw computing performance enable information to be held in memory – available for immediate use – rather than reading or writing it mechanically from a hard disk. As such ‘in memory’ processing is a much quicker process and is particularly valuable in a complex multi-dimensional modelling environment that requires instant recalculation of billions of cells at a time. This capability gives Anaplan a significant edge over traditional systems that struggle to return adequate response times with high density models, i.e. models in which the majority of cells in all dimensions are populated with values. The step change is performance is quite startling. A model of 150 million cells (roughly equivalent to 150 massive Excel Workbooks, say 100 sheets per workbook, each containing 200 rows and 50 columns and around 25Mb per file) re-calculates with impressive speed over the web.

The ability to recalculate such massive models at spreadsheet-like speed means that unlike traditional systems that may require, an organisation’s 3 year plan to be split over several models (to sustain performance) it is often feasible and practical in Anaplan to hold all of an organisation’s information in a single model. As a consequence it is easier to affect instant changes in the model since there is only one place to make the amendment.

But the overwhelming advantage of a single large model is that it allows different functional areas to participate in the same model (or selected areas of it) and automatically promotes a joined up approach so that that processes which straddle different operational areas are interleaved.  For example a sales plan, can be tied into a production plan (to ensure that there are sufficient quantities of product to sell in the right mix) and to a resource plan to confirm that there are sufficient sales personnel to meet targets. In other words a single model can bridge the sales, production and HR functions, with each of them contributing valuable insight into the projected outcome.  Finally, a financial plan can be seamlessly bound into the other operational plans to provide a level of consistency that traditional planning systems find difficult to match.

Multi-threaded processing

The ability to take advantage of multiple concurrent processes is another major example of how technology advancements have been employed to good effect in Anaplan. Multiple processes working in parallel work much faster than conventional approaches and even though the user is unaware of the processing power being deployed in Anaplan’s data centre – which is the of course the whole point of cloud computing - the user is nevertheless a major beneficiary.

Keeping the modelling logic simple

A founding principle of Anaplan is to keep the construction of business rules such as validation logic and calculations as near to ‘natural language’ as possible, pitching model creation at the competency level of the average spreadsheet user. The use of plain English to construct logic in Anaplan plays a vital role in allowing users with a modest level of knowledge to specify new business rules, to simplify existing spreadsheet rules and to readily review the logic within an Anaplan model.  The latter point enables almost any user to take over the maintenance of an Anaplan model.

Keeping lists clean

The temptation when building models is to develop intricate calculation rules attributable to specific chart of account lines or members of other dimensions. However this hampers the productivity of model building and maintenance.  In Anaplan the calculations are separated from the underlying structure of the model, so that sections of account codes, the time dimension, product groups and so on can be re-used elsewhere.  Uncluttered structures mean that it is easier to import information from other applications, or to integrate with other applications and models.

Excel familiarity

Model building in Anaplan should be readily familiar to Microsoft Excel users.  The grid like interface with tabs and the approach to specifying calculations would be familiar in concept to a moderately experienced Excel user. This allows the user population rather than IT specialists to take responsibility for building the business model and maintaining it.  The ability of end users to drive the development reduces development time and is more likely to lead to a system that is in-line with user expectations and business requirements.

Simplicity of pricing

An advantage of Anaplan’s offering in the cloud is that it is particularly scalable, which is especially important with business critical models, such as budgeting, planning and forecasting that benefit from high levels of user participation.  But how should organisations pay for this capability?

The accepted model of charging a fixed amount per user (per month) is a disincentive for growing organizations and those for whom engaging large numbers of concurrent users is essential. Furthermore, this approach does not reflect the way in which cloud vendors incur their costs. So Anaplan’s management decided that a better approach is to charge for usage (data volumes) and allow more or less unfettered access for general users of the system – personnel that use the reporting and data entry capabilities.  Model builders and administrators, so called “Analysts” are charged separately, as needed. This radical approach drives widespread adoption and allows organisations to benefit immediately from the insights and collaboration that this brings. Furthermore, the ability of automated budgeting to drive out waste from the process and accelerate planning cycles liberates highly qualified and expensive analyst time to focus on business performance rather than marshalling hundreds of spreadsheets.

SO WHAT DOES ANAPLAN DO?

The popular rise in cloud based applications with both consumers and businesses has set expectations that ‘on-demand’ software should be easy to establish, use and maintain.  So ‘ease of use’ and configuration is at the heart of building Anaplan models. 

 

Fig 1 Applications are maintained entirely in the cloud

Anaplan 1 Settings.jpg

Initial set up

The basic configuration of a model is housed in ‘Settings’ which defines the broad multidimensional structure of the model, for example fixed dimensions, such as the time periods in which it reports and user definable ‘Lists’ which describe the other dimensions in which the business operates.  It is this multi-dimensionality which immediately distinguishes the Anaplan approach from a two-dimensional spreadsheet model.

‘Versions’ provide another perspective of the business allowing it, as the name suggests, to collect data relating to different iterations of the model, such as actual, budget, reforecast, reforecast 2.  Anaplan models are maintained exclusively over the web making new versions, or any other structural changes instantly available to the whole user population - something that historically has been difficult (too slow) to achieve in a cloud-based environment.

Security 

Security permissions are especially important in Anaplan since the scalability and power of the application means that a single model can potentially cover the entire enterprise.  Access to the application is governed by the “Users” setting which defines user roles, allocates them to different parts of the model (modules) and prescribes what actions are permitted.

Modules

Modules represent unique views of the business, i.e. combinations of, dimensions (“Lists” in Anaplan parlance), time periods and line items allowing users to glance at business results from different perspectives as well as acting as data entry templates.

The use of modules in concert with the security settings described above allows a designated administrator to partition the model to give different classes of user their own window on the enterprise.  In this way Anaplan resolves the perennial problem of having to build different models for different groups of users.  Where localisation of a global model is required subsets of lists can simply be added to selected lists.

Fig 2. Creating modules is as simple as dragging dimensions onto a grid and specifying line items

Anaplan 2 Modules.jpg

Built-in help text highlights how to use the system at key points (by hovering a mouse over key features) with a hyperlink to a web-based repository of help, called “Anapedia”, for further details.

Fig 3.0 Help text describes how to populate a model by copying data across

Anaplan 3 Help.jpg

Once the module is created it is possible to insert calculations, which as noted below are in natural language. For example, to calculate profit in a cell a user simply enters the formula “sales – cost of sales” or similar.  By toggling the module between its active (ready to use) mode and “blueprint” mode it is possible to see at a glance how calculations are derived – something that is very difficult to achieve in Excel and other vendors’ systems. Data entered manually into cells can be copied automatically across a row of the grid or it can be imported and uploaded from an external data source such as an Excel .csv file, or even SalesForce.com.

Charting and DashBoards

Charts and Dashboards can be generated directly from modules by simply highlighting the rows and columns to include in the display.  Anaplan supports pie charts, line charts and histograms building them at impressive speed across the internet.  These too can be added to Dashboards so that the organisation can build up comprehensive views of performance tailored exactly to its needs.

Fig 4.0 Dashboards can be created on the ‘fly’, adding content to suit a particular purpose.

Anaplan 5 Dashboard.jpg

The dashboards are also ‘dynamic’ so that once created they are updated automatically and in real-time as the underlying data in the model changes.

Using the model

Once the set up is complete the model is immediately available for use.  A home page shows all of the modules and dashboards which can be viewed.  With the appropriate security permissions a user can simply enter or amend data in a grid or bulk upload data (see earlier) as appropriate.

A “filter” function allows the view of the module to be further refined applying Boolean logic to selections of lists to cut down the amount of data on view at any one time.  Pivoting the grid, i.e. transposing rows and columns (from the available choice of dimensions) to give a different view of the organisation is simply a matter of dragging dimensions on and off the grid using the same interface as that used for building a new module (see above).

Fig 5.0 Pivoting data in Anaplan is intuitive and instantaneous.

 Anaplan 6 Pivot.jpg

Workflow

Anaplan incorporates a straightforward workflow system that allows an administrator or manager to track the progress of data entry across dimensions and prompt individuals or groups of users (by email) to complete the next phase, or to advise them of a deadline for data submission. In this way the system usefully encourages collaboration between users and allows the status of a module to be assessed at any point in time by reviewing the simplified colour coding ‘traffic lighting’ system that denotes the status of each phase.

SUMMARY

The marketplace for business intelligence and performance management applications is characterised by traditional suites of software that were designed for a different era. Today’s uncertain business environment means that decision makers require analytical solutions that are instantly accessible and amenable to change.  The cloud provides an attractive setting for analytics because of its convenience and the ability to hive off infrastructure to a third party.  But not all vendors have been able to turn the cloud to their advantage.  Saddled with old architectures, a hotchpotch of loosely integrated applications and a heavy reliance on traditional licence fees their solutions are looking increasingly uncompetitive.

Anaplan’s founders, with a deep heritage in analytical platforms have taken the opportunity of cloud computing to take a fresh approach to the problem, incorporating the latest thinking and technology. Founding principles include a unified platform, in-memory computing and multi-threaded processing to ensure a fast level of performance - something that has eluded earlier generations of web based solutions. As such Anaplan can support very large models and populations of users. At a stroke this allows managers to collaborate across complete processes in a single business model, transcend functional barriers and link operational to financial plans.  But they have also made the system very intuitive and easy to use putting the creation, maintenance and use of application within the grasp of anyone with modest Excel skills.

The ‘icing on the cake’ is a pricing model that breaks with convention and allows organisations to pay for what they need and to grow their applications in sympathy with their organisation’s development rather than investing tens of thousands of dollars up front.

Overall, Anaplan is a refreshingly new approach that goes beyond just analytics in the cloud.  It sets a new paradigm for the way that business applications should be created, used and purchased.

 

 

 

About FSN

FSN Publishing Limited is an independent research, news and publishing organization catering for the needs of the finance function. This white paper is written by Gary Simon, Group Publisher of FSN and Managing Editor of FSN Newswire. He is a graduate of London University, a Fellow of the Institute of Chartered Accountants in England and Wales and a Fellow of the British Computer Society with more than 27 years experience of implementing management and financial reporting systems. Formerly a partner in Deloitte for more than 16 years, he has led some of the most complex information management assignments for global enterprises in the private and public sector.

Gary.simon@fsn.co,.uk

www.fsn.co.uk

Whilst every attempt has been made to ensure that the information in this document is accurate and complete some typographical errors or technical inaccuracies may exist. This report is of a general nature and not intended to be specific to a particular set of circumstances. FSN Publishing Limited and the author do not accept responsibility for any kind of loss resulting from the use of information contained in this document.

 

 

 

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