Cloud-based CPM vendors gather in London – talk to FSN

4th May 2012

Last week two of the leading lights in Cloud-based CPM were in London for a budgeting, planning and forecasting conference.  Jon Kondo, CEO of Host Analytics and Guy Haddleton CEO of Anaplan talked to Gary Simon, FSN’s managing editor about their recent successes and plans for expansion as the CFO’s become more switched on to a Cloud-based approach to enterprise performance management.

You don’t need any ‘magic rectangles’ to describe the capabilities of these two organisations.  FSN has been following them since their foundation around 3 years ago.  It was clear then that we were entering a new era of computing and whilst there were initial doubts about the wisdom of moving to the Cloud, (security of data, confidentiality, service levels) these concerns have all but evaporated.  Both vendors report significant gains, dispelling the notion that the Cloud is just for SMEs and start-ups.

What both businesses have in common is that they portray themselves as providers of CPM solutions first and happen to be in the Cloud, second.  It’s an important distinction because although both Host Analytics and Anaplan have been written specifically for the Cloud these organisations have both sought to do things ‘better’ than the traditional on-premise solutions.  Contrast this with other vendors who have simply re-purposed existing products to run in the Cloud, carrying over old functionality and approaches.

The message hasn’t been lost on the market.  Host Analytics boasts customers such as GSK and NEC Europe, whilst Anaplan can point to recent success with McAfee.  These are substantial entities but both Kondo and Haddleton confirm that the decision to move to the Cloud is not driven by cost savings, as it was in the early days.  The key drivers for making the move are the modern capabilities that newer products in the Cloud can offer.  Foremost amongst these are a unified data model, the ability to scale to thousands of users and the ability to share data and processes, i.e. to collaborate within and between functions.  The latter has seemed particularly elusive in the on-premise world.

Mark Cohen, Vice President of Finance and IT, Thule Vehicle Accessories North America is a Host Analytics customer who has benefitted from a unified data model. “Before, we were lucky just to get the numbers. With Corporate Performance Management we get the numbers and the whole story. Budget meetings are now about the business, not about the integrity of information.”

Of course cost does come into the equation since the cloud vendors’ business model is a much leaner and efficient one.  But that doesn’t translate to skimping on resource.  Both vendors are aggressively expanding their workforces.  The difference lies principally in the lower cost of the applications over their useful life, the so called TCO (Total Cost of Ownership).  This is a complex amalgam of lower infrastructure costs, licence fee (charged on a subscription basis) and implementation costs. 

Kondo urges companies to look at this carefully.  “When in competition the largest vendors will often bundle their performance management offerings with other solutions to make the initial package attractive.  But organisations pay dearly in the end through very high consultancy and implementation costs.”  Kondo believes that the TCO of a Host Analytics offering can be just one third of a comparable on-premise solution from the traditional on-premise providers, such as Oracle, SAP and IBM.

Guy Haddleton adds, “The old way of doing things was to employ armies of consultants, which was very costly initially and every time a company wants to change something.”  What Anaplan seeks to achieve is to empower end-users in finance and other functions to take responsibility for the applications and be able to make changes to a business model themselves without recourse to anyone else.  “Put simply we take the flexibility of a spreadsheet and combine it with the scalability of an enterprise system whilst leveraging the power and collaboration of the Cloud,” adds Haddleton.

It seems to be paying off.  Bryan Bayless, VP GTM Finance at McAfee is responsible for financial oversight of the Enterprise Business division which accounts for about half of McAfee’s revenues. They recently installed Anaplan.  “The ROI is a no brainer. I’m used to project paybacks of 2+years, but this project was 2 months on a cash basis. If you take account of the resources no longer required and the IT costs we have taken out, then the ROI is at least 400 percent.”

So what’s changed?  Recent wins by both Anaplan and Host Analytics are legitimising the Cloud-based approach to CPM.  In the past it was unusual for a Cloud-based vendor to be included in the selection process for a performance management solution in a large enterprise but now it is the norm. 

Gartner Analyst, John Van Decker says, “Interest in SaaS-based CPM solutions is increasing, and many organizations that would not have considered Saas in the past are being attracted to the potential benefits of Saas.  Anaplan was recently selected as a Gartner Cool Vendor for 2012.”

 And with success gathering pace it will be interesting to see whether Cloud vendors will take significant market share.