Forecasting: A 'Disruptive Technology' in the Cloud

Oh, no, not another one. As new enterprise-focused technologies and delivery models like cloud computing, mobile apps and software-as-a-service become part of the mainstream, CFOs are getting inundated with information about revolutionary ways to streamline and enhance financial management.
 
They would be remiss in their duty to continually improve finance by not listening to the spiels, of course. And the latest entrant in Asia sounds a bit different. San Francisco’s Anaplan describes itself as a “provider of cloud-based modeling and planning solutions for sales, operations, and finance.”
 
Established in 2007, the company formally launched its business in the region in April. “We’re a disruptive technology,” says Anaplan President and CEO Frederic Laluyaux, who was previously Senior Vice President and GM for enterprise planning management, governance risk management and compliance, and finance line of business at giant enterprise software incumbent SAP.
 
He and Samir Neji, Anaplan’s Managing Director in Asia, spoke to CFO Innovation’s Cesar Bacani. Excerpts:
 
Tell us about Anaplan.
Frederic Laluyaux: Our company was founded by Michael Gould, a Briton who worked for many years for Adaytum, which specialised in planning solutions and got sold to Cognos. It’s now Cognos Planning Solutions, and was itself sold to IBM. In 2007, Michael left IBM because he wanted to be completely free to develop the next-generation modelling and planning tool. He wanted to start with a blank sheet of paper.  
 
He basically locked himself in his house in the UK for more than three years and came up with the core engine of Anaplan. In 2010 he reached out to the former CEO of Adaytum, Guy Haddleton, and they launched Anaplan.
 
I joined the company from SAP in July 2012. We’ve since signed lots of big accounts; the company doubled its size in 2012.  In Q1 this year, we’ve doubled the size of the company again. We’ve opened offices in Singapore, in Sweden, in France, in the UK from the go-to-market perspective.
 
We’ve had a big Series C of financing with a late-stage venture firm called Meritech. They’re one of the most prestigious Silicon Valley investors; they invest only in companies with real revenues and real products, examples being Salesforce.com and Facebook. It was an important step because it pushed us into a different category.  
 
And now, we’re in full rollout mode. We’re approaching a hundred customers. We’ve about 200 employees. We’re a global operation; we’re really scaling.
 
What exactly does Anaplan offer to the enterprise?
Frederic Laluyaux: You have to go back a little to understand what we’re doing. The traditional application landscape for the enterprise is the transactional layer, which is your ERPs, and then on top of that, you’ve got different types of databases – the OLAP databases, the OSTP databases – and on top of those databases sit all your applications. On top of that sit your BI [business intelligence] layer.
 
What’s happened in the market in the last 20 years is that the ERP vendors bought everybody in the stack – they bought the OLAP database makers, they bought the planning and the BI. The focus turned to integration, in trying to make the integration between all those pieces and layers work, and also on doing incremental small improvements at each level of the stack.
 
But if you look at planning, there’s been really little improvement over the last 15 years on how planning delivers value to companies. Fundamentally it’s still financial planning at heart. Financial planning is great, but if you look at the complexity of the planning process in a company, it goes between sales and operations, it goes between marketing and finance. It’s not just finance.
 
Finance is working quite well with consolidation, with reporting, all of that has been quite well addressed by the existing applications from Oracle, SAP and IBM . . . But when we look at our customers today, large and small companies, they’re still using Excel and home-grown systems to plan their operations. Everything outside of the core financial process still has gaps.
 
So that’s why we have come with an innovation called hyperblock. Instead of doing the small improvements of the planning application, why don’t we collapse the entire stack? The result of this is a single environment that allows the customer to work at the transactional level, to work in the multi-dimensional level that has all the core planning functionalities integrated, and has the business user layers completed integrated as well.
 
So when you look at a modelling problem or a planning problem that used to take months to set up, we have a level of immediacy that’s completely unmatched because we’ve got the flexibility and the power and also the ability to work right at the transactional level. Normally when you do that in the planning process, you have to integrate all the different layers and applications, and that is very rigid and very difficult to set up and maintain.
 
In Anaplan, you can create your model, you can have this user interface, the business user reporting, all contained in our cloud solution. So if you log-in into Anaplan.com, you access the different workspace, you load your data, you build your model, you collaborate with your colleagues on the process, you have your workflow – all of that is contained in our Anaplan application.
 
So what happens to my ERP system that I bought for millions of dollars? Do I just throw that away and use your integrated solution instead?
Frederic Laluyaux: Not yet; not right now. You use your ERP to make your processes, to do all the stuff that’s pure transactional . . . The ERPs are very good at managing processes and transactions. What they’re not good at is planning.
 
They have one version of the truth and that’s the one that they swear by and that is what you work with. But anytime you say, hey, what if I increase the number of sales orders in that area of my business? What if I change my sales territories? That’s where we come in.
 
The sales organisation, for example, has a process that will validate that a proposal is compliant with the internal discounting policy. You can put that specific process into your ERP or you can allow the users to do the validation straight in Anaplan, so you don’t ‘pollute’ your ERP.
 
Using the memory engine in Anaplan, you get that done, and once it’s approved, then you can push it back to the ERP for the order to be properly processed with your ordering system and so forth. So Anaplan is very complementary to the ERP.
 
If you look at our customers – HP, McAfee, Diageo, all those big companies that work with Anaplan – they have their ERP running, and on top of their ERP, they have their Anaplan.
 
Is it possible, if I’m starting my company, a start-up, that I just subscribe to Anaplan? I don’t need to invest in an ERP system at all?
Frederic Laluyaux: It is possible. We as a company, we use Anaplan for a lot of things. Basically most of our modelling and planning is done on Anaplan; all sales transactions are managed in Anaplan.
 
But I don’t want you to think that Anaplan is going to be, for example, a replacement for ERP when it comes to the supply chain, for example. We really focus on the planning and the analytics. We don’t want to be replacing the ERP today. That’s not where we want to be.
 
Samir Neji: We’re not trying to re-innovate anything within the order-to-cash application, which is basically ERP. Most of the Asian organisations are struggling with a ton of Excel around  what we can call their reporting, their planning, their decision support.
 
There has been a huge effort to bring these into analytics or planning environment in the last decade. We know that there have been a lot of failure rates within that process, mainly because these were solutions that were bought with the vendors trying to integrate these products and they have not worked well for the organisation.
 
So what Anaplan has done is to replace that layer outside the ERP. We are looking at trying to replace and help these organisations to bring about an immediate and ultimately correct decision support environment which surrounds the ERP gaps.
 
What about risk management, particularly around treasury management?
Samir Neji: We have not done much activity around risk yet, but on the TRM side, Anaplan can be an excellent alternative. We are able to do a lot of treasury functions within Anaplan because of the flexibility which we offer to customers. We are building up apps and you will see us coming out with a lot of apps [through partners such as Accenture].
 
How do you differentiate yourself from others in your space?
Samir Neji: To be very short and crisp, it is our immediacy . . . In my earlier world [with on-premise vendors], it usually took months to do TRM work for the customer.  We could get it done for six to eight weeks [with Anaplan]. The immediacy is what the CFO wants.
 
The second [differentiator] is the power of the calculation engine and how it has been built to be consumed by the business user rather than the technology guys . . . The MD of management consulting at Accenture said to me: I just logged in yesterday and today I have been able to demonstrate the cause to the customer. That’s the level of ease of use.
 
So if I sign on today, tomorrow I get my planning and modelling done?
Samir Neji: To be realistic it will take four weeks, five to six weeks, maximum.
                   
It will help me understand better how Anaplan services work if you were to tell me how the company itself uses them.
Frederic Laluyaux: It’s used in multiple places. We just raised US$35 million [from Series C venture capital investors] . . .  When you do that, you have to show a plan and you have to show different scenarios. The whole modelling and planning of how the company is going to grow, the p&l, the balance sheet, the cash flow all was done in Anaplan.
 
Today, all our actuals, our employees, transactions, billings, HR, all of that is struck in Anaplan. On top of that, every Monday morning we have our leadership call and we literally track all our metrics in Anaplan. One by one, sales, marketing, finance, HR, development we track the core metrics of financial and operations . . . We are using Anaplan basically in every area where normal companies will still be using Excel.
 
In your dealings with your customers, is security still a concern with their data being stored in the cloud?
Samir Neji: Yes, security is a concern when we speak to customers, but most of them have gone past it. This is our business and we have tons of certifications on our data centres and we have a dedicated group taking care of the entire security with respect to the database and apps. What we do for customers is we link up the security team within the customer IT and our security, and they have a discussion and they go through all the technology stuff.
 
Interestingly, McAfee is our customer and they’re one of the largest tech companies in the world. They have tons of data sitting in our system. They have gone through an entire sweep of all our security certifications and all the security stuff which is related to that.
 
Are there any metrics comparing how much a company would have saved if it goes with Anaplan instead of an on-premise model or a hosted solution?
Samir Neji: We do an assessment and we promise a six months’ ROI.  
 
Frederic Laluyaux: The value of Anaplan is not really just because we’re in the cloud. MacAfee, for example, they actually had a 2% margin improvement immediately after implementing Anaplan. Diageo spends US$1 billion every year allocating money to promotions and running promotions. I can’t share the number, but [better planning and modelling has brought them] an incredible amount of millions of dollars.
 
There’s a value in being on the cloud versus being on premise, but with Anaplan the bulk of the value comes from the algorithm itself.
 
Are there arrangements where I will only pay you on the ROI I get out of it? If I don’t get ROI, I don’t need to pay?

Frederic Laluyaux: We haven’t done that. But with Anaplan, you can start small. When I was with SAP, the ticket to entry was extremely high. Here, the smaller projects start at US$50,000. We are doing US$1 million deals, but we can also do smaller ones. That’s the beauty of Anaplan.   

 

Photo credit: Shutterstock.com 

 

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