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Anaplan, a provider of cloud-based business planning software for sales, operations, and finance and administration departments, recently implemented its new Winter ’14 Release for customers. This release builds on my colleagues analysis on their innovation in business modeling and planning in 2013. Anaplan’s primary objective is to give companies a workable alternative to spreadsheets for business planning. It is a field in which opportunity exists. Our benchmark research on this topic finds that a majority of companies continue to use spreadsheets for their planning activities. Almost all (83%) operations departments use spreadsheets for their plans, as do 60 percent of sales and marketing units. Yet the same research shows that satisfaction with spreadsheets as a planning tool is considerably lower than satisfaction with dedicated planning applications. But despite general agreement in companies that the planning process is broken and spreadsheets are a problem, companies seem reluctant to break the bad habit of using spreadsheets. This conclusion suggests that either switching to dedicated software hasn’t been easy enough or that the results of doing it have not been compelling enough to motivate change. Anaplan intends to address both of these issues.
Anaplan designed its software to support business planning integrated across an enterprise in a practical way that’s an attractive alternative to spreadsheets. Its HyperBlock architecture is a hybrid of relational, vertical and OLAP databases with in-memory data storage and calculation. To translate that technology-speak into a plain concept, it’s easier than ever for those trained in spreadsheet modeling to transport their skills to a dedicated planning application. Anaplan simplifies the process of creating a planning environment that can be used by sales and marketing, finance, operations – any part of a company. Individual business units can create their plans without IT involvement. Customer companies don’t have to move all plans at once to Anaplan, but when they do, integrating all of the plans into a unified company view is straightforward.
The bulk of the changes in the Winter Release are aimed at refining and improving the user experience and facilitating model creation and updates. One of the most obvious changes is in the individual user interface, which opens up with “model tiles” representing each of the plans each individual has in his or her portfolio. It’s fairly typical for individuals to participate in multiple planning activities. Our benchmark research on business planning finds that, on average, employees participate in five sets of plans. Each of these may have multiple versions, and some may have subsidiary plans to a main plan. Some plans may be current while others are no longer used and are archived. The new interface makes it easier to organize this collection, making the most important plans readily accessible. This enhancement and others that will follow reflect Anaplan’s intent to incorporate ergonomics in the design of its software.
Choosing a model opens a dashboard relevant to the specific role of the user and the plan he or she has selected. Organizations can configure the layout of the dashboard, which provides high-level summarized information and different ways of navigating into and around the details in the plan. Navigation is now role-based to enable users to zero in on only those models and dashboards relevant to their function or role. Anaplan can be configured to drill down to specific items or transactions if necessary. Doing this in a multidimensional model is not always straightforward. An Excel add-in is a must for any planning application because it provides a familiar user interface that enhances productivity while eliminating the disadvantages of desktop spreadsheet, since the individual is working with a formal application and an advanced database environment. Anaplan’s Winter Release simplifies installation of the add-in. All of these enhancements go beyond a simple “consumerization” of business software – layering a snappy gloss onto software that remain tedious to use – to provide a more satisfying working environment.
Another notable addition in the Winter Release is “intelligent mapping,” a useful way for one person to create templates of components used in a model (say, all of the costs of adding a store, doing a marketing campaign or performing heavy maintenance on capital equipment) that others can use. Since organizations tend to handle most processes in much the same way, the operational and financial aspects of those processes are likely to be modeled in almost exactly the same ways. Being able to quickly copy a useful exemplar and easily customize it to an individual’s specific needs saves time. Moreover, making it simple to achieve consistency can improve the effectiveness of planning. Using intelligent mapping needn’t be the product of a conscious effort to create a template, either. An equally likely use is when someone looks at a plan created by another business unit and sees some component in that plan that’s useful to his or her model. Intelligent mapping makes it easy to copy and modify it to suit the need.
Effective collaborative planning is a structured dialog. Structured because it involves hard numbers and a dialog because it involves a back-and-forth exchange between executives and managers to mediate between the results desired and what’s feasible. Toward that end, Anaplan has added a capability in its models it calls a “hold,” which fixes one or more values in the model while the rest are adjusted. This simplifies the process of setting month-by-month, line-by-line objectives because it enables executives to impose selective constraints (minimum or maximum values such as sales by a product line or advertising expense) while adjusting assumptions quickly to assess whether the resulting changes are realistic. Fixing and releasing holds iteratively simplifies and shortens the process of assessing specific details to achieve a plan that is workable and agreeable.
For analysts that create or support planning models, the Winter Release adds a floating formula editor. This is a small but important element because it improves the productivity of modelers – typically a constrained resource in most companies.
The new release further advances Anaplan’s strategic objective to provide corporations with a tool that reduces the amount of effort needed for collaborative planning in any part of the business and enhance the value of this planning by better aligning business unit objectives with market opportunities. Our planning research finds that companies have many plans but, other than the annual budget, very little of it connected and coordinated. Anaplan focuses on collaborative business planning as a way to differentiate its offering from budgeting tools – a mature market with entrenched competitors. Its objective is supported by the underlying architecture of the software, which is designed to lower the barriers to switching from spreadsheet planning and budgeting as well as generating greater business value from a company’s planning processes.
Having said all this, I have to add that making it easier not to use spreadsheets is necessary but insufficient to alter corporate behavior. Companies need a business incentive to change. Anaplan’s use of in-memory technology provides that incentive because it adds considerable value to the planning process. Since the software can process even complex models with large data sets in seconds, in-memory computing can change the nature of planning, budgeting, forecasting and reviews. For example, the technology enables organizations to run more simulations during a planning or review session to understand trade-offs and the consequences of specific events. It can change the focus of reviews from what just happened to what to do next. Rather than relying on intuition or simplistic scenarios to make that decision, in-memory systems support structured, numbers-driven conversations to develop the details of a plan. This is the breakthrough to any planning or budgeting process that in-memory processing provides and a good reason for businesses to make the leap to more capable software.
Anaplan’s product doesn’t do everything. For example, companies that want all of the rigor that goes with a formal sales and operations planning effort should focus on applications dedicated to this process. And Anaplan doesn’t have all of the features that dedicated project planning software can provide. That noted, I recommend that companies that are looking for a dedicated application for general business planning and financial budgeting consider Anaplan. This is especially true if their objective is to have a planning environment usable by all parts of the business that can serve as the integration point for all business planning. We have found their customers have made significant progress to improving the modeling and planning which is why it received the 2013 Ventana Research Leadership Award. If you have not taken a look at Anaplan it is well worth your time.
Robert Kugel – SVP Research
Tidemark announced the release of the Fall 2013 version of its eponymous cloud-based application that my colleague assessed earlier in 2013. This new release adds capabilities for labor planning and expense management as well profitability modeling and analysis. These two areas of planning and analysis are common to all businesses. The new release adds features that enhance the software’s ability to do sales forecasting, initiative planning and IT department planning. The company continues to refine its modeling capabilities to make it easier for people engaged in the planning process to translate their expectations and concerns into a quantified view of the future. For example, users now can build models using natural-language modeling. The objective is to eliminate the need for help from business analysts or experts trained in the use of a tool and immersed the details of the IT plumbing, such as the metadata used for specific general ledger accounts or operational data.
The Tidemark product fits into our business planning software category. It enables rapid creation and frequent updating of company plans by connecting the individual plans of business units in a unified view. It has workflows to manage periodic updates to an integrated plan and analytics to support the planning and review phases of the process. It offers engaging visualization and reporting functionality that enhances understanding and insight in developing plans as well as communicating results. It has built-in social collaboration capabilities in context because business planning requires collaboration.
Direct integration of individual business unit plans is a key capability of business planning software because it promotes coordination across a corporation. Companies in our research that plan using summarized business data much more often reported a lack of coordination than those that directly link their plan details: 27 percent of those that summarize data experience a lack of coordination in reacting to changing business conditions, compared to just 7 percent of those with direct links. As well, to facilitate planning among today’s dispersed organizations, Tidemark’s mobile capabilities support sharing plan creation and review on such devices.
One distinctive aspect of dedicated business planning is that it handles the operational and financial aspects of a plan in parallel. Traditionally, a budget-focused planning process conflates the two to produce a financial plan. Financial planning (budgeting) and operational planning have fundamentally different objectives, but they must be connected. Budgeting is about financial control; it’s about not failing. Planning aims at finding the best way to succeed. You can’t budget effectively without a plan, and you can’t plan effectively unless you consider fiscal constraints. But the two shouldn’t be homogenized, which is the way almost all companies do planning and budgeting today. Business planning software enables executives and managers to understand both the operational and the financial consequences of their actions, but it emphasizes the things that the various parts of the business focus on, such as units sold, sales calls made, the number and types of employees required or customers served.
The business planning category has emerged in response to the growing sophistication of users, especially as baby boomers are replaced by generations of workers who have more demanding expectations of how software should work. Complementing this trend are improved technologies, which already are having an impact on how companies do business planning and forecasting. The cumulative effect of a decade of advances have brought traditional processes to a turning point that will profoundly change how businesses look to the future and decide their courses of action. Tidemark was founded to produce technology to help organizations increase insight, accountability and agility by addressing the shortcomings of using budgeting as a management tool, especially when it is performed using desktop spreadsheets.
The user experience figures heavily in Tidemark’s design. It enable individuals to configure the applications to work the way they want them to in the context of the business, adapting processes, data collection and information presentations to meet the specific requirements of an organization. User interfaces follow this pattern. Collaboration, for example, is set up to understand which individuals the user will interact with in a particular context. As the user moves from task to task, that list will change. This capability is consistent with what I expect to become the norm in social collaboration in enterprise applications.
Tidemark’s competitive strategy is to push as much as possible of the planning process out to individual business users. The objective is to collect all relevant information in a context that helps a business unit plan and execute better while giving executives an integrated view of the individual plans. Devolving the modeling process and automating data movements and aggregations allows those in the financial planning and analysis (FP&A) function to devote more time and thought to the analytical aspects of their work, something I call “putting the A back in FP&A.” To do this, Tidemark aims to
facilitate the process of translating managers’ thoughts and expectations into models that enhance the value of the forward-looking information they can provide senior executives. This approach also promotes greater accountability because the outcome is the business unit’s plan, not allowing users to think of it as the finance department’s budget. Tidemark also places configuration and modeling into the hands of the users. Different parts of the business plan in different ways, and this differs between businesses. Moreover, as business and economic conditions change, the planning process must adapt in ways that suit the needs of those doing the planning.
Tidemark’s main competitor today is the status quo. Companies continue to use their budgeting process as a proxy for integrated business planning, which is only indirectly supported by individual business unit plans. This market is dominated by desktop spreadsheets and range of mostly legacy financial performance management (FPM) software, which includes dedicated planning applications from large vendors as well as smaller ones along with cloud-based vendors. Tidemark is changing the conversation from a finance-centric approach to one that support planning operations and finance in parallel – in short, business planning.
Companies that are dissatisfied with their current approach to business planning and are looking to improve what our research finds in a third to almost half of organizations as important like accuracy, insight, speed and alignment of their business planning should consider business planning. When they do, they should consider the kind of software that will enable them to support a better process. We recommend that they include Tidemark in their evaluation.
Robert Kugel – SVP Research