The Enterprise Performance Management (EPM) applications market is riding on a wave of consolidations, heavy investments by customers and investors, along with a healthy dose of innovation.
Currently, the Big Three (Oracle with its ubiquitous Hyperion Planning and Essbase, SAP with its equally popular BusinessObjects and Crystal Reports, and IBM with its venerable Cognos brand for business intelligence and performance management) hold a combined 60% of the EPM market, but the space has seen a shift in sentiments as a slew of upstarts and challengers are rising to drive the end to end business process of financial planning, budgeting and forecasting to new heights.
Because of robust growth of upstarts like Anaplan, Adaptive insights, Vena Solutions and others, we are raising our estimate to 5.5% from 4.8% for the 2018-2022 forecast period, propelling the market to $3.2 billion in license, maintenance and Cloud subscription revenues by 2022. Additionally, the 2017 performance of many of these EPM vendors suggested that 2018 could be another strong year because of their increased recurring revenue stream. You can read more here for our continuously-updated report on the sizing of the EPM market as well as our definition.
In recent weeks, I have attended a number of events hosted by these upstarts including Anaplan with its Connected Planning approach, Infor with its fast-growing Cloud Suite featuring increased contributions from its Dynamic Enterprise Performance Management (d/EPM) product as well as Aera Technology for its use of artificial intelligence technologies to develop what it calls cognitive decision board with the goal of speeding up everything from supply chain planning to improved financial management.
In a nut shell, EPM is on steroids, capturing a legion of followers who are no longer satisfied with the traditional mix of budgeting tools, disparate data sources and reams of Excel files for their business planning and financial consolidation needs.
By turning to Anaplan for connected planning, Coca Cola captures demand signals and hand them off to suppliers to achieve forecast alignment as the beverage maker is now capable of analyzing 3.7 million transactions in as little as seven minutes, a process that previously could have taken it days or weeks to complete because of disparate data sources and systems.
As a result, companies are investing heavily in EPM applications. Travis Perkins, the Home Depot in the United Kingdom with nearly 2,000 stores, is investing tens of millions of dollars in a multi-year digital transformation project that includes an extensive portfolio of Cloud applications with Infor d/EPM as one of its key components for planning and forecasting. The New York-based Infor calls it one of the biggest Cloud deals in its history.
Similar transactions are expected to become more commonplace as fast-growing EPM vendors, armed with a flood of capital infusion from investors, are shoring up themselves with considerable R&D resources as well as go-to-market reinforcements.
Anaplan has nearly tripled the number of R&D resources over the past few years most recently by adding a team of 50 developers to its UK operations. The total headcount of Anaplan, which has gone through a series of management changes and additions over the past year, now stands at 1,000, up from 600 in 2016.
Meanwhile, Anaplan’s customer count has reached more than 850, up from in 2016, having won accolades from users in finance, sales, supply chain and other corporate functions across different verticals like consumer packaged goods, high tech and telecommunications. With $200 million in billings in its fiscal 2018, Anaplan could push past $150 million in total revenues by end of 2018, compared with $125 million in 2017.
With a recent addition of $60 million in new financing, Anaplan has bolstered its product offerings including greater emphasis on line of business connected planning, partnership ecosystem including OEMing optimization engine from Gurobi for use cases like airline schedule planning, as well as professional services capacity expansion with firms like Deloitte, which now has more than 300 consultants certified for Anaplan implementations. In total, Anaplan has certified more than 2,000 such consultants from systems integrators like Accenture and PWC, addressing one of the bottlenecks that hampered its growth because of a lack of implementation resources at the field level.
Frank Calderoni, who became CEO of Anaplan in early 2017, said he has instilled urgency to engineering and product teams over the past year, resulting in 40 enhancements that aim to realize the goals of connected planning. For instance, Anaplan customers are capable of layering machine-learning insights, KPIs and planning scenarios on top of team collaboration.
At customers such as Estee Lauder and Heinz, finance users can work closely with product managers and pricing experts all running Anaplan applications to determine the best cost, price and availability combination at the SKU level in order to capture the biggest sales opportunities.
The value of connected planning underscores the fact that EPM is also moving beyond the confines of the finance and accounting function. At Aera Technology, CEO Fred Laluyaux, who ran Anaplan for four years until 2016, likens such planning challenges to the development of what he calls a self-driving enterprise in need of a seamless combination of transaction data and decision-support tools as well as intuitive and automated collaboration capabilities.
The outcome is cognitive automation, which is where Aera is addressing by delivering applications (heavy on web crawling and indexing capabilities) that automatically search, query and recommend best practices or actions to take for the end users. Examples can be something like a skills workbench for project planners to fit the right talent for the right job, or availability to promise tools that can dynamically harness ERP transaction data and CRM systems to predict demand for supply chain planning executives.
Having received $50 million in recent funding, Aera is ramping up its product development and go-to-market resources by hiring up to 300 employees by end of 2018, up from the current level of 115. Laluyaux expects to put the self-driving concept to work at some of the biggest companies in the world later this year.
Whether it’s connected planning or enterprises aspiring to be self-driving, the stuff that whets the appetite of next-generation EPM specialists, or for that matter enterprise applications vendors in general, is a holistic way to crisscross myriads of back-office and customer-facing solutions in order to help corporate users attain desirable and predictable outcomes.
Customers said the real value of EPM – especially with a Cloud approach that brings a system of record to life – lies in risk mitigation since most of what EPM users do have tangible financial implications. “We can’t afford to have two sets of numbers,’’ said a finance executive and an Anaplan customer. “It’s better than passing spreadsheets.’’
The New EPM Landscape
Currently, the Big Three sustain themselves with a hybrid model that combines sales of new Cloud applications while cashing in considerable maintenance revenues from their onpremise products. On the other hand, the majority of the EPM vendors in our database are selling nothing but their Cloud-native applications, aligning themselves with the Cloud first strategies of their customers.
Adding another wrinkle to the divergence is the fact that many of these upstarts are fortifying themselves by pairing up with one another in order to grow their installed base, plug product gaps and achieve the economy of scale needed to compete at the global level.
Many ERP vendors realize that a better way to defend themselves is by strengthening their EPM offensive. Both Infor and Workday are banking on their planning applications to help customers achieve real-time visibility that spans from their ERP systems to their entire operations with everything sitting on top of a new platform – Infor OS and Workday PaaS respectively – to deliver on those promises. While still a newcomer to the EPM market, Workday said its Planning product – based on its 2015 acquisition of Gridcraft and relaunched in 2016 – has signed 250 customers, or more than half of its installed base of Workday Financial Management clients, which now top 450 in its latest quarter.
In the case of Infor, its d/EPM applications can be traced back to its earlier 2003 acquisition of Comshare and through the years Infor has invested heavily in improving and Cloud-enabling its EPM product by incorporating modern techniques like automated data refinement and networked BI. For example, its 2017 acquisition of Birst for Cloud-based business intelligence has helped shore up its EPM offerings. All these will be instrumental in making a full-stack analytics platform possible for Infor, along with its feature-rich Cloud ERP Suite for asset-intensive industries like automotive, manufacturing, oil and gas and others.
For much of 2018, the dominance of the EPM market will be fought over many fronts including the need to simplify EPM for average business users, while keying in on innovation like artificial intelligence, machine learning and integrated analytics and business intelligence. Here’s a list of disruptive vendors and their latest developments following a flurry of deals that are changing the competitive landscape.
Exhibit 1 – Disruptive EPM Applications Vendors and How They Compete In 2018
|Vendor||Recent Company Developments||Recent Product Developments||Key Enterprise & Cloud Applications|
|Adaptive Insights||Passes $100 million in total revenues after adding more than 500 net new customers during its fiscal 2018. .||Recently launched Adaptive Insights for Sales as part of its Business Planning Cloud to expand beyond the finance function.||Adaptive Insights Business Planning Cloud|
|Aera Technology||Receives $50M in funding as it plans to more than double its headcount to 300.||Products to become generally available in 2018.||Cognitive Decision Board|
|Anaplan||Racks up $200M in billing. Customer count tops 850, while headcount exceeds 1,000.||Expands channel capacity, while driving product innovation through machine learning.||Anaplan Connected Planning|
|BOARD International||Total revenues soared 46% to $79 million in 2017 as Board is on its way to become a $100 million company in 2018 on the strengths of its 3,000+ customers.||With the help of its new e-Learning platform, Board aims to accelerate Cloud migration among its onpremise customers. Cloud revenues more than tripled in 2017.||Board BI, Performance Management and Analytics software sold in one package.|
|CAMMS||Acquires Melbourne-based Cambron Software for its HCM, EPM and governance applications designed for the public sector in Australia.||Aims to become the No. 1 EPM vendor in Australia, especially in key verticals like mining and transportation.||CAMMS Financial Planning and Budgeting|
|Centage Corporation||After death of its former CEO Barry Clapp who presided over its steep growth for five years, Centage forges ahead with a new management team led by Ken Marshall.||Centage banks on channel partners like NetSuite as well as its base of 10,000+ users, especially those in strategic verticals like healthcare.||MaestroSuite|
|Corporater||Acquires Origin AS to deliver a suite that combines their EPM and governance applications.||The purchase will buttress Corporater’s Business Management Platform for financial services and other verticals in the Scandinavian region.||Business Management Platform|
|Host Analytics, Inc.||Host Analytics’ Cloud EPM products have won support of more than 700 customers ranging in size from SMBs to multinationals.||Recently launched MyPlan for collaborative budgeting and forecasting with special emphasis on business users.||Host Analytics for Finance, Sales, HR, and Marketing|
|Infor||Won major d/EPM and ERP deals including Ebit Systems, Flex, Georgia Pacific, Travis Perkins, and Valmet, while boosting incremental revenues that amount to 50% above what it charges for its ERP software.||Positions d/EPM applications as key enabler of Cloud migration for Infor’s 90,000+ customers.||d/EPM for Dynamic Enterprise Performance Management|
|Jedox||Receives 20 million euros in funding from Iris Capital, eCAPITAL and Wecken & Cie.||Jedox to use new funding to grow its installed base of 2,300 accounts and headcount of over 160.||Jedox’s CPM platform|
|Longview Solutions||Merges with Tidemark, a Silicon Valley-based, enterprise financial planning and analytics cloud software company.||Leverages Tidemark’s Cloud expertise to drive Cloud migration among Longview’s installed base.||Longview Planning|
|OneStream Software||Total revenues jumped 90% in 2017 driven by increasing adoption of OneStream XF Cloud which represented nearly two-thirds of new revenue and customers.||Headcount has risen to 170 with key hires who specialize in displacing legacy EPM products.||OneStreamXF and OneStreamXF Cloud|
|Tagetik, a Wolters Kluwer Company||Wolters Kluwer acquires Tagetik for its EPM applications for 300 million in euros, greatly expanding its presence in the EPM market by adding nearly 1,000 customers and 75,000 users in 35 countries.||Purchase of Tagetik has grown its EPM business now representing 10% of revenues of Wolters Kluwer’s Tax & Accounting division, which tops $1.3 billion.||Tagetik corporate performance management solutions, Wolter Kluwer TeamMate for audit management|
|Talentia Software||Acquires Swiss-based Addedo, an EPM consulting firm with 25 employees, 200 clients and 11 million euros in sales.||Addedo, which resells EPM products from IBM Cognos and Longview, is expected to add Talentia’s ERP products to its offerings.||Talentia’s BP&F software for budgeting and forecasting|
|Vena Solutions||After securing more than 400 customers and $30 million in new funding in 2016, Vena has doubled its Cloud subscription revenues in 2017. Headcount tops 200.||Recently launched Revenue Performance Management (RPM), an EPM product designed for SaaS and subscription-based businesses to better allocate resources and align departments to maximize revenues, profitability and business growth.||Vena Budgeting, Planning and Forecasting; Vena Revenue Performance Management|
|Workday||Buys Gridcraft and folds it into Workday Planning, which has signed 250 customers.||Continues to bundle Workday Planning with Working Financial Management through its evolving Cloud platform strategy.||Workday Planning|
|Workiva||Exceeded $200 million in total revenues in 2017 after securing more than 3,000 customers.||Integration with Anaplan and other EPM vendors enable companies to standardize the entire financial planning and reporting process to accommodate rules like XBRL for SEC compliance.||Workiva For Reporting and Compliance|
Source: Apps Run The World, May 2018