Connected Planners and Finance Wizards Excel By Riding On Robust EPM Growth

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 a little over 100 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

Source: Apps Run The World, May 2018

• Apps Business
• Feature