Anaplan presented at DEMO Fall 2009 this morning, unveiling its vision for a planning application that aims to be easier to use than a spreadsheet, delivers integrated business planning far easier than any spreadsheet can. Integrated business planning (IBP) is the process of connecting the planning function across an organization to improve its internal alignment and financial performance. IBP uses a comprehensive model of the organization linking strategic planning, operational planning and financial planning. Linking all plans and forward looking assumptions across an enterprise, executives and other decision makers are able to evaluate plans more realistically, uncover inconsistencies and risks and assess opportunities (see “Integrated Business Planning – More Important Than Ever” and Where’s the “P” in ERP?). Few companies can execute IBP today and our research shows that one of the most intractable barriers to more effective corporate planning is the fact that a majority of companies (and a large majority of small and midsize companies) use spreadsheets to manage the process. (See “Taming the Spreadsheet Mess”).
Anaplanis designed to support integrated business planning by eliminating the problems spreadsheets routinely pose such as the difficulty of rolling up multiple spreadsheets for an integrated view as well as finding and correcting errors. (These two issues caused by spreadsheets’ lack of referential- and data integrity). Anaplan can give organizations the ability to do detailed driver-based modeling of operations and integrate this dynamically with the company’s projected balance sheet and cash flow statements over the same forecast periods. Only 6% of companies we recently benchmarked in IBP use driver-based planning methods, which explains why most companies have had a difficult time over the past two years adjusting their plans to the extremely high level of volatility in commodity prices, exchange rates and business demand.
Because Anaplan is offering a cloud-based set of planning applications it does this without the need for IT resources (people, incremental hardware or software) and it can be up and running rapidly. Better yet, the company’s business model is designed to make all of this available at a price and ease of use factor that will make it accessible for all but the smallest companies. The company will be offering a free test of its beta software shortly. While any such “free” demo will require you (and by extension your company) to invest some time in doing a preliminary evaluation, I recommend that you take a look because for many companies the trial will be well worth the time invested.
Guy Haddleton, a founder of Anaplan, was the presenter and did a short demo of the product showing the audience how the software can build and maintain a sales forecast for a company with 150 sales people, offering 1,200 products to 200 customers on a monthly (or even weekly) basis, as well a generate periodic reports. I first met Guy about 10 years ago when he was running Adaytum, a planning software company that later was acquired by Cognos and is now a core piece of IBM Cognos’ performance management suite. Many of those involved with Anaplan are Adaytum alumni and all have been focused for the past couple of years on how to express their deep understanding of the planning, forecasting and review functions in a way that would substantially cut the cost (and therefore the price) of automating and integrating planning.
Our benchmark research in IBP shows that a majority (57%) of people in a managerial role in a company participate in at least four separate planning functions, yet only one-third have any direct linkage of these plans because of the difficulty of pulling together this information on spreadsheets. Indeed, only 20% directly link their sales plans into the financial budget, meaning that changes in sales projections take weeks or months to be reflected in the financial budget.
Anaplan has a great opportunity as planning needs to be used across business and not just by finance and senior management and reducing the cost and complexity is just part of improving business performance. Now let’s see how they execute on their plan!
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Robert D. Kugel CFA - SVP Research