I recently wrote about the accelerating adoption of SaaS solutions by finance departments. In it I noted that while this is not “new news” to those that have been following the IT industry closely, it is to the people who actually are in charge of buying them. Those that once had a kneejerk aversion to using anything but on-premises software (because of their issues with security, functionality and data integration) are increasingly less concerned.
I was reminded of this when I read a recent press release by Adaptive Planning announcing its 2009 results. In a lackluster year for many enterprise software vendors (SAP’s revenues were down, Oracle’s were up only slightly and even Salesforce.com’s revenues slowed to about a 20% increase compared to a 44% gain in 2008) the company announced that it had achieved a 70% gain in revenues and that at year-end it had 660 clients, up 49% from 2008’s final count.
This was a good year for selling planning software. After at least two years of business turmoil and finding their annual budgets were DOA after months of effort, many CFOs and controllers came to recognize that their process was broken. Since spreadsheets are a root cause of serious process issues, especially in planning and budgeting, replacing them with a dedicated application is an important first step to achieving process improvement. For many midsize companies (and even some larger ones) the cost and hassle of deploying on-premises software for this purpose is too high. Caught between the proverbial “rock and a hard place” these companies increasingly are finding that SaaS is the right approach to acquiring a dedicated budgeting solution because of its lower up-front costs, faster time to value and the fact that the company does not have to support or maintain any software or hardware – an important consideration in midsize companies with limited IT staffs.
Adaptive Planning has been steadily adding to the capabilities of its offering. One of the ones with interesting long-term potential is its benchmarking service that gives users access to backward- and forward-looking comparative metrics. In any sort of hosted application environment, it is possible for the vendor to offer anonymous summarized data from all those using the service that approve of its use. In theory, this would let executives of Company X compare their company’s revenue growth assumptions to all other companies in a similar business and/or geography. Or compare gross margins or benefit cost per employee in the most recent quarter. Providing there are enough customers willing to anonymously share their data and that the data can be sliced to the appropriate demographic slice relevant to the company using the data, I believe this sort of benchmarking would be of great value to managers and be one more reason why, compared to using desktop spreadsheets, SaaS is a far superior approach for planning and budgeting.
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