Adaptive Planning has just released Version 6 of its software-as-a-service financial planning and reporting solution. The new release adds some notable advances that can improve a company’s planning efforts by allowing them to give up desktop spreadsheets without having to give up the spreadsheet.  

One of the key deficiencies of desktop spreadsheets is their inability to easily manage more than three “dimensions” at a time. For many tasks, this is not a problem. However, business enterprises are inherently multi-dimensional. People plan and analyze results based on the dimensions of time, product lines, business units, customers, pay grades, currency, plan version and so on. Each of these dimensions usually has a hierarchy (SKUs roll up into product lines, which roll up to product families; weeks roll up to months, which roll up into quarters and then years). Managing all this in a desktop spreadsheet is a tortuous process. To be sure, experienced spreadsheet jockeys can whip up a model that can get around some of these limitations, but only the first time around. These models are always “brittle” so that changes in the business (such as new products introduced or one division merged into another), require time consuming work-arounds or even a complete reworking of the spreadsheet. (In which case it’s almost impossible to go back in time to make comparisons.) Since change is a constant in business, planning using desktop spreadsheets is an ongoing compromise. As confounding as this may be, for years a majority of midsize companies (and divisions of larger ones) have concluded that it was preferable to the alternative: a dedicated planning application from a third party or built in-house, because they did not want to spend the money for the software, hire people with the skills to manage it and devote other resources to its upkeep.

One of the important new features of Adaptive Planning 6 is its “Cube Sheet” which provides many of the same dimension handling capabilities as applications or multidimensional databases. It enables users to create and analyze planning models using as many as ten dimensions, allowing companies to make changes to plans or analyses much faster than with desktop spreadsheets. For example, if in the third month of the year the corporation sells a division or adds a product line these changes can be reflected quickly and relatively painlessly in Adaptive Planning. With spreadsheets you can spend a lot of time updating the model in detail (which our research shows few companies do), you can create a simplified model to get the gist of the impact or you can wing it (which is what the largest percentage of companies do). Alternatively, you can use the “Cube Sheet,” eliminate the division or add the product at a particular introduction date and see the impact on sales, expenses, balance sheet and cash flow. Doing a historical pro-forma analysis showing year over year results without the division that was sold is straightforward. In an even simpler example, making percentage changes to product line pricing assumptions by major product family and geography usually is a time consuming affair in desktop spreadsheets. (The true jocks can structure their models to simplify this, but then will spend hours trying to find the changed cell reference or something else that created the nonsensical result they got when they rolled up the field submissions.) Adaptive Planning now makes those sorts of changes relatively easy and accurate. The “Cube Sheet” complements the existing time-based “Standard Sheets” and list-oriented “Modeled Sheets,” allowing companies to give those submitting plan details the right interface with which to work.

For years we have pointed out that desktop spreadsheets are a significant barrier to improving a company’s planning processes because they are the wrong tool for the job. This includes what I call integrated business planning. Midsize companies (and divisions of larger organizations) have been reluctant to give up spreadsheets because of the cost issues and because they did not see the urgency of changing the process. The substantial business volatility over the last several years has demonstrated to executives the need to have a faster, more agile and more accurate planning capability. SaaS offerings like Adaptive Planning’s give these companies a real choice, because they eliminate a large portion of the up-front costs of an on-premise planning solution and do not require them to maintain the software which is at the core of what cloud computing is all about. Since it’s always available on the Internet, companies don’t have to worry about how to collect the data and view reports and analyses: it’s available to anyone with permission to view it in the detail in which they are permitted to view it. Midsize companies that want to improve their planning, making it a more effective management tool should look at Adaptive Planning’s latest release. The addition of the “Cube Sheet” adds another reason why it’s a better way to plan than desktop spreadsheets.

Adaptive Planning also has established integration with NetSuite, a SaaS-based enterprise application suite that includes ERP, meaning that users of both applications will be able to navigate between them, including being able to drill down from Adaptive Planning into underlying “actual” details in NetSuite. For midsize companies, the integration can be a significant benefit. Organizations have struggled with data integration from applications for planning and performance management projects for years, so this automated SaaS-based approach has the potential to make life much easier for users of both company’s software. Having this information all together is important because it helps executives manage their business with greater agility. Our benchmark research shows that companies that can incorporate actual results into their forecasts and drill down into underlying transactions in real-time have much more accurate plans and are able to respond faster and more effectively to changing business conditions.

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Regards,

Robert D. Kugel CFA - SVP Research