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Business Management

No more Excel: Adaptive Insights seeks corporate performance management crown

If I had a penny for every time I heard the phrase “We want to do to to X what Salesforce.com did to Siebel” I’d be a millionaire right now. Or at the very least earn six or seven pence per month. I can understand why it has become a formula though. Many companies attempt to usurp market leaders by building, as did Salesforce, a cloud-based, social, collaborative, subscription-paid offering. So when Adaptive Insights founder and chairman Rob Hull says he’d like to “do to Hyperion what Salesforce.com did to Siebel” we all know where he’s coming from – particularly as Adaptive is itself backed financially by Salesforce.

Adaptive plays in a sector that won’t mean much to the average person in the street but is a huge deal for enterprises. The name that seems to have been settled on for the market is corporate performance management (CPM). Hull, a Texan transplanted to California where he runs Adaptive from Palo Alto, defines the challenge thus:

“It’s the overall business management problem, helping the finance team to serve the organisation as a whole, see where it’s been in the past and better project where it’s going in the future. We’re putting better insights, better analytics and better planning into the hands of the finance team and, from them, to the hands of others in the organisation.”

The 11-year-old Adaptive isn’t alone in spying an opportunity. Rivals include Tidemark (six years old and with $93m in funding), Host Analytics (14-years-old, $86m) and Anaplan (nine years old, over $144m raised, and another company that has some Salesforce investment). Hull and his cohorts have raised over $101m but he sees significant elements of differentiation.

“Anaplan [for example] has taken more of a focused approach to the sales organisation,” he says. “Adaptive has taken a broader lens … We too look at sales but we’re really taking a more holistic view of the business so you can drill down to deeper data like cost-per-employee.”

Adaptive typically sells to CFOs but sees optimal value in scenarios where its tendrils spread throughout organisations. And, as is often the case, the genesis of the company came from hard-won experience.

“Adaptive came about as a result of my frustration as a CFO,” says Hull. “The legacy vendors made the problem just too difficult and effectively introduced a business problem rather than solving a business problem.”

CPM is one of the many practices where CFOs, CIOs and others have seen the problem and answered it with that great ubiquitous tool of our times, Microsoft Excel.

“Excel is a fantastic desktop productivity tool if I’m working alone in a single problem-solving mode but it is still a very unstructured tool and [at scale] it begins to break down very quickly, leading to formula errors, broken links and lacking insights,” Hull says.

“We want to take the best of what Excel can do – the ease of use and familiarity – but have something more structured and collaborative that can provide the insights without the broken links and formulas.”

(All of which rather begs the question of why Microsoft hasn’t attempted to do something itself but relevant initiatives within its PerformancePoint Server line appear to have been muted recently. A missed opportunity, perhaps.)

Adaptive was built from the off as a cloud product and Hull says he didn’t fear missing out on selling to the companies wedded to their servers and on-premises software.

“Part of what I saw as a CFO was a lot of shelfware and organisations hamstrung by lack of resources and where IT became a bottleneck. We also considered open source: we dipped our toes in those waters and very quickly realised the software and entire business model were different.”

Also, Hull says, the notion that cloud makes for a lack of stickiness with customers is not necessarily so. There’s a minimum one-year commitment for Adaptive and many commit to two to four years upfront.

Adaptive doesn’t provide revenue numbers but other indicators are strong. It has a 2,500-strong customer base that is nicely spread across the size of organisation – deals range from tens of thousands of dollars to over $1m – and verticals such as tech, financial services, hospitality, government and not-for-profits. Big-name customers include FireEye, Siemens and Coca-Cola. And, as with Salesforce, the big opportunity is to deploy fast (six to eight weeks is typical) and to “land and expand” and build annual recurring revenue as customers spread use of CPM across more departments.

Partnerships are also key and midsize ERP/e-commerce cloud leader NetSuite resells Adaptive as its Financial Planning module.

Hull calls CPM a $20bn market opportunity and says that opportunity is mostly green-field, weaning CFOs off Excel and convincing them to act as advocates to the rest of the company. He sees the chance to grow revenues at a 50% clip “for years”.

Hull recently recruited software veteran Tom Bogan as CEO and appears well set on the way to an IPO, even if he insists that floating the company “is not the end game”.

Of course, you can expect the big guns of enterprise software to fire back at some point but their records in the cloud are spotty. Hull says that Oracle-owned Hyperion uses “an old ASP model, racking and stacking boxes which we know from history will not scale well”. SAP is “talking but yet to show products” while “Oracle and SAP are buying their way into the cloud”.

They have all the money in the world to pick off a cloud CPM firm, of course, but Hull feels he has a 12-year head-start on the stack giants and wants to rub in the advantage with a European datacentre to complement US facilities.

Companies have been attempting to crack performance management for many years, decades even, and there’s no guarantee that Adaptive or any of its rivals will become the dominant force in the sector. But the addiction to Excel can’t be justified and the prize to its replacements will be glittering.

 

See also:

Anaplan plots and end to Excel-mania for business planning

Typical 24: Michael Gould, Anaplan

Lessons to management from ‘Le Tour’

Typical 24: Fred Laluyaux, Anaplan

Which World Cup team best describes your style as a finance leader?

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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