- Major Studies
Anaplan is a rapidly growing player in the market for cloud-based enterprise planning systems. But will its people-centric approach to planning allow it to scale to the next level?
At Anaplan’s annual conference, Hub17, company executives took an unusual step for a cloud-based company—they talked about people. And they seemed to mean it. Newly hired CEO Frank Calderoni boldly stated that the San Francisco-based company’s approach was a “people-first” strategy, and that a new era of “connected planning” it hopes to usher in rests on three pillars—people, processes and data.
Connected planning is a simple but transformative concept. Calderoni described it as “making dynamic, lasting connections between data, people and plans.”
‘A Single Source of Truth’
The phrase that Anaplan executives use most when describing connected planning is that it is “creating a single source of truth.” They describe the typical company as still struggling with data silos but, more importantly, planning silos. Sales, HR, supply chain and every other function are making forecasts based on numbers. However, those numbers don’t always match. Many of them are locked in spreadsheets that don’t get shared throughout the organization. The forecasts from these various functions may not even operate on the same assumptions, and when one forecast is changed, others may not follow suit.
Anaplan pulls data from ERP, CRM and other sources of corporate data, including those ubiquitous spreadsheets. From there, models can be built using the same data. When a number is changed in one model, if a company chooses, the impact of that change is reflected throughout the rest of the model and to every connected model in the company instantaneously.. For example, if an HR headcount plan is based on 2 percent growth and a financial forecast changes that to 3 percent growth, the HR headcount plan can be instantly changed so that all plans reflect the same data and assumptions. Moreover, because it is linked to all models, that number isn’t the only one changed. Any numbers affected by the HR model will change as well. And any headcount numbers in departmental plans will change accordingly. The final product is that all models, forecasts and plans connected to Anaplan are constantly using the most current numbers (within workflow rules established by the user).
This can have a profound effect on success, but it isn’t just about data. Calderoni said it is about people. “Without people, it isn’t going to come together,” he said. “We’re all about collaboration. It is really about bringing people together on a team to make the best decision possible. When you have more people engaged in a problem, you get the best ideas, the most ideas, and you can select the best answer. And people get buy-in because you included them and they feel empowered.”
In other words, if everyone is hovering over their own data, they are working on different problems. If everyone has access to the same data and the same plans, they are working on the same problem. They can all pull in the same direction.
Community Key to Scaling
Anaplan also stresses that it isn’t just about people within an organization, but also within the larger Anaplan community. The company has launched a new community platform designed to connect end users to each other and to Anaplan employees and partners so they can help solve problems, make better models, and learn from each other.
The community is key to Anaplan’s ability to scale. Anaplan has been on a massive growth trajectory, gaining 250 of its 660 customers in just the past year. The company’s revenue is on a similar trajectory, with subscriber revenue up 75 percent in a year to $120 million.
Up to now, Anaplan admits it has won contracts much as a startup would. In a town hall meeting, executives expressed that much of their growth in supply chain has come from “one guy with a lot of airline miles.”Connor O’Brien, an Anaplan area director/solutions consultant, said the company is happy to engage in “bake-offs,” where it works to demonstrate how quickly and effectively it can solve problems compared to competitors. Anaplan can often solve a problem for a customer in two days while competitors need a month, according to O’Brien.
This personal attention includes customer success teams designed to help customers solve problems and “guru time” built into contracts. This approach helps Anaplan stand out among cloud companies that Anaplan views as too often touting software and data over people. But it does put pressure on Anaplan to continue to grow its internal and external communities to keep the personal touch.
Connected Planning Has Not Yet Fully Arrived
Perhaps the most interesting thing about connected planning is that, despite its obvious benefits, no Anaplan customer has implemented connected planning enterprise-wide. So far, Anaplan has been built with a land-and-expand approach. Anaplan might come in to solve a single problem in an organization, for instance, headcount planning. When in place, it is often expanded to solve other pain points. However, so far, it has not expanded to be the enterprise-wide connected planning tool described by Calderoni.
Vice President for Product Management Sampath Gomatam believes that the obstacle is a behavioral issue. It takes earning trust and buy-in throughout an organization.
There might be another related reason. One customer from a major insurance firm said, “Anaplan is really hard work. There are people who will help you. But it is really hard work.”
This customer used Anaplan for workforce planning, capacity modeling and HR management. Rather than using it to address a single pain point and moving forward, the customer chose to use it for a range of HR tasks. This was intentional, and it ended up helping the organization. “The benefit of ‘eating the elephant in a single bite’ was that we discovered our own warts were uncovered in terms of data quality,” said the customer.” We were able to identify weak areas of our data that were going to hurt us in the future. If we had broken down the problem, we may not have discovered it as quickly.
“If there was an unexpected nature of this journey, it is that the [Anaplan] framework enforced discipline in the data and the data structures,” the customer added. “Thinking about the models, that rigor was very valuable. If you want to do what Anaplan is good at, you have to follow the rules. If you do that, the press clippings are real. It is really fast and agile and all those things.” The customer described having to use “frog DNA,” as in the film “Jurassic Park,” to fill in missing pieces of company data that Anaplan needed for its modeling.
In other words, much of the behavioral change that Anaplan needs for companies to adopt connected planning is not within its control. Maximum success with Anaplan means entire organizations need to embrace a kind of discipline and respect for data that may or may not already exist inside the organization. As the customer said, “It is everything they say it is, but only if the company commits, as in ‘all capitals’ commits. This isn’t purchasing a BI unit. Anaplan is foundational. The benefit isn’t hard to realize once you go all in.”
Right Data Isn’t Big Data
There is a stark difference between the Anaplan strategy and the strategy of many larger cloud companies dealing with data or planning such as Oracle, SAP or Salesforce. While these companies tout their success with larger data sets, machine learning and artificial intelligence, Anaplan talks about putting data in the hands of people. This is not unintentional.
Co-founder and CTO Michael Gould said Anaplan’s goal is less about handling large amounts of data (which it can do) and instead about getting good data to the organization. “A lot of big companies are putting a lot of money into the AI/machine-learning space,” said Gould. “But there is a lot of uncertainty there. They’re looking at how to handle these huge streams of data. What we see is a greenfield space going from data to decision. We want to work more closely to where the decision is made. We definitely have a point of view that the vast majority of the opportunity is people making the decision together.”
In the short term, at least, Gould is right. And that is a major reason why Anaplan can show such huge growth, including with large customers such as American Airlines, Hewlett Packard Enterprise, Chevron, and Del Monte. Getting the right data to the right person is still something most organizations are struggling with. And by all accounts, Anaplan is exceptional at helping companies do that.
Can Anaplan Scale?
But the future will depend upon Anaplan’s ability to scale. The company appears to be making all the right moves in terms of scaling the technology. It’s putting considerable resources into scaling the platform, addressing security, and doing all the right things to make sure the platform and applications scale. The harder part is scaling that personal touch. It is unclear if Anaplan can scale the community and continue to bring in employees with the expertise and customer focus it has attracted so far.
But most importantly, as data scales, is choosing not to emphasize machine learning and AI a good long-term strategy? Yes, currently, planning is a human endeavor. But as machine learning, AI and data mining make sense of the deluge of data, planning will need to become an increasingly machine-assisted endeavor. Can Anaplan adapt to that future if it continues to choose not to prioritize machine learning and AI? Or does Anaplan have a “shelf life?”
It most likely depends on how quickly the dream of AI and machine learning in the enterprise is realized. In the short term, connected planning clearly provides a transformative view of the organization. Once that is in place, connected planning could plug in seamlessly to a more AI-centric planning world. But if Anaplan can’t sell its vision before AI and machine learning become a reality, competing in an automated world will be difficult.
The short term is bright, however, and connected planning is winning hearts and minds among its early adopters. If Anaplan can scale, it can change the way business is done.
(Photo credit: Peter Prato)