Adaptive Insights - an update

Profile picture for user brianssommer By Brian Sommer May 3, 2016
Brian Sommer offers his take on a recent update from Adaptive Insights. He points to expanded opportunities but also warns of the impending demand for more analytics.

Late last week, I had a short conversation with Adaptive Insights CEO Tom Bogan. Adaptive is a budgeting, planning, consolidation, analytics and forecasting solution that is used by scores of companies globally. Adaptive’s solution, like those of competitors Anaplan, Host Analytics and others, is an all-cloud, multi-tenant product.  All of these firms (and more) occupy a space called CPM (corporate performance management) or EPM (enterprise performance management).

Adaptive insights

This space is a hot sector in the cloud applications market with many vendors reporting hundreds or thousands of customers. Adaptive alone claims over 3,000 customers. Why are these products so successful? Businesses find it easy to integrate diverse financial software products to a cloud-based consolidation/planning tool. These products don’t necessarily need much IT support, if any at all. Recently, one of my own software selection clients chose Adaptive.

Specific to Adaptive, the new release of the software:

  • Expands users’ abilities to incorporate operational data with financial data so that better plans, forecasts and analysis can be supported.
  • Provides a number of pre-configured connectors that speed up the transfer of information to/from leading cloud software solutions from vendors like NetSuite, and others.

The Adaptive solution is designed to work with cloud and on-premises solutions. For the latter, a behind the firewall agent may need to be loaded onto the on-premises solution so that data can be transferred to the Adaptive cloud. Connecting to custom or other systems may require custom connections. These non-standard connections may require a user to have some technical sophistication so that data structures can be mapped or understood by the Adaptive technology.

Regardless of the manner of the connection, users can still drill back into the source data when reviewing the analytics, visuals and plans found in the Adaptive system. This should make Executive Committee and boardroom discussions a lot more valuable and constructive.

The combining of operational and financial data is not a new thing for Adaptive but now it’s a core part of the solution. A couple of key Adaptive customers (in Australia I believe) were doing this a year or so ago when they wired sensors to their mining equipment. Marrying this operational data with financial data helped one company better manage repair and downtime costs as well as improve operational plans.

Today’s announcements make this capability a mainstream aspect of the solution. Interestingly, Bogan indicated that when customers fire this up, it will not trigger increased disk storage fees for customers when they push more operational data into the Adaptive cloud. I’m acutely aware of this issue as some cloud financial solution providers charge usurious rates for disk consumption. Bogan states they do not charge for disk usage.

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Will this new capability mean that customers can start smashing huge (often external) data sets into the Adaptive cloud? Adaptive would like put its ‘toe in the water’ first with internal operational data before opening the data floodgates further. That’s understandable.

Feeding the data beast

I expect customers won’t wait though and will start experimenting with big data sets very soon as the in-memory and analytic tools will make new insights irresistible to executives. In essence, this capability is the real value driver that financial software buyers are looking for. Sure, you can get consolidated accounting data from Adaptive but what the Executive Committee of a firm wants is blazing fast access to financial, operational and other data all displayed by highly visual and intuitive means. And, they want it on any device anywhere. Adaptive may be stunned at the speed and intensity with which customers are going to exploit this capability.

If customers don’t do it first, Adaptive will likely need to add support for feeds from social sources like GNIP and DataSift. These solutions enable users to add social sentiment data into the planning process. Those feeds will test the mettle of Adaptive and competitor products. Likewise, retailers will want live weather forecast feeds to better predict store sales and to optimize employee store staffing.

Customers will also use these new capabilities to turn Adaptive’s product into a fraud detection tool. I’ve seen what Ernst & Young can do with data from email and Accounts Payable correspondence to detect potential bribery situations. I’ve seen what Oversight Systems can do to detect Travel & Entertainment fraud with corporate credit card and expense report data. Adaptive customers won’t stop at optimizing operations results – they’ll find uses that Adaptive’s leadership hasn’t thought of yet. This is what happens when Fubini’s Law kicks in.

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My take

Adaptive has posted positive numbers relative to its growth and customer adoption. Average contract value (ACV) is running at a cumulative annual growth rate of 50% or better the last four or so years. Customer count has come a long ways from the 64 customers they had in 2006 to the 3000+ today. I’m particularly impressed with the size and marquee status of the numerous name-brand customers they’ve acquired.

On a related but sadder note, the Wall Street Journal announced last week that Anaplan’s CEO is being replaced. Personally, I thought Frederic Laluyaux was a pretty straight-up fellow. Like Adaptive, Anaplan has enjoyed a lot of growth and customer adoption. Apparently, the investors may have wanted more especially to satisfy the growth expectations that come with $240 million in venture financing.

This is clearly the time for all players in this space to grab all of the market share real estate they can. Established ERP and Financial application software vendors are not going to lose more market share to these cloud EPM firms. Workday, a powerhouse in large enterprise Financial and HR applications, is building its own EPM functionality that will be debuting soon.  In other spaces, I note that Host Analytics has teamed up with Qlik for enhanced planning.

This spaces getting mighty interesting. Best keep your seat warm.