Adaptive Insights and the CPM Value Shift

In preparation for this week’s Adaptive Live event, Saugatuck’s Bill McNee and Bruce Guptill were briefed by company execs on Adaptive Insights’ business plans, go-to-market strategy, and latest developments.

Our net takeaway: The advent of the Boundary-free Enterprise™ is changing what we think of as CPM and BI, and even FP&A, which in turn is changing the role, value, involvement, and strategies of the typical Finance organization, which itself changes the roles, business, and go-to-market approaches of providers like Adaptive Insights.

Adaptive Insights is a privately-held Cloud business solutions company headquartered in Palo Alto, California, founded in 2003 as Adaptive Planning. As a SaaS provider of business intelligence and corporate performance management solutions, Adaptive historically targeted smaller and mid-sized enterprises, and – as have other early-gen Cloud / SaaS providers – has more recently shifted its focus more strongly toward mid-sized and larger enterprises.

The company has also shifted from a traditional BI / CPM / FP&A add-on / ”sidecar” focus (see 51-page research report Cloud Financials – The Third Wave Emerges, 1492SSR, 17Dec2014. Non-clients can purchase download and purchase the report here) to more of an integrative Finance management suite / platform approach, which includes and extends the company’s presence – and the influence and involvement of the typical Finance organization – into other key enterprise groups including Sales and HR. Look for a range of formal announcements made earlier this week (including this one) regarding Adaptive Solutions, a Cloud-based management suite designed to integrate and deliver a mix of Finance policy and practice, services, and content, with the first offering aimed at optimizing Sales revenue management.

These are very useful and valuable capabilities that will no doubt improve the ability of the Finance organization to develop and improve on business performance – and its own value to the enterprise – while increasing Adaptive’s own footprint and influence within enterprises.

This is a direct consequence of the advent and evolution of what Saugatuck calls the Boundary-free Enterprise™, which can best and briefly be explained as working environments in which the traditional technological and functional boundaries between groups and systems continue to fade, as data and management systems become more broadly available and applicable via inexpensive and increasingly adaptable Cloud-catalyzed systems and functions. Simply, there are fewer and fewer clear lines between the functions, data, and systems of Finance, Sales, HR, Marketing, and so on; their roles and value becomes more intermingled as more Cloud-based platforms become utilized.

So we see these “Solution” and associated platform / suite moves by Adaptive Insights as not only enabling greater value and presence in existing customers, but also in positioning the company for greater attraction to larger enterprises by enabling more management and involvement of the Finance organization – all as a reflection of the changing nature of Finance in its central role.

As this strategy has developed and matured, Adaptive’s funding has also. The company has raised more than $60M since 2012 and over $100M in total, including funding from Bessemer Venture Partners, Cardinal Venture Capital, Monitor Ventures, Norwest Venture Partners, Onset Ventures, RBC Venture Partners and – importantly – Salesforce.com Inc. New Adaptive CEO Thomas Bogan, who arrived in January 2015, has not ruled out an IPO, but he also has not ruled out another private financing round as the company is clicking on all cylinders right now.

We call out salesforce.com as a financier for Adaptive because it is also a prime go-to-market partner for Adaptive, as are early-gen Cloud Finance / ERP provider NetSuite and Cloud-based HR / HCM / Finance solution provider Workday (among others). All of these firms are also pursuing larger and more complex enterprise customers via an increasingly integrative business / Finance platform role, and doing so in areas that increasingly compete more and more directly with Adaptive’s offerings (and vice-versa). Where Adaptive had been seen as a “sidecar” / add-on type of sale in the past with the core offerings from NetSuite, Salesforce and Workday, they are now beginning to position themselves as competitors in certain aspects of their value prop.

We raised this issue / potential issue in our talks with Adaptive execs, who acknowledge the possibility – really, the likelihood – of competing against current partners and allies, but who also played up the fact that all of these firms are still developing portfolios and go-to-market efforts, and hence still tend to complement one another in more situations than they compete. Just this week, Adaptive told us that they see their offerings and roles as “very complementary” to NetSuite, WorkDay, Salesforce, and to traditional ERP systems and providers, in that Adaptive’s solutions accept and integrate data flows from all of these types of systems.

That may be so, but it really focuses only on Adaptive’s traditional BI / CPM / FP&A roles and offerings, and not on the expanding position as a Cloud-based, Finance-first enterprise management platform. Our experience – and the fact that Adaptive is announcing 20+ more “Solution”-oriented extensions and offerings from its Cloud platform – tell us that it will not be long before most of these relationships are strained, and in some cases broken.

And Adaptive faces a growing army of competitors beyond these three “frenemies.” As the role(s) and function(s) of Finance continue to grow, to become more complex, and to require more and better integration with Sales, Marketing, HR, and IT, directly or indirectly competing Cloud offerings include the startup Tidemark as well as more established providers such as Host Analytics, Anaplan (who we likewise hear is doing extremely well right now), IBM-Cognos (Private Cloud or hosted, e.g., Amazon), Infor, Oracle-Hyperion,  Tagetik and traditional business management suite king SAP (especially in regard to its emerging next-gen offering Cloud for Planning (see Lens360 blog post “On the Road with Finance,” 20Mar2015).

Again, at the bottom line, what Adaptive Insights is announcing and rolling out makes them more competitive, and offers them much-expanded presence within enterprises that are beginning to experience the realities of managing the Boundary-free Enterprise phenomenon. Integrative platforms such as Adaptive’s will play critical roles in enabling simple abilities to improve data sharing and application access, which will – when wielded by savvy Finance leaders and groups supported by visionary IT leaders and organizations – enable significant improvements in overall business management, led by improved ability to manage business performance across Finance, Sales, Marketing, HR, and IT.

“Business performance” is no longer limited in scope or function to Finance, because “business data” is no longer limited to Finance-specific bits (if it ever truly was). Enabling Finance to cross traditional “boundaries” into Sales, HR, Marketing, and other functional lines enables improved corporate, LOB, and functional management, from planning and forecasting to dashboard-led real-time performance insights. It makes sense to place Finance in the middle of that.