GUIDEBOOK ADAPTIVE INSIGHTS

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1 GUIDEBOOK ADAPTIVE INSIGHTS December 2013

2 July 2013 Document NX THE BOTTOM LINE Although corporate performance management (CPM) solutions have been in the market for some time, a new set of vendors such as Adaptive Insights are taking advantage of the cloud delivery model to deliver CPM that is less costly, faster to deploy, and more flexible than traditional CPM Suites. In examining Adaptive Insights customers experience with the application, Nucleus found companies were able to provide greater visibility into budgeting and planning processes to increase collaboration and productivity while improving decision making and reducing risk. THE SITUATION Corporate performance management (CPM) has traditionally been deployed to support planning, budgeting and forecasting; financial close and reporting; cost and spend management; and financial consolidation. These applications have typically been supplied as an add-on to enterprise resource planning (ERP) applications from vendors such as SAP, Oracle, and Infor or as an extension of typically business intelligence (BI) suites from vendors including IBM and SAS. While many of these solutions are relatively mature, they have also followed traditional software deployment, support, and upgrade models, and been slow to adopt the cloud delivery model. In contrast, new CPM solutions that are focused on usability, relatively rapid to configure and deploy, and often cloud-based present new opportunities for companies seeking CPM solutions that are more in line with their expectations for cost, flexibility, and integration over time. THE SOLUTION Adaptive Insights provides a cloud-based CPM suite, which includes the following: Planning, budgeting, and forecasting. Adaptive Planning s cash flow forecasting and sales forecasting software and its financial modeling engine support personnel planning, capital planning, sales and revenue planning, balance sheet and cash flow planning, streamlined allocations, currency management, and self-service reporting and analysis. Financial consolidation. The financial consolidation software, Adaptive Consolidation, supports partitioning of actuals data, intercompany eliminations, allocation planning, multiple currencies, reclassifications, journal entry tracking and export, and process tracking. Data visualization. Adaptive Insights visual designer for dashboards makes it easy for user to create and edit their own dashboards and support alerting, knowledge sharing and collaboration. Nucleus Research Inc. 100 State Street Boston, MA Phone:

3 Data integration. Adaptive data integration enables users to rapidly integrate data from on-premise and cloud applications via prebuilt connectors, Excel imports, or Adaptive s Web Services API. To better understand the value proposition of Adaptive Insights approach, Nucleus analyzed the experiences of a number of Adaptive Insights customers, from medium-sized to large global organizations, in various industries including high tech, services, life sciences, and finance. Companies surveyed ranged in size from those with 20,000+ employees with $7 billion+ in revenue, to organizations with $200 million in revenue and 100 employees. Prior to implementing the Adaptive Suite, many had been using several different solutions such as Hyperion, SAP and Microsoft. WHY ADAPTIVE INSIGHTS Nucleus found there were a number of reasons why customers chose Adaptive Insights including usability and flexibility, cloud delivery, reputation and references, and lower cost. USABILITY AND FLEXIBILITY Compared to more traditional solutions, Adaptive Suite required less initial training and set up and less IT intervention and support over time to make changes. We had Hyperion but Adaptive Planning gave us the ability to do scenario planning on the fly and as things changed we could change it without recoding like we had to do with Hyperion. I wanted the flexibility to not be dependent on IT for development or support. Adaptive makes working offsite very easy. It s also very intuitive for our financial professionals as well very easy. Customers who had used or considered other planning tools found the intuitive nature of Adaptive Planning to be a significant differentiator, enabling users to be up and running with a fraction of the training normally required for such a solution. This usability is particularly important for business users that may not use the application on a daily basis. CLOUD DELIVERY While the cloud itself wasn t a technology requirement for all customers, the financial and access benefits were a key differentiator. The two key benefits of the cloud are being able to access Adaptive from any place at any time and the system itself seems a lot more robust than the in-house tools that still go down for hours at a time. Our mantra was to live and eat cloud products on site was never a consideration. It gives ease of use for admins but also for users. Page 3

4 Customers looking at a planning solution didn t originally have cloud as a requirement, but the cost savings of a cloud deployment along with the ease of access for the users were important influencers in the final decisions. REPUTATION AND REFERENCES One customer Nucleus analyzed had previously deployed Adaptive Suite at other companies and used that reputation to drive the purchase decision. Others talked to references or participating in a pilot to convince them of the capabilities of the application. LOWER COST Customers who evaluated or had experience with other traditional CPM applications were attracted by the lower initial and ongoing costs for both software and implementation and support associated with Adaptive Insights. Customers reported being unable to justify the cost of other vendors, even if it was an extension of their existing implementation. For one customer, the cost was going to be three times higher than Adaptive Suite. Adaptive was really the only one we looked at. It met our needs and the price was extremely competitive relative to the solutions from big ERP vendors. We looked at extending our SAP implementation to include the SAP planning module, but it was going to be three times more expensive than Adaptive Planning. We just couldn t justify that difference in cost. I didn t want to have a significant cost to bring in a Cognos or something on those lines. Lower cost was a significant factor, with customers finding they could acquire Adaptive Suite at an average of one-third the cost of competing solutions, and experience further cost savings through lower support and maintenance costs. KEY BENEFIT AREAS Nucleus identified a number of direct and indirect benefits customers had achieved from deploying the Adaptive Suite, including reduced or avoided technology costs, increased productivity, staff avoidance, improved collaboration and manager involvement, and better decision making. REDUCED OR AVOIDED TECHNOLOGY COSTS Adaptive Suite users moving from Excel spreadsheet-based consolidation found they were able to support their sophisticated planning and budgeting needs without the initial and ongoing costs associated with traditional CPM solutions. Others were able to retire or reduce the cost of other existing tools that were replaced by the Adaptive Suite. As one Page 4

5 customer said, We had looked at some bigger solutions that required going out of finance and into IT. We d spend hundreds of thousands trying to get it implemented, and then you have to ask who s going to maintain it and keep it running. Nucleus found Adaptive Insights customers were able to save on initial license costs, avoid hardware costs entirely, and budget less for support on an ongoing basis. Because the application is configured and calculations are transparent in most cases, users can make changes and perform their own analysis with limited IT intervention. INCREASED PRODUCTIVITY AND STAFF AVOIDANCE Nucleus found that companies moving to the Adaptive Suite were able to dramatically increase the productivity of finance staff. Customers typically reported a 50 to 70 percent reduction in the time needed to complete financial planning and consolidation work. For many companies, this meant being able to scale and effectively support growth without adding additional staff. Customers typically reported a percent reduction in the time needed to complete consolidation work. As we add new products to our plant, we can work with managers to structure how we put them into Adaptive and do it real time next to our customers. It s a huge productivity gain in terms of being able to get it right the first time. We ve reduced the time for financial consolidation by 70 percent. We ve reduced the time finance spends trying to reconcile spreadsheets from 80 percent of their time to 20 percent of their time. Customers typically reported a 70 percent time savings in their planning process. We are able to make changes to the plan and make adjustments on the fly. Our line managers review and develop their own plans. This has greatly reduced the time required to review and increased accuracy. We used to spend four weeks to report on and track revenue streams for our multiple business units. We can now accomplish that in one day. Users are able to defined their own performance metrics, collaborate with others on those metrics and make requests for changes between themselves instead of having involve Finance. I don t think I ve seen a request at all since we implemented Adaptive Planning. Previously, our process was mostly Excel spreadsheets, required six weeks of calculation and number review, and then consolidation in SAP. Now our users do their entire budget process in three days, entirely in the Adaptive Suite. Page 5

6 Nucleus found that the time savings associated with the Adaptive Suite enabled business users to focus on decision making based on clear and available data to reduce costs, improve margins, optimize processes, and identify performance gaps. IMPROVED COLLABORATION AND MANAGER INVOLVEMENT The ability to access the Adaptive Suite from anywhere, the ability to drill down and share information between finance and operations, and the ability for managers to quickly see how changes would impact their profitability and performance drove greater collaboration and manager involvement in a more iterative budgeting and forecasting process. Companies reported having greater insight on margins, the ability to quickly adjust for headcount and other expenditures, and as a result, were able to directly impact profitability. We can make changes to our model on the fly. If we need to adjust it we can do it sitting next to the person who knows. Managers can see the direct impact of adding headcount or change a yield assumption on their budget. We are now able to plan and forecast on a forward looking basis. We have more insight on margins, and can quickly adjust headcount, directly impacting our profitability. Adaptive allows you to push a lot more ownership of budgeting to people who really need to own them: the managers on the production floors. Our performance metrics are evaluated at the board level. Now our users are able to see the impact of capital expenses and make changes ahead of time so they can adjust as required and meet their objectives. Nucleus found Adaptive Insights customers were very pleased with the empowerment that their users have experienced. The ability for the users to own their numbers has made a significant impact on not just budget delivery but engagement of all employees in the planning and forecasting process. The increase in collaboration has provided positive impact on expenses, budgetary requirements and long term forecasting. BETTER VISIBILITY FOR STRATEGIC DECISION MAKING All customers cited greater visibility for decision making and increasing the predictability of forecasts as a key benefit of Adaptive Planning. Customers reported having a single trusted source of financial data has made significant strategic impacts on their companies, providing greater transparency and insight. Page 6

7 Having a single, reliable and trusted source of financial data has made a significant strategic impact on our company. Adaptive Planning is the platform for our strategic direction. It provides us the insight when evaluating new product lines, and information we need to base business direction decisions. We build models and crunch the numbers giving us the ability to cost out projects and create 5-year projections which help drive our decisions. It has allowed greater transparency up and down our management chain as to what is going on in the plant and what our future is looking like. Everything is formula based, and all our stakeholders can see exactly how numbers are being calculated. In Hyperion, you have a module that allows you to forecast headcount and it gives you dollars but you don t necessarily know what the salary, fringes, or other factors are unless you re the guy who wrote the code. With the audit trail you can see who changed what and when. We can then talk about after it s locked why we changed it or why they did, which gives us a greater level of trust in each other and in the end product or forecast. Previously users had to use two different products to identify trends and see where changes had to be made. Now they can see actuals in one place and are able to focus on the accounts they are responsible for. In the old system, they would have to filter through 500 accounts to find the 10 they wanted in their analysis. Process is much cleaner and the users are a lot more efficient and confident in their analysis. It s allowed us to roll things out to all budget users, creating more awareness of overall departmental budgets and do more sophisticated modeling around our cost of sales. We have 10 different companies in our organizational structure. We can now link intercompany eliminations and expenses, and can easily see track the transfers, revenue and expenses between companies. Previously this was extremely challenging and difficult to resolve when the numbers didn t add up. Now our expenses are within 0.5 percent accuracy and our users are much more confident in the data. Using Adaptive Planning, we are able to have greater visibility earlier on our contract negotiation processes with vendors. We can now identify costs, change expenses and adjust services. We can now see the impact that large ticket items have on our budget, and on cash flow. One customer reported they were successful in bringing their expenses within 0.5 percent accuracy, and users had a much greater level of confidence in the data. Nucleus found many customers stated a frustrating lack of visibility into budgets, expenses, and just overall financial data prior to the implementation of Adaptive Planning. Now that their organizations have a much improved confidence in the numbers and financial data, as well as the ability to see all of the information in one single view, they have improved their planning processes, and have a much greater confidence in the budget decisions and plans they are developing. Page 7

8 BEST PRACTICES Companies that maximized ROI from the Adaptive Suite followed a number of best practices surrounding their deployment including Rethinking planning processes. Moving away from a black box approach to planning and forecasting enabled companies to rethink their planning processes and become much more granular in their what-if and scenario analyses. Driving collaboration. Because the Adaptive Suite is easily used by both finance and operational management, users found they could now focus on solving problems and creative decision making rather than verifying or arguing over numbers. Taking advantage of phased approach to integration. Most customers Nucleus analyzed had already integrated data from multiple cloud and on-premise applications into the Adaptive Suite environment for greater visibility into real-time transactional and HR information. Others took advantage of the iterative cloud approach to address initial planning and consolidation processes or specific user sites and then leveraged that experience to further extend the application to analyze data from other core application pillars and areas of the business. CUSTOMER PROFILE: DOCUSIGN DocuSign, a privately held company, provides cloud-based electronic signature technology that facilitates exchanges of contracts, tax documents, and legal materials. DocuSign s global customer base includes more than 60,000 companies in a variety of industries. DocuSign was heavily reliant on spreadsheets for financial planning and budgeting of resources such as personnel. This spreadsheet approach presented several challenges, including the time and effort to review and update multiple spreadsheets, and difficulty in developing and reconciling multiple versions of plans. Management knew it had to streamline processes and improve decision making to ensure it could take advantage of opportunities to grow the company and expand globally. Key benefits of the project included increased visibility for managers for decision making, increased visibility for sales, and improved efficiency (Nucleus Research n156 - Adaptive Insights ROI case study DocuSign, December 2013). ROI: 802% Payback: 1.5 months Page 8

9 CONCLUSION Although CPM technologies have been around for a long time, they have often been out of the financial reach or budget appetite of even medium-sized firms. The Adaptive Suite s cloud approach, usability, and scalability (as well as its ability to support global currency and reporting requirements) has driven adoption of its application by large and mid-sized firms alike. In its analysis of cloud versus on-premise deployments, Nucleus found that cloud delivers 1.7 times the ROI of on-premise applications, because of lower initial and ongoing costs but also because of the ability for organizations to leverage more value and flexibility over time from a cloud application compared to traditional on-premises one (Nucleus Research m108 Cloud delivers 1.7 times more ROI, September 2012). For every dollar spent on a cloud application implementation, customers saw nearly two dollars returned in their investment, when compared to that of a traditional on premises implementation. In addition, Nucleus has found that four out of five cloud application projects have an incremental increase in annual benefit over time without a proportional increase in costs. Key benefits reported by customers: We looked at extending our SAP implementation to include the SAP planning module, but it was going to be three times more expensive than Adaptive Planning. We just couldn t justify that difference in cost. We ve reduced the time finance spends trying to reconcile spreadsheets from 80 percent of their time to 20 percent of their time. Previously, our process was mostly Excel spreadsheets, required 6 weeks of calculation and number review, and then consolidation in SAP. Now our users do their entire budget process in three days, entirely in Adaptive Planning. Now our expenses are within 0.5 percent accuracy and our users are much more confident in the data. We used to spend four weeks to report on and track revenue streams for our multiple business units. We can now accomplish that in one day. Nucleus found Adaptive Insights customers were able to take advantage of the cloud benefits of Adaptive Suite as well as its investments in usability and robust financial management, analytics, and integration capabilities to drive greater productivity, improved collaboration, and, ultimately, better decision making. Customers reported improving revenue streams reporting and tracking efficiencies by nearly 200 percent, bringing in reporting expenses within 0.5 percent accuracy, and reducing time spent on consolidation and budgeting from six weeks down to three days; Their users were more efficient, had much greater confidence in the data and plans, and as a result, their organizations were able to confidently make strategic business decisions. Page 9