A profile of Adaptive Planning.
If you’re trying to forecast next year’s revenue but find yourself drowning in Excel worksheets it might be worth looking at a dedicated forecasting and budgeting tool. This used to mean investing in an expensive server to run a database for analysis of company finances, but cloud-based alternatives have now started to emerge.
Adaptive Planning claims to be the first cloud-based tool of its kind, sitting between Excel at the lower end and SAP, Oracle and IBM in the enterprise. The starting price is $3,500 a year for three users with configurations depending on the type of users and the length of the contract.
BoxFreeIT spoke with Greg Clarke, CEO of ABM Systems, Adaptive Planning’s distributor and reseller in Australia, about the merits of Adaptive Planning and its use for forecasting by small and medium businesses.
BoxFreeIT: How well-established is Adaptive Planning?
Greg Clarke: The company was founded in 2003 by a frustrated accountant who thought there should be better ways of doing budgeting than in Excel. It went on sale in 2006 and now has 1000 customers globally with well over 20,000 users in 32 countries.
BoxFreeIT: What type of customers do you have in Australia?
Clarke: There’s definitely a higher utilisation of the technology in the SME (market). There’s about 40 customers in Australia, including Thiess, James Cook University, Rheem, Siemens and Phillips. The NSW Department of Housing is our largest customer.
Companies that are under 30 people in size would probably prefer cobbling things together in Excel. Once you get to a level of complexity in a business it would look for systems of this type.
BoxFreeIT: Which staff use it in a business?
Clarke: The buyer is the CFO, the accountant or the financial controller. They are the ones who have the pain points by doing forecasting in Excel without rigour, and it takes a long time. The users are the one to three people in the finance department and then each of the department heads and cost centre managers. In a small enterprise of 50 seats you might have half a dozen users.
Next page: What Adaptive Planning does better than Excel
BoxFreeIT: What does it do better than Excel?
Clarke: I would describe it as Excel-like in the web. It has the familiar feel with columns and rows, but there are several things that make it a good technology.
It’s methodology agnostic. if you want to have a top-down, driver-based, rolling forecasting methodology you can apply that framework or have a bottom-up, chartered account, line-item historic approach.
It’s got a lot of smarts that Excel doesn’t have. You enter a number and you can roll it forward, increment and decrement it using pre-built criteria and then apply that using seasonal patterns. It’s all colour-coded, there’s an audit trail and real-time consolidation of information. As soon as someone has entered their budget information it’s consolidated to the top immediately.
Also you have the central management of formulae and assumptions which you can’t do that easily in Excel. The formulas are name based and not cell based. As you’re doing exploration of your budget and figures you can drill down to see if a formula takes into account full-time employee headcount, multiplies it by a standard rate that’s built up from certain accounts. All that is named in the formula rather than seeing C3 times D12 (cell co-ordinates, as in Excel).
If the FTE headcount is 7.5, who is it made up of? If the per handset freight is $40 you can drill down and see where that has come from. And people can’t muck around with formulas.
BoxFreeIT: Is that a problem, people changing formulas?
Clarke: That’s a big problem in Excel because you develop a standard and then people add columns and rows and change formulas and decide to copy and past things that they shouldn’t. You can control all that sort of stuff in Adaptive Planning, lock it all down and ensure that people can only input stuff that they can input and have tolerances around things so that they can only operate in bands.
BoxFreeIT: The pricing seems hefty for a cloud-based program. Is that because of the technology or the database requirements at the backend?
Clarke: I don’t think it’s hefty pricing at all, I think it’s very, very good pricing for the space that it’s in.
BoxFreeIT: What does it compare to?
Clarke: I would say (it compares to) some very well-known applications like Cognos from IBM or Hyperion (now part of Oracle’s performance management platform), Business Objects from SAP. And you’re talking about 10-15 percent of the cost of those applications.
Most of the implementations are up in running in a few days or weeks, not months. There’s a major cost benefit arising from the technology just in terms of ease of use before you start to take into account the normal stuff of cloud computing such as saving on infrastructure and database administrators and all that.
There were two things that attracted me to Adaptive Planning. If you’re tech savvy you can log onto the website and try it straight away. Prospective clients don’t have to do anything other than supply a name and an email address.
They also operate a global open pricing model. People can come and enter in user numbers and other aspects of the configuration to work out the pricing. (The price calculator is here.) Prospective users can develop a very good understanding of what the tool can do and how much it will cost.
BoxFreeIT: Why does it charge for the number of connections?
Clarke: You can import data from CSV (files) or Excel directly into and out of Adaptive Planning. A lot of customers a very happy with that functionality. Others want to integrate it into a general ledger system, HR, CRM, and so on. (Each custom connection incurs an extra cost.)
BoxFreeIT: Could accountants use Adaptive Planning to produce reports for clients?
Clarke: It’s possible – the report writing is pretty good. You can structure things so you’re generating a consolidated report of P&L and balance sheet and cash flow and so on as a multi-worksheet workbook into Excel.
All of that is designed as a standard for regular report production, and (reports are generated automatically). It uses all the nice colour coding of variances and numbers and charting that Excel offers.
To a small accounting practice it does open up a good potential revenue stream in terms of training and consulting for implementation. Not only are they working on the technical, ‘this is how you migrate what you’ve built in Excel into this tool’, they can also provide advice on best practice planning.
They could say, ‘You have a budgeting approach that isn’t very good, it doesn’t really encourage innovation, and everything is based on taking last year’s (figures) and adding a bit, and you’re building a lot of cost into your business that you don’t need to build in. We can provide you some advice on better ways of planning.’