With more than $2.5 billion in annual revenues and millions of customers, Intel Security demands a lot of teamwork from its financial planners.
That's one reason that this year, the company dropped on-premises Hyperion Planning from Oracle for certain operating expense and revenue planning tasks and switched to Anaplan cloud-based business budgeting software.
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Intel Security is among the first large enterprises to move to the cloud for financial planning and analysis (FP&A). Smaller companies led the way, but this year, more and larger organizations have been migrating to the cloud for FP&A, according to analysts and vendors.
"Two to three years ago ... organizations were asking about the cloud and testing the water," said Christopher Iervolino, an analyst at Gartner, based in Stamford, Conn. "At this point, they are diving in."
Jeff Brobst, the central controller at Intel Security, said the company first began using Anaplan in 2012 when it started phasing out Microsoft Excel-based legacy processes. Intel Security -- a division of processor maker Intel Corp., based in Santa Clara, Calif. -- began using Anaplan for functions such as forecasting sales commissions and some FP&A, including determining discount approvals for proposed quotes of customers.
Anaplan now provides more than 25 financial applications to Intel Security, which has 8,000 employees. With Hyperion, which was in place for more than eight years, Intel Security only used two of its applications.
Brobst said Anaplan is very easy to use, makes people more efficient and looks and feels a lot like Excel, only with cloud advantages such as speed.
Workday covers bases with cloud budgeting
Workday's expansion into budgeting, planning and forecasting is raising questions about why it also invested in two smaller companies that offer the same kind of software.
In May 2014, Anaplan said it received a new investment from Workday, the provider of human capital management (HCM) and financial management software as a service. In mid-June, Tidemark announced that Workday was a new investor.
Then on June 30, Workday unveiled its own planning, budgeting and forecasting application, called Workday Planning, to go with its cloud ERP, HCM, reporting and analytics.
Why did Workday invest in Tidemark and Anaplan when in 2016 it will be offering its own application that would seem to compete with those two?
Leighanne Levensaler, a senior vice president responsible for direction and strategy of applications at Workday, said that in most cases, Workday Planning will be the best application to support the needs of customers for budgeting, planning, and forecasting headcount, spend, revenue, capital, and project resources.
"There will be other customer situations where a partner point system like Tidemark or Anaplan may be required to handle advanced modeling use cases in areas such sales, manufacturing, labor scheduling, or pricing," she said in an email. "Overall, it's important to note our customers will have a choice: Workday Planning or a partner application with support for a bi-directional integration."
"Large organizations are looking to move their budgeting and planning to the cloud. In fact, this has been a top request from our customers," she said.
For example, he uses Anaplan for 18-month rolling forecasts of revenues. Revenue forecasts for software are notoriously tricky, but Brobst said his are generally within 1-2% of actual revenues. Anaplan has improved and sped up revenue forecasts and made them more transparent, allowing collaboration among planners, he explained.
Anaplan also has a very good calculation engine, Brobst said. "Not only does it forecast, it quantifies the risk. Because of that, there is more trust. When you have more trust, it allows you to act with more agility."
Previously, revenue planning was done in Excel, with finance users uploading data to Hyperion for corporate compliance, Brobst explained. Similarly, some work with operating expenses was handled in the Hyperion application, and some was in Excel.
Brobst said Anaplan gives users the flexibility of Excel and the additional ability to quickly access massive amounts of data for analysis and modeling of such measures as income, expenses and profits. Excel does not provide use of those large data sets, he said.
Smaller companies first to cloud business budgeting software
Iervolino, of Gartner, and Gerard Verweij, a technology consultant for New York-based PwC, said they are definitely seeing larger enterprises adopt the cloud for financial planning, budgeting and analysis.
Smaller companies led the move to the cloud for business budgeting software for several reasons. They typically lack the IT budgets to purchase many traditional on-premises products, which initially require more cash up front as well as implementation consulting, Iervolino explained. Smaller companies also lack the larger IT staff needed to support the more complicated infrastructure of many on-premises products and prefer their products to be simpler so finance staff can use their applications without much specialized training.
Now, the cloud is becoming more popular with big organizations for budgeting and planning, according to Iervolino. Large ERP vendors such as Oracle, SAP and Workday are offering cloud budgeting, planning and forecasting to satisfy the demand.
Workday and SAP unveiled new cloud budgeting and planning products this year. Another major vendor, Infor, now offers single-tenant software as a service for budgeting and planning and will deliver multi-tenant SaaS in 2016, the company said in an email.
The cloud budgeting, planning and forecasting products are initially less expensive than their on-premises counterparts, Iervolino said. These cloud-based applications also have a faster time to value and tend to be easier to use, allowing leaders outside of finance to participate and provide more collaborative forecasting, he said.
Of the different types of financials, planning, budgeting and analysis is among the first to move to the cloud for a number of reasons, Iervolino explained. For one, there are many cloud products in the category. Also, they offer a faster time to value and improved ease of use that facilitates wider adoption between the finance office and other business divisions.
Verweij said CFOs at large companies are more trusting and understanding of cloud functions after seeing progress and results in cloud software for customer relationship management and human capital management. The SaaS licensing model also means costs can be more predictable and more economical in some cases, he said.
It's easier for CFOs to move planning, budgeting and forecasting to the cloud because there is relatively less risk than with core financials, Verweij said.
CEOs and CFOs are also seeing that the cloud can be more nimble.
"In order for them to meet their growth agenda, certainly when you look at companies that need to quickly expand across multiple territories around the globe, they need to scale up quickly," Verweij said. "They are looking at this more from an agility perspective. That is a key point."
Cloud business budgeting software present challenges
CFOs, especially ones at large public companies, might be more reluctant to adopt the cloud for core financial functions such as revenue and treasury management, or management of accounts receivable, accounts payable and general ledger, according to Verweij. However, more are asking about the ramifications of moving these core financial functions to the cloud.
He said PwC is also seeing some challenges for big companies moving FP&A to the cloud.
In particular, mature public companies are used to systems that are heavily customized to meet their needs, Verweij explained. They may have gaps in their data or broken forecasting processes. They may also struggle with establishing the structured and consistent processes and clean data that are required to fully unlock the benefits of the cloud, according to Verweij.
The big difference with cloud is that new and rich functions are released two to three times a year. Finance leaders need to assess the new functions and see what will benefit their systems.
Despite these challenges, cloud vendors such as Tagetik, Host Analytics and Adaptive Insights said they are signing new contracts this year with big enterprises.
The Golden State Warriors, LinkedIn, the Minnesota Vikings and the University of Arizona were some of the enterprises that purchased cloud planning and budgeting from Adaptive Insights in 2015, a company spokeswoman said in an email.
New customers for Host Analytics include AMG Advanced Metallurgical Group, HomeServices of America, Purdue Pharma and Steinway & Sons, a spokesman said.
Also in 2015, Tagetik Software signed contracts to sell cloud planning and budgeting to large companies such as Abengoa, Barilla, Carrefour and Spotify, said Dave Kasabian, chief marketing officer at Tagetik.
Kasabian cited a survey by Saugatuck Technology that found 52% of organizations with 10,000 employees or more plan to move planning and forecasting to the cloud by 2017. The survey, conducted in November and December of 2014 and licensed by Tagetik for marketing reasons, found only 10% of such organizations are currently using the cloud for those functions, he said.
Comparing companies of various sizes, the Saugatuck research also found that those with 10,000 or more employees are the least satisfied with their current planning and forecasting product, he said.
"That creates a big opportunity in the market,'' he said. "A lot of larger enterprises will be demanding cloud over the next couple of years."
Get more insights from Gartner's Chris Iervolino
Read a guide to SaaS financial management
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