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CEO Tech Talk: Customer Wins Over Excel, SAP, Oracle Fuels Anaplan Hyper-Growth

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After CRM with Salesforce.com , Human Ressources (Workday, SmartRecruiters...) and Service Management (ServiceNow, BMC), cloud-based Planning and Forecasting solutions or Corporate Performance Management (CPM), as it's called in industry lingo, is poised to be the next wave of cloud solutions to disrupt the enterprise software market dominated today by traditional players like SAP or Oracle .

A few startups like Adaptive Insights, Anaplan, Host Analytics, Planisware or Tidemark, managed to grab most of the mindshare and venture investments - over $500M to date - of this new wave and are currently enjoying triple-digit growth, mostly fueled by customers migrating away from spreadsheets and legacy solutions.

Earlier this week, Anaplan - which raised a total of $150 million in venture capital so far - announced another record year-over-year triple-digit growth, for the first half of its current fiscal year ending January 2016,  in terms of revenues (+134%), full-time employees (over 500) and active users (+160%), now passing the 50,000 mark. Customers include HP, Verizon, VMware , United Airlines, Pandora and Facebook.

I recently sat down with Anaplan CEO, Frederic Laluyaux, to talk about some of the reasons enterprises are turning to these new cloud-based CPM startups, which compete for a share of this $12 billion market, as well as the future of the San Francisco-based startup. Below are edited excerpts from our conversation.

Jean-Baptiste Su: So what exactly and in layman terms does Anaplan do?

Frederic Laluyaux: What we do is fundamentally allowing you to plan the future and say "what if?" What if I allocate more budget or more capital in that part of the company versus that line of business, or what if I change the way my geographic coverage works, my sales compensation works, etc, in real-time and based on the latest sets of company data. While Business Intelligence gives great insights of what happened in the past, Anaplan helps you project in the future and optimize your company's performance.

JBS: But aren't enterprises already doing that?

FL: Yes, and actually I love to say that we're solving old problems (budgeting, planning, forecasting...) that are currently solved by legacy applications and spreadsheets, with a modern cloud-based approach powered by our proprietary in-memory database technology, Hyperblock. What enterprises are currently doing is dumping all the data they have from their ERP, financial systems, etc... into an Excel spreadsheet and start doing their planning and forecasting. The problem with Excel is that it's not scalable, it's a manual and error-prone process, it's not auditable, and the rules are set at the cell level which is a mega problem because it makes it hard for people to understand the overall model.

JBS: So why people are still using Excel for their financial forecasting and planning?

FL: There are 2 fundamental reasons. First, because they were no real alternatives until a few years ago when cloud-based solutions like Anaplan started to appear. But the main reason why it was hard to displace Excel, which is a personal productivity tool that never meant to be an enterprise collaboration tool, is the sense of immediacy, which comes from the fact that the data, the logic and the visualization are all in the same place. Which is what Anaplan also offers but at a much bigger scale and really designed from the ground-up for enterprise collaboration.

JBS: What's unique about Anaplan's approach versus other cloud-based competitors like Adaptive Insights or Host Analytics?

FL: What we all do requires incredible resources in terms of computing power, modeling and programming. It's really the combination of 3 things: the data volume for those models to be relevant, the complexity - the models need always be up to date- and the collaboration collective intelligence applied to a given problem. In order to accomplish that we invented and developed during 4-years our own in-memory data engine, Hyperblock. We have customers now that have over 200 billion cells in their model, that they can change and update on the fly! And there are today over 13 trillion cells being managed in the Anaplan platform. Nobody else can do this, and certainly not Excel!

JBS: In-memory databases are not new. Is SAP Hana also a competitor?

FL: What's really unique about Hyperblock is that in our data engine, we've also built-in intelligence and visualization. It's not a tiered approach where my data sits in one place - like in an in-memory database -, my rules and logic in another, and my visualization on top of it. With Anaplan it's all embedded. And no one else has done it.

JBS: You've raised $150M so far. Is an IPO next?

FL: It depends on the market condition and our readyness. We feel like we have the right business volume and momentum to do it. Now we'll decide what is the right time, should we decide to do it.

JBS: What are really the benefits for a startup like Anaplan to go IPO, if you can raise additional capital on private markets?

FL: We are a mission critical platform for a lot of large companies which rely on Anaplan to run their business. For example, we have a customer that runs 27 apps on our cloud platform. So it's legitimate for these customers to ask us to go public because it gives them assurance that we'll remain independent over the long term. The other advantage with the IPO, as it provides a liquidity event for employees, something that we're not under pressure to do just yet, because the company is growing really really fast and everybody is happy with the way it grows. And obviously it's also a way to raise money for expansion or acquisitions.

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