How Anaplan makes dynamic strategic planning a reality

Anaplan doesn’t come up in many conversations about unicorns – you know, the Ubers, Airbnbs and SnapChats of the world. But if your company is struggling with strategic planning, Anaplan is one unicorn you’ll want to learn more about. San Francisco-headquartered Anaplan’s cloud-based platform replaces spreadsheet mania as a way to handle large-scale strategic planning in real time. Companies such as HP, Intel and Morgan Stanley are streamlining sales management, forecasting and a variety of other applications using Anaplan, which simplifies life for everyone from senior managers to model builders and end users.

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Anaplan founder and CTO Michael Gould tells IDG Chief Content Officer John Gallant how the platform’s in-memory calculation engine can support dynamic planning for even the biggest companies, and why being built in the cloud gives Anaplan a leg up on traditional planning apps from rivals like IBM and Oracle. Gould also discussed Anaplan’s growing app marketplace where a variety of new tools are helping customers improve planning across the company, and how this unicorn is capitalizing on all the venture investing it has earned.

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CIO.com: Why was Anaplan formed? What problems were you setting out to solve?

Anaplan founder and CTO Michael Gould: I started Anaplan 10 years ago. My background was with Cognos and IBM and I recognized the challenges of decision making in organizations. We’re trying to get away from the planning process being just an annual exercise and driving it towards decision making, a much more immediate course-correction process.

I’ve been in enterprise planning software for most of my working career and the products that were out there were pretty old. They date back to a mainframe system I’d worked on as an intern back at IBM in the mid-80s and the other products around had a similar vintage. I recognized the need for a new platform in large measure to address the problem that people were reverting to spreadsheets for almost all actual decision making in an organization. They would pull the data out of the existing planning systems, but do the real work in spreadsheets, send them around, collaborate over email and then, having made a decision, post the results back into the system as the means of recording, aggregating and reporting those decisions.

Anaplan was intended to address that problem for organizations, to give a platform for running the decision-making process.

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CIO.com: It’s a cloud-based solution today.

Gould: That is correct. We launched as a cloud-based platform.

CIO.com: Can you help readers understand the key elements of your Anaplan system and how they work together?

Gould: At the heart is an in-memory calculation engine designed to support the same kind of interaction and immediacy you get working with a spreadsheet; you can enter data and immediately see it recalculate. You can adapt and change. It’s very versatile in terms of different problem spaces that you can apply it to. On the one hand trying to keep the agility and versatility you get with spreadsheets but with enterprise scale. Enough structure, enough data volume handling, enough performance to be able to run the kinds of modeling and planning activities required for the largest companies in the world.

CIO.com: Can you describe Hyperblock?

Gould: It’s an approach to the way we handle the data in memory and it’s optimized to enable very fast changes to the data. If you think of BI systems, pulling data out of transactional systems and structuring it in a way that you can query and report on it, to a large extent the data isn’t changing in real time.

With the planning application, end users are interacting with it and wanting to see the impact of those changes. If you’re doing promotions planning, you want to create a new promotion, assign some products to that promotion, you need to see the rollup of that in terms of your planned expenditure across different customers, across different product lines and so on.

Hyperblock is the way the data is structured internally, in memory, in order to allow very fast propagation of changes through the system, both in terms of data entry, putting in new data values and seeing them recalculate, but also in terms of some of the structural changes, creating a new promotion, adding products to that promotion. Those are opening up new slots within your data structure that you then need to recalculate. The Hyperblock architecture is really how we optimize for those interactions, that very fast change, both in terms of data and in terms of structure.

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CIO.com: You strive to make this accessible to virtually anyone and that’s always seemed to be a challenge for planning or analytics tools. What have you done from a user experience perspective to make this useful for lots of different people in the company?

Gould: First, we’ve aimed to keep the user experience unified for everyone from administration to model building to the actual use of applications, both in terms of contribution — end users who are feeding data into it — and executives who are reviewing data within the application. They all work with the same web-based interface but just have access to different parts.

For example, there will be some modeling areas that are only accessible if you’re a model builder. But the real point is to keep that a single, simple experience. In many ways that’s building on the success of the spreadsheet as a ubiquitous tool across organizations large and small. If you’re a senior manager or executive reviewing data, you go into it as if it were a simple dashboard and that’s all you expect to interact with within the platform. End users contributing to the planning process will interact with certain screens that guide them through the tasks that they need to contribute and then there are other parts of the platform that become available depending on what your access is.

CIO.com: Whom do you sell to and who brings it into the organization to start?

Gould: What we’re looking for initially is a particular pain point that is a sufficiently high priority that there’s a lot of attention to it within the organization. That could be in financial planning, sales operations for quota planning or sales forecasting. It could be in supply chain for demand forecasting. We’re looking for is a process that’s either broken or inefficient and there’s a real need to address that. We work outwards from there as people grasp the potential applicability of the platform across multiple use cases within one function and then across multiple functions.

CIO.com: What typically is the role of the IT department in the deployment of this?

Gould: We aim to engage with IT from the outset. The design of models is often most appropriately done by the business analyst, people within the business who understand the domain and the problems they’re trying to solve. But at the same time you have to have IT involvement for data integration, for security signoff and for the governance around the quality of the data.

Typically, we’re working both with IT and the business — getting collaboration where they understand the roles, where IT stops and the business takes over. We encourage IT to own the quality of the data going into the system because they have the background, the understanding of the data integration process and the governance around that. Also, tying the data back to the corporate data warehouse to make sure it all ties in before planning processes start, making sure you’ve got the right data before you get going.

CIO.com: Are IT departments using this for their own planning?

Gould: We have customers using it for IT costing, tax planning for expenditure, things like that. Typically, Anaplan is geared towards future decision making, as I said earlier. It’s not really designed to be a transactional system.

Actual management of what’s currently going on in your business is not really what we do. We interact with other systems when you’re at the transactional level, but we focus on forward-looking planning.

CIO.com: Can you talk a bit more about the predictive analytics capabilities of the product?

Gould: We have integration with optimization tools for predicting supply chain, for optimizing production across different factories. We have a range of statistical forecasting methods available within the platform. An area of we’re looking at a lot — not live yet in the platform but a very hot topic — is machine learning and the use of historical data. For example, customer buying patterns of telecom companies, then feeding that into your planning and forecasting models.

In a sense, it’s not at the heart of what we do in terms of the actual technology that we produce. We’re aiming to integrate with other tools. We’re not building our own machine learning algorithms in order to drive our models, but it’s very closely coupled and something that our customers are very interested in.

CIO.com: Can you talk a little bit along those lines about what are some of your key products and tools out there that you are integrating with?

Gould: We integrate with optimizers like CBC we use for linear programming optimization. At the back-end we would be integrating with Python, primarily to make use of the wide range of forecasting techniques that have been developed, as well as the main programming languages where we see the most active development. Apache Spark MLlib for the machine learning side.

CIO.com: Can you give me an example that shows how Anaplan is being used?

Gould: One of the customers that has been working with us for the longest [time] is Intel Security, formerly McAfee, which became part of Intel a couple of years back. They started with territory and quota management, looking at the problems they had with something approaching a couple thousand sales reps across the world.

Obviously, with a sales force of that size you have a lot of churn of sales reps leaving, new ones coming in and just keeping track of what quota they had allocated to the sales reps. This was a very Excel-driven process. We implemented a solution for them. It went live in just a few weeks. They then came back to us and asked if we could help with their commission calculation process, the crediting rules to take their existing bookings data, how to allocate that to the right sales reps and calculate commissions and then start to model out future commissions, which are a huge expense for any company that’s driven off an enterprise sales team.

From there they spread out across multiple applications in sales operations, into finance and starting to connect all those pieces together. They have close to 30 different applications up and running now.

CIO.com: Is there another use case that you can share with us?

Gould: Another great example is HP. They use us for quota planning. We’re actually working with two different customers there, but they implemented a global rollout of their quota planning, essentially the process of assigning customer accounts to their sales reps across the world.

It used to take them around four months to go through that process. They started a couple of months before the end of the fiscal year, but it wasn’t actually complete until a couple of months into the new year. This whole process was so delayed that they were basically struggling to understand where they were as they went into the new year. We implemented a solution for that with them. They went live within five months start to finish and now are able to have that quota plan in place right at the start of their new year.

CIO.com: You mentioned the old-school competition that was out there when you built this product, but who do you compete against today? Are you typically augmenting existing systems or replacing existing systems?

Gould: Our main competitors are still the big vendors; IBM, Oracle, SAP. To some extent we compete with the use of Excel, but we’re not trying to replace Excel. We’re not a spreadsheet.

Excel is a great tool for personal use. What we say is we’re trying to get away from inappropriate use of spreadsheets for running large-scale processes, planning applications within big companies. It’s primarily the planning applications from IBM, Oracle and SAP but not on the transactional side. We’re not competing against their GL systems or anything like that.

CIO.com: Are any of those offerings cloud based at this point or are you the only company with cloud-based capability for that?

Gould: Some of them have taken existing old systems and created a cloud version of them, but I think that’s a very different proposition to building something for the cloud from the ground up. You can take pretty well anything and put it in the cloud if you try hard enough, but basically you’re running single instances of software and just hosting it on people’s behalf.

Anaplan is fully multi-tenanted. We can run multiple instances within the same server for different smaller clients. Bigger clients typically require dedicated machines just for the same data processing that’s required. I don’t see any of those [rivals] having true, ground-up applications that are built for the cloud.

CIO.com: Michael, you had substantial venture investment in your company since the founding. How have you used that investment to advance Anaplan?

Gould: Two main areas. One is expanding globally in terms of our sales team. Even from an early stage we were a very global company. Our first sale was in the U.S. The second one was in Australia. The third one was in the U.S. again and we quickly started getting customers in Europe.

We have offices around the world, 15 countries, in the Far East, Russia and Europe as well as in the States. That partly reflects the fact that even though we’re a relatively early stage company, we’re dealing with primarily large global organizations and so require that local presence anyway. That’s one side. The other side is R&D.

We have a fairly complex platform. We’ve been working on it for 10 years, but there’s still a lot of development going on and we’re investing in building up the engineering team. We’re just about to open a new development center in London to bring in back-end Java developers working on our core engine there.

CIO.com: I want to ask you about the Anaplan App Hub and if you could explain a little bit more about what that is, what’s available on there and how you see it growing?

Gould: These are preconfigured applications. The platform is very open and is very flexible. In a sense, if you just start with the platform you’re starting with a blank sheet. What the App Hub is providing is previous applications and they range from fully fledged applications that you take from the App Hub and use as is with minimal configuration. For example, for consolidation you don’t want to be reinventing accounting rules and how those are implemented from scratch. You want to have those built for you. That would be one end of the scale.

At the other end of the scale, there are applications that are, if you like, examples or templates to get you started, to show you how to approach particular problems. A lot of our focus more recently has been on having partners bringing applications to the App Hub. More than half of the applications there are built by partners, some smaller boutique firms but also some of the big players — Deloitte, PWC, Accenture and others bringing their applications to the App Hub. This is really a vehicle for them to bring their domain expertise into the platform that we provide.

As a company, we never expect to have deep understanding of all different nuances of financial planning applications or supply chain. Zero-based budgeting would be a great example. We have a number of the large consulting firms providing zero-based budgeting solutions and that’s not a skill set that we have in-house. A great example of that would be Kellogg’s, who worked with McKenzie implementing zero-based budgeting on App Hub.

CIO.com: Is that a mix of free and paid applications?

Gould: Yes. The Anaplan ones are included with the platform subscription. Essentially, any Anaplan provided application is available. The partners are free to charge for the app or just charge for the professional services that go with it.

CIO.com: Obviously, corporate strategic plans are about as important and critical data as companies have. Can you talk about the security aspects of the platform? Is security an obstacle to adoption of the platform?

Gould: It’s certainly a question that comes up a lot. We deal with, as you say, a lot of very sensitive information for very large companies. We obviously take it very, very seriously. It’s incredibly important that we’re secure. One of the things that we’re about to roll out is bring-your-own-key encryptions. This is essentially putting the management of the encryption keys in the hands of our customer security team and separating that from the running of our data centers. This is around how the data is encrypted at rest from its storage into the actual app server, where the data is being processed, right through to the point where it is in memory. Enabling that kind of technology is absolutely critical.

We deal with large banks doing HR planning. Morgan Stanley is one who has been using Anaplan for incentive compensation management, so highly sensitive information there. What we’re seeing is that it’s a very important topic. It isn’t a roadblock. We haven’t seen customers who walk away from it. When you get down to the reality of it, if you really look at what your risks are, they’re probably just as great in your own data center, possibly higher than in a cloud-based platform. For one thing, you’ve got a lot more people actually testing it. Pretty well all our large customers run their own penetration tests on our network prior to signing up with us and, obviously, an in-house data center doesn’t have that level of scrutiny.

You’ve also got some aspects of separation of duties, particularly with the BYOK encryption. The encryption keys will be managed by the customers’ security teams and separated from our own data center staff, who run the physical hardware so there’s some benefit there. It is clearly a very hot topic, but I think it’s one that is overall, even the biggest companies and most security conscious ones, are accepting and working with rather than pushing back against.

CIO.com: What’s the pricing model for the product?

Gould: We’re comparable with other SaaS vendors. It’s essentially a per-user pricing model. We’re probably at the high end compared with others in the space, but not dramatically above others.

CIO.com: Any sense of what that is to give people a better understanding?

Gould: I’m not sure if it’s okay. I’d rather not go into details with the pricing model if that’s okay with you.

CIO.com: What’s ahead for the coming year, what would you want people to know you’re working on or you expect to deliver in the coming year?

Gould: A big focus for us is on reporting and integration, really aiming at opening up the platform further for integration with third-party tools. We have a lot of customers who have reporting systems in place and want to use different visualizations and so we’re working with a number of partners, some of whom are customers. We’re doing a lot of work on predictive analytics as we touched on earlier, forecasting techniques, Monte Carlo simulation and continuing to invest in the core platform, the scalability, the performance, handling large models and getting faster response times.

CIO.com: What’s the one key thing you would want a CIO or another senior IT executive to understand about the company?

Gould: Anaplan is a platform that can run across multiple use cases across their business. So as a CIO, it’s a way of putting into the hands of the different functions within the business a tool that they can build their planning applications on and run them, still under control of IT.

Compared with a lot of what happens with spreadsheet-based systems or people with their own little databases on local servers in a very fragmented landscape, I think the one key thing that we offer is a platform that you can use to drive your decision making right across the business. And that’s great news for a CIO to have that potentially available to them.