The Cloud and Performance Management

Cloud computing has been getting a lot of attention in the media lately—and with good reason. Beginning with pioneers like Salesforce.com, we are witnessing a profound shift in the enterprise software market as business applications are moving to the cloud, which is simply computing and storage services moved to the Internet.

Nearly every business application start-up in the past 10 years is principally offered as software-as-a-service, or SaaS, and even many of the large, on-premise software companies are quickly moving to offer hosted versions of their software. There are 13 public SaaS companies with a combined market cap of over $35 billion and the SaaS category is growing at 20 percent compound annual growth rate, or CAGR.

This article will explore some of the reasons why this is happening and apply these reasons specifically to corporate performance management. This is not just a debate about software delivery models. We believe SaaS offers a more compelling value proposition to corporate buyers that can be summarized by the following points:
1. Lower TCO and faster ROI
2. World class environment owned by finance
3. Focus on the business solution
4. Value added services.

Let’s explore each of these in a bit more detail.

Lower TCO / Faster ROI – For a specific suite of applications like planning, consolidations, and reporting, SaaS offers better economics. It provides companies with a predictable cost structure based on price per user fees with all infrastructure, hardware, and data center costs accounted for. There are no hidden costs and the cost of the software and ongoing maintenance is lower by leveraging a true multi-tenant SaaS environment. Implementations tend to be more straightforward due to the consistency of the platform and the modular, iterative nature of the work. In many cases, the implementation can be delivered via fixed priced efforts and/or via a managed service. Finally, application maintenance is significantly less than a traditional on-premise as most of the maintenance effort is done by the SaaS vendor.

Environment Owned by Finance – Another benefit of going with a SaaS vendor is that it provides the organization and the FP&A team with access to an application environment with very little support from IT. Maintaining financial systems is never core to any business so leveraging a platform allows IT to focus on those systems that are core to the business. Also, a combination of rapid product innovation via included upgrades to the environment and SAS 70 Type II compliance provide the organization with a platform that keeps getting better and is also very secure.

Focus on the Business Solution - Perhaps one of the biggest benefits to going with a SaaS vendor is that it allows FP&A to focus on the business solution, not the technology infrastructure to support it. Many times, corporate performance management projects are consumed with discussions about how IT is going to install and ultimately maintain a pretty complicated on-premise software application. By going with a SaaS vendor, your organization is able to take advantage of a flexible, scalable platform that will grow as you grow. It is also easy to learn and easy to use so you can focus on how to improve your business, not your knowledge of the software.

Value-Added Services - A final benefit that does not receive much focus is the value-added services that a SaaS platform can provide over time. What is emerging is a new breed of services. Whether through the vendor or the partner ecosystem we will start to see services such as benchmarking, integration of third party data (econometric, weather, commodity prices, etc.), application modules and templates, etc. that will fundamentally provide a richer experience beyond what single tenant, on-premise solutions can provide.

Remembering Steve Jobs

I finished watching Modern Family and switched the channel to CNBC to catch a special on China when I saw the news that Steve Jobs had passed away at the young age of 56 after a long battle with cancer.  We all knew that Steve was very sick and his recent passing of the torch to Tim Cook only emphasized that point. But this was so final.  I sat there stunned.  I never met Steve and even if I played the six degrees game it would be many steps before I would get to Steve.  Even so, his life had a big impact on my life – he inspired me.

I remember when my family purchased our first Apple product – an Apple II computer.  To me it was the coolest thing in the world even though it couldn’t do very much compared to today’s devices.  I remember the release of the Macintosh computer and the iconic Super Bowl ad in January of 1984 and seeing the computer for the first time at the local computer store and desperately wanting one.  I remember buying my first Macintosh, opening up the box and being amazed.  This was different.  This was cool.  I was hooked.

I closely followed Steve’s career – leaving Apple, starting NeXT, buying Pixar, and rejoining Apple.  Along this insanely great trajectory he changed the computer business, he changed the music business, he changed the animated movie business, he changed the mobile device business, he changed the retail business.  He changed business.  He inspired entreprenuers around the world.  He made design not just cool but core.  He put a dent in the universe.  He inspired me.

For those of you who have not seen Steve’s 2005 commencement address at Stanford University, watch it. This is Steve at his best and he makes three important points as only Steve can.  He talks about connecting the dots with our experiences in life.  He talks about love and loss and the only way you can do great work is to love what you do.  He talks about death as life’s change agent and urges us not to waste time doing things we don’t love.  He closes and tells us “to follow our hearts and intuition, to stay hungry, stay foolish.”

Thank you for inspiring me Steve and rest in peace.

-SM

Summer Outing 2011

We had our summer outing on Friday of last week.  I spent the night before hoping that we would catch a break since we were in the middle of a slow moving weather system that had dumped a cool rain on us the previous few days.  If the weather did not cooperate we would have to move to plan B for the outing.  Fortunately we got the break I hoped for and were treated to overcast skies, no rain, and good wind for our Round the Island sailing regatta organized by the Boston Sailing Center.  We split the company into a small fleet of J24s.  Since our sailing resumes were thin, each boat had a more than competent and helpful captain provided by the BSC.  We had a short briefing at the center then headed to our boats where our captains filled in more details as we headed out to the starting line.  For more commentary and pictures of the sailing please friend us on Cervello’s Facebook Page.

After the sailing we headed over to Joe’s on the Waterfront and quickly took over the second floor as spouses and significant others joined us.  We seamlessly transitioned from the post race cocktails to the pre-dinner cocktails and appetizers.  Like many events with our crew, we had fun giving each other a hard time about the happenings during the regatta.  After dinner, the real fun began as John, Patrick, Tripti, Garvin, and Mike (“T-Bone”) roasted the founders with “The Real Story” of Cervello’s founding.  They were the hit of the show.   The usual speeches were followed by a team “Minute to Win It” competition followed by more cocktails. Overall it was a great outing.

Some quick thoughts.  Even though we are a young company, we have a great culture. I was really impressed by the group that without prompting wrote and delivered the roast.  They had the crowd howling with laughter and took the initiative to make it happen.  In addition, we have great people.  We have a number of people that live outside the Boston area so it is rare to see everyone in one place.  The outing gave me an opportunity to observe all that we have built so far and I felt really good about the team we have assembled and the people supporting them.

Great culture and great people – I think that is a winning combination for our small company.  I want to thank the team and the people that support us.   Pull in the mainsheet, head up, and let’s keep sailing hard.

-SM

Be Agile

In the last post I shared my thoughts on how some of the principles advanced by the lean startup movement can be applied to an analytics & planning program.  In today’s post, I would like to take this train of thought a step further and apply some of the principles from agile development.  As a quick background, agile development is a group of software development methodologies based on iterative and incremental development.  The term came into formal use with the publishing of the Agile Manifesto in 2001, although the ideas of being lightweight and adaptive have a strong link to the early days of software development.

So, how does a software development methodology relate to the development of analytics & planning applications?  Let’s take a look at the manifesto itself:

“We are uncovering better ways of developing software by doing it and helping others do it.  Through this work we have come to value:

• Individuals and interactions over processes and tools
• Working software over comprehensive documentation
• Customer collaboration over contract negotiation
• Responding to change over following a plan

That is, while there is value in the items on the right, we value the items on the left more.”

 Let’s look at each of these concepts in terms of how they apply them to the development of analytics & planning applications.

•  individuals and interactions over processes and tools  -  For an application development team to be successful, we believe that self-organization and motivation are important, as are interactions like co-location (where possible).  If we can mobilize a team that works interactively with our clients then we typically produce our best work.
• working software over comprehensive documentation  -  As part of how we work with our clients, we continually emphasize working application modules rather than just presenting documents to clients in meetings.  Being able to touch and feel a dashboard, a report, an input template, or an ad hoc analysis environment is worth more than words on a page.
• customer collaboration over contract negotiation  -  A key tenant to building successful analytics & planning applications is to have tight, continuous stakeholder involvement.  The applications we are building are management tools and need to reflect the unique needs of each client.  Metrics are only effective if they are used and this only happens through collaboration.
• responding to change over following a plan  -  Agile development is focused on quick responses to change and continuous development.  This approach allows our teams to embrace change to make the applications more compelling / viral and to start small and deliver increased value over time.

We believe that through the application of agile software development methodologies to analytics & planning applications you can better align your efforts with the cadence and changing needs of the business.  It allows you to start small and quickly and consistently deliver new modules rather than taking a big bang / high failure approach.  Simply put, we believe it is a better way.

Be Lean

I would like to share some thoughts on what it takes for an organization to use analytics to gain competitive advantage.  As is typically the case for me, I like to find inspiration from ideas outside of the space and will use some of the thinking on lean start-ups from Eric Ries and Steve Blank for this post.

Lesson #1 – Think like a start-up.  Think like a start-up and put enough thought into what you are trying to achieve and what your customers will “buy” then get started.  Pick areas of the business where you have decent data and the results of the analytics will have a big impact on the organization.  Just as an entrepreneur should not waste time on a detailed business plan you should not waste time on a detailed roadmap.  Sketch it out then get moving.

Lesson #2 – Focus on speed through the loop.  Move quickly through the loop.  Once you pick an area of initial focus start building the “minimum viable product” (an application with the least amount of functionality and complexity to get your customers going).  Treat your internal customers like real paying customers and deliver enough of what they need to find the MVP useful but looking for more.  Minimize total time through the loop and repeat.

Lesson #3 – Measure and learn and be willing to change.  Listen to your customers and measure their behavior.  You may have created beautiful dashboards with lots of interesting data but if people are not using them then your effort is wasted.  Think like a software product manager and pay attention to what is going to make your application viral.  You want people to use the applications so be willing to change to make this happen.

Lesson #4 – Don’t over invest until you know what you are investing in.  Don’t make the classic mistake and start by building more infrastructure than you need.  Scale the infrastructure to meet the needs of your analytics program.  Creating a global sales analytics application is very different than creating a data “playground” for your analysts at the home office.  Invest according to need.

So take a cue from many of the hot start-ups when thinking about your analytics program and Be Lean!