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.

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

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

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.

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!

What occurred to me as I was thinking about it later is that marathons and fundraising to support others share a common trait – it is not how much you raise or how fast you run the race that matters. Instead, it is the reasons for doing it and the fact that you do it that really matter. It is no surprise that these two efforts are commonly linked.

The marathon is the most humbling of races and many times there are very touching stories as to why people run. For those that have participated in a marathon or watched one you quickly notice that it is not a field of traditional athletes. Yes, there are the elite runners that ghost effortlessly along and finish the race in a little over 2 hours but then there are the masses that are there for some combination of pushing themselves physically as well as something bigger. As an example, I ran the Marine Corp Marathon a couple of years ago and was deeply moved by many of the young men and women of our armed forces running for a fallen comrade. There are so many examples.

The same points can be made with fundraising to support others. For many people, the process of raising money can be very humbling and there tends to be a touching story or motivation for doing it. There are so many examples of causes that people seek to support and the reasons for doing it are varied and personal. As well, there are always a group of “elite fundraisers” that can raise significant amounts quickly but the truth is that anyone can do it. Like a marathon, you don’t have to be part of the elite group to do it and be effective.

So what really impresses me about Christine and Mike is not only how they are pushing themselves physically to prepare for this race, but, more importantly, how they are pushing themselves to prepare for this race by making it bigger than themselves. Their effort to raise funds for Children’s Hospital and Easter Seals, which is a marathon unto itself, makes running in this historic event more than just a race.

Please join me in supporting Mike and Christine whether with words of encouragement or contributions to their selected charities, Children’s Hospital Boston and Easter Seals.

 -   clear purpose

-   simple to use

-   fun

 Let’s explore each of these in a bit more detail and how these ideas can apply to business applications.  For the sake of this post, I am going to talk about a business application in the context of what we create for our clients – specific purpose analytics and planning applications built using commercially available on-premise software and SaaS platforms.  The truth is that our part of the business application market is lagging some of the business process focused SaaS applications currently available, especially for the SMB market.  Given this reality, these concepts are very relevant if we hope to create useful apps that effectively facilitate data driven decision making.

Clear purpose  -  It may seem odd that since we are talking about single purpose analytics and planning apps that “clear purpose” would be a problem – but it is.  Many organizations have a vague notion of using data more effectively to support decision making but don’t really think through what that means.  This lack of clarity leads to bloated applications that try to do everything for everyone but really serve no clear purpose.  We advocate that you fight the bloat by being clear in the problem you are trying to solve and starting small and evolving your application to meet the changing needs of the business.

Simple to use  -  Sophisticated web based, analytics front ends have created a confusing proliferation of 3D graphs and charts with wild colors.  The goal it seems is to mimic an airplane cockpit to create the illusion of control.  We need to take a lesson from Edward Tufte and Dona Wong – “less is more”.  Use data to tell a story and not to impress your friends with flashy interfaces – bling may work if you are a rap star but not for business analytics.  Think about the different people using the application and create the right interface for each user group.  Spend time thinking about navigation.  It is the little details that will make the application simple to use.

Fun  -  Since we are talking about business applications, let’s change the word “fun” to “useful”.  This is probably the biggest short coming for the current breed of analytics and planning applications, but that is changing quickly.  Although these apps are typically very good at presenting structured data, they are not as strong with unstructured data and commentary.  Yet it is this ability to share thoughts and look at trends in unstructured data that will ultimately make these tools more useful and, well, fun.

The bottom line with all of these concepts is that today’s business applications, in particular analytics and planning apps, need to look to successful consumer applications as a model for how people work.  If designed correctly, you will create an application that is viral (at least within that organization) and is something that people will seamlessly engage with throughout the day to make better decisions.

Yes, I got this quote from a fortune cookie and I did change “man” to “company”.  Regardless, I think it is a helpful way to think about what we are trying to build at Cervello – a company that is relentlessly focused on creating a better way for its clients to analyze and plan business results.

So why do we seek to be different and chart a better course?  The simple answer is that we want to become a key asset to our clients.  We believe that if we make our clients successful that we will be successful.  This belief requires us to constantly challenge the traditional way technology and services firms deliver value and to question all of the assumptions underlying those traditional ways.  Through this questioning we will do a more effective job of really listening to what our clients’ needs are in order to work with them in a way that makes them more successful.

Let me get specific.  We believe that the traditional technology acquisition and application delivery model for analytics and planning projects is broken.  We are focusing on a 2.0 version with the following key principles:

1)  agile development – This is a fairly hot topic as it relates to business solution development.  We are taking the concepts from agile software development and applying these to the unique needs of analytics and planning solutions.  If done effectively, value is delivered quicker and continuously and solutions will adapt to the changing needs of the business.

2)  cloud technology – Whether it is a true multi-tenant platform or a hosted application, we are focused on leveraging on demand analytics and planning technology to remove many of the costs and hassles of on premise software.  By leveraging the cloud, we make it easier for our clients to focus on the business solution.

3)  focused solutions – As we grow our business, we will continue to build out new solution areas.  Online marketing is a good example of our first area of focus and we are providing both an analytics app and an on demand analytics offering to support the varied needs of our clients and prospects.  We think the combination of services and apps in a focused solution area will allow us to create really valuable solutions for our clients.

We believe there is a better way and we will remain relentlessly focused on evolving this better way for our clients to analyze and plan business results.

Scot

#4 – Identify and commit adequate resources to get started and run your planning processes

There are two considerations you need to plan for in effectively staffing your initiatives, the life-cycle of the initiative and the types of resources you’ll need. For example, every initiative has a generic life-cycle: definition – planning what you are going to do; implementation – actually building the initial solution; evolution – evolving the solution as you go (which we happen to think is a critical piece that is often overlooked); and last but not least, running – using the actual planning process.

At each stage of this life cycle, certain skill sets are needed, and a single resource often does not have skills that translate across each stage. As we mentioned before, you’ll need to ensure coverage in categories of resources. Generally speaking, the people you are looking for are business users, central or business unit finance, data/IT specialists and don’t forget the most important, executive sponsors.

So what if you are starting an initiative and you don’t have the resources? Again, going with our theme, you have options. First, you could approach it with internal resources, either through hiring additional resources or re-allocation of existing staff. Second, you can supplement your internal team with external consultants. Or third, an emerging solution is through on demand services. In this model, you work with a partner to take the “heavy-lifting” tasks in financial analysis and IT to work alongside your team that can now focus on creating value add analysis and insights.

All three of these options have their pros and cons, and no one option is the silver bullet. Keep in mind, however, that your success is dependant upon your team and their ability to succeed, so pick your team wisely.

SaaS vs. On-Premise Considerations

Breadth: Do the traditional applications have more than you need? How basic are your processes and needs? What features and functionality are must-haves?

Resources: Do you have enough resources within Finance and IT to drive and support a CPM and BI initiative? If you do have the right amount and type of resources, it can be a breeze; otherwise, it can be disastrous!

Track Record: How successful have you been deploying software solutions in the past? Have you implemented an ERP system already? How did it go? Do you have the expertise and bandwidth to deploy another significant solution?

Cash Flow: Can you handle a big capital outlay right now or would you prefer a consistent, ongoing expense?

Time-to-Value: Do you need a solution in place to complete your 2011 budget?

If you answered yes to a majority of these questions, then you should consider SaaS solutions. If the majority of your answers were no, then Enterprise/On-Premise solutions should be a strong consideration. Most importantly, before you invest in anything, know your needs and how these differing solutions can help make you a success.