Host Analytics to be Acquired by Vector Capital

Craig Schiff , President and CEO, BPM Partners

Note: Includes updated information (1/2/19)

Overview

Host Analytics has announced a definitive agreement to be acquired by Vector Capital,  a leading private equity firm specializing in transformational investments in established technology businesses. The deal has now officially closed. The terms of the deal have not been disclosed.

Why This Deal?

Demand for performance management solutions is growing but at the same time the vendor landscape is undergoing significant changes. Adaptive Insights was acquired by Workday earlier this year, Anaplan has become a public company, the larger vendors are in the midst of a multi-year transition from their legacy on premise solutions to brand new cloud offerings. Vendors that had been targeting the midmarket are looking to move upstream. Even long established performance management implementation firms such as TopDown Consulting and Edgewater Ranzal are being acquired. There is an opportunity here to take advantage of the uncertainty all of  these changes create, particularly in the $ 250 million to $ 2 billion slice of the market.

What’s needed to fully exploit this opening? A capable management team, a competitive product set, and deep pockets. Host Analytics already has the right team and product, Vector Capital brings the deep pockets (as well as operational resources and expertise).

Working with a company like Vector Capital has unique benefits and avoids the pitfalls of merging with a larger software company. Let’s start with the pitfalls. Whenever two software companies merge there are a number of inherent challenges – overlap in management, overlap in products, years of product integration work. The management overlap often leads to key team member departures, the product overlap leads to some products being killed or refocused, and the years of integration work often detract from product innovation and expansion of functionality. All of this negatively impacts sales, customer satisfaction, and morale. A key benefit of a venture firm owner is the enhanced ability to find and acquire complementary solutions. The acquisition of performance management vendor Longview Solutions by Marlin Equity several years back illustrates this fairly well. Soon after their acquisition by Marlin, Longview acquired arcplan for BI/analytics and Tidemark for cloud-based planning. Host Analytics may now be able to accelerate its ability to deliver on its vision for the Office of the CFO.

Why Now?

While the timing of this deal certainly reflects the desire to take advantage of  the opportunity in the market today, I’m sure there are other motivations as well. Perhaps some of the original investors/board members are ready for a change. This is a straightforward way to enable them to cash out and pursue other challenges. Board member rotation also benefits Host Analytics with new ideas being brought to the table. It is worth noting though that the largest shareholder, StarVest Partners, will remain a significant investor.

Final Thoughts

In spite of this deal, Host Analytics remains a picture of stability in a rapidly changing market. It will continue to be run as an independent business. Dave Kellogg, long-term CEO at Host, is being replaced on an interim basis by the current Chief Revenue Officer, and the interim CFO role will be filled by a Vector Capital VP. There are no other announced or anticipated management changes at this time. Host is following its existing product roadmap and continuing to roll out new updates and partnerships. Of course we need to see how this all plays out once the transition is complete, but on the surface it seems like a good deal for all concerned.

More about Host Analytics

7 Myths and Misconceptions of Consolidation Software

Sponsored by Longview 

  • Hear an analyst outline seven myths/realities of consolidation software, while a product expert fleshes out the details
  • Speaker(s): Craig Schiff, CEO, BPM Partners; Guy Menard, VP of Close Product Management, Longview
  • Originally Broadcast: December 2018
  • Duration: 60 minutes
  • Temporarily Unavailable

Executive Summary:

Gather practical advice on what to look for and what questions to ask when evaluating consolidation solutions. Hear how next-generation consolidation solutions are enabling organizations to automate their process, reduce the time to close and give you confidence that your data is accurate.

Newsletter: December 2018

Predictions for Performance Management in 2019

Craig Schiff , President and CEO, BPM Partners

Artificial Intelligence Will Begin to Provide Real Value

Vendors have been touting Machine Learning and AI for years now, but while it helped them to be seen as innovative and leading edge, it hasn’t really impacted sales. No FP&A groups looking for a new budgeting and forecasting system were saying ‘it has to have AI/ML’. That is changing. There are two main reasons for this. First of all, the implementation of AI by the vendors has become more focused and nuanced. Instead of just tacking on the technology so they could say they have it, they are really using it to provide benefits to performance management users. This includes everything from making their systems easier to use to improving data quality and forecast accuracy. The second element leading to increased interest is the marketing itself. While hardcore technologists are interested in deep learning and natural language processing, the buyers in Finance are more interested in what it can do for them. Vendors are getting the message and talk about predictive analytics and forecast probabilities (machine learning), ease of information access (natural language queries), and more accurate information (anomaly detection).The implementation of AI in the latest performance management products does in fact provide real value to customers which will generate demand, and this in turn provides real value to vendors who successfully package and market this functionality. For more information on this topic see: The Value AI Brings to Performance Management.

Many More Companies Will be Upgrading from Legacy Systems

We have seen a recent surge of companies looking to replace their legacy on-premise performance management systems with a more modern version and this will continue and grow. In most cases their current vendor does offer a modern, cloud-based offering but it is a brand new product that bears little resemblance to what they currently own. This in turn has these companies considering alternatives. The thinking goes that if it is a major project to convert to the new offering (which it will be), why limit the search to just the current vendor? These companies are now following a process that is similar to companies that are moving forward with performance management for the first time: evaluating 3-4 vendors to see which one can best meet their current needs. Everyone benefits from this – vendors have a new group of prospects to sell to, and the companies have a wider range of options to choose from instead of just limiting themselves to their current vendor. Now of course their current vendor can offer them some incentives such as a low upgrade fee and a set of conversion tools to try to keep them in the fold. The reality is that we have not seen much of this. In some cases it is nearly impossible to provide automated conversion tools based on how different the products are. It is our belief that regardless it is worth taking this opportunity to look at alternatives since the entrenched vendor who was leading edge in the last generation may be behind in the current generation. Requirements may have changed dramatically as well since the last system was purchased. One other point, if companies haven’t yet considered upgrading from their legacy on premise offerings they should for two reasons. First of all, performance management has come a long way since on premise ruled the day and they may be missing out on great new capabilities. Secondly, they may be investing time and resources in a ‘dead’ product (and taking a risk by relying on a product with greatly reduced support), even if the vendor claims reports of the product’s death are premature. For related information on this topic see: Frozen in Time.

Financial Consolidation Capabilities Will be Included in More Projects

Budgeting and planning are currently the most in demand performance management components and have been for many years. However, the majority of our customers in the past year have included some aspects of financial consolidation in their requirements, even when they were not specifically looking for a consolidation system. While we always see a sizable  number of companies that are focused on full-blown financial consolidation, many budgeting focused organizations are adding aspects of financial consolidation to their vendor selection criteria as well (see charts below). Candidates for a robust financial consolidation solution are typically large organizations that have one or more of the following challenges:  several different ERP systems, numerous reporting currencies, extensive intercompany transactions, complex local statutory reporting needs, many alternate roll-ups, and/or minority ownership/joint ventures. Some of that functionality and more can also benefit budgeting and planning systems. Currency translation and alternate roll-ups are common requirements of budgeting systems and budgeting vendors accommodate these needs with basic functionality. However, vendors that provide consolidation solutions alongside budgeting and planning can offer more pre-built capabilities and usually deliver better performance. Beyond that, there is functionality that some budgeting and planning purchasers ask for that is typically only included as part of a consolidation feature set. This list includes detailed audit logs, intercompany matching and elimination, account reconciliation, trial balance, ability to see data pre and post adjustments and in some cases even being able to post journal entries. We expect this trend to continue and apparently the vendors do as well as many of them have a renewed focus on enhancing their consolidation capabilities. For more information on this topic see: How to Leverage Consolidation Functionality in Budgeting and Planning.

Source: BPM Partners 2018 BPM Pulse Survey

Company-wide Planning Will Gain Traction

Integrated business planning has been a goal for many years. Most organizations have fallen short when it comes to achieving this goal because of two issues:  difficulty in coordinating major cross-functional initiatives and lack of technology support. Both of these problems have begun to sort themselves out. On the technology front several of the larger performance management vendors have started to deliver on the promise of an integrated, collaborative planning platform. Whether they call it connected planning or collaborative enterprise planning or something else entirely, the vision is the same: a single unified planning platform with specific solutions for each area of the business. Some of the smaller vendors that have focused almost exclusively on financial planning have seen the light as well and are beginning to think of themselves as more of a platform and are utilizing an app store model to deliver solutions to meet the needs of a broader audience. Organizations that are looking for solutions that address operational as well financial planning now have a wider range of options to choose from than in the past when they essentially had to build their own operational solutions using business intelligence tools. With the technology side being addressed there is still the organizational challenge of each department focusing narrowly on their own needs. Who drives and oversees this cross-functional initiative and makes sure that the company doesn’t end up with a collection of disconnected point solutions? The answer to this question has grown clearer over time. While the CIO and department heads have a role to play, the consensus seems to be that it is the CFO who should oversee coordinated and connected company-wide planning (see chart below). With these two key pieces of the puzzle falling into place we expect to see more companies undertake enterprise-wide planning projects. For related information on this topic see: Performance Management: The Next Generation.

Source: BPM Partners 2018 BPM Pulse Survey

As you can see, in 2019 there will be more reasons than ever for those that have remained on the sidelines to get on board with performance management. For those that already have, it may be worthwhile to evaluate their current system against more modern products and determine if an upgrade makes sense.

The Importance of AI in Corporate Budgeting, Planning, and Forecasting

Sponsored by prevero/Unit4

  • Learn about the benefits AI can bring to budgeting, forecasting, and planning
  • Author: BPM Partners
  • Date: December 2018
  • Pages: 10
  • Request your copy today by completing the White Papers Request form.

Executive Summary:

Vendors of corporate performance management (CPM) software have begun to recognize the importance of artificial intelligence (AI) capabilities in their products. Nearly all vendors have some AI-based features today, or under development for an upcoming release, but only a select handful have emphasized AI as a strategic, fundamental component. Customers have started to request AI in CPM systems, particularly for its value in predictive analytics and forecasting – which many in Finance already have experience using that predates the use of AI in this area. This white paper focuses on the role of AI in budgeting but some of the discussion is applicable to other areas of CPM and Finance as well. Due to its “high volume, accurate historical records, and quantitative nature”, Finance is well-suited for artificial intelligence.