Over the past 5 months the performance management market has seen significant interest and investment. Not just from customers, but from venture capital firms and other software companies looking to gain a foothold in this market. Here is a timeline of the major announcements:
October 2018 – Adaptive Insights is acquired by Workday
November 2018 – Anaplan goes public
December 2018 – Host Analytics is acquired by Vector Capital
January 2019 – Vena Solutions receives a $115 million investment from JMI Equity and Centana Growth Partners
February 2019 – OneStream Software receives a significant investment from KKR (rumored to be approximately $500 million)
The performance management market hasn’t seen this much activity since 2007 when Cognos was acquired by IBM, Hyperion was acquired by Oracle, and OutlookSoft was acquired by SAP (they also acquired Business Objects which had just acquired Cartesis that same year). However, that series of acquisitions was focused on enabling the acquiring companies to replace their existing (and mediocre) performance management offerings with market-leading ones. In effect, it was a market consolidation since the smaller, independent vendors were absorbed into the larger vendors and the existing solutions they replaced were phased out.
What is happening today is the opposite of what happened in 2007: this round of activity is all about expanding the performance management market. All of the companies identified above continue to sell their product lines with varying degrees of independence, but with significant new capital behind them. The goal is to enable them to grow faster than they could have on their own.
What does this mean from a customer/prospect perspective?
The Good: All of these companies are now more viable than they were prior to this activity. Concerns about relatively small, independent vendors not being around for ongoing support are greatly reduced. New product development can be accelerated, support staffs increased. Of course sales and marketing investments will also increase creating a larger community of customers to be a part of. All of the investments will keep these vendors active and growing.
The (Potential) Bad: New owners/board members can take the vendor in a new direction that doesn’t align with existing customer needs. An influx of capital and rapid expansion can lead to distraction and unmanageable growth with leadership being stretched thin. Key team members can cash out and leave the company. There is also the risk that the remaining smaller performance management vendors are no longer able to compete with these vendors who are flush with cash. This can lead to some of them becoming niche players or disappearing entirely, unless they find their own suitors.
The net however is that it is a great time to be a performance management customer. This is a thriving, competitive market with a wide selection of proven solutions available for companies of all sizes. This new investment will help expand the footprint of performance management within companies as well as across the globe.