The Performance Management Gold Rush

Craig Schiff , President and CEO, BPM Partners

Overview

Casual observers have probably noticed some of the new investments made in the performance management space this year. As dedicated followers of the space we have tracked almost all of them, and the volume (both number of deals and total dollars) in such a short period of time is truly astonishing. This is nothing new for performance management as we have seen similar hot streaks in the past, but the number of vendors involved, the deal size, and the valuations take it to a new level.

Deals

Let’s start by summarizing the deals and their key attributes.

Vendor (links to PerformancePlace)  Date of Deal (links to announcement)  Dollars (* our estimate)  Type    Notes
Jedox January 2021 $100 million + Private equity
Prophix January 2021 $400-$500 million* Majority investment
Board March 2021 Not disclosed Ownership expansion Added new CEO
Cube March 2021 $10 million Series A New Vendor
Unit4 March 2021 $2.1 billion Buyout ERP/FP&A vendor
DataRails April 2021 $18.5 million Series A New vendor
OneStream April 2021 $200 million Series B $6 billion valuation
Vena April 2021 $300 million Series C
Fluence May 2021 $10 million Series A Added new CEO

That’s over $3 billion invested in performance management vendors in just the past 5 months! While the big dollars went to established vendors, there are a number of newer vendors getting funded as well. One of the most interesting things to note here is that OneStream’s latest round values it at $6 billion dollars. The acquisitions of two major vendors I was part of didn’t come close to that valuation. Oracle picked up Hyperion for a little more than half that amount, and SAP’s purchase of OutlookSoft was significantly less.

Analysis

So, what’s driving this ‘gold rush’ in the performance management space? Success. This is not some buzzy new technology, although the fact that all of these vendors started in the cloud or have moved their product and market focus there certainly helps. Performance management systems are mission-critical front office business software solutions. They have benefited from two major trends: Finance transformation, and the need for greater agility necessitated by the challenging business climate caused by the pandemic. While many businesses struggled this past year, just about every performance management vendor we have spoken with achieved or exceeded their pre-pandemic budget targets.

With money flowing and demand increasing many new vendors have recently entered the space. In addition, existing vendors around the periphery have rebranded and repositioned to take advantage of the opportunities related to performance management. Some of these newer or relaunched vendors include the already mentioned Cube, Fluence, and DataRails, as well as Acterys, Place, OnPlan, MYGIDE, BankBI, Synario, Quantrix, Limelight, and Jirav.

What does this all mean for prospective purchasers of these products? The larger vendors will use their new investments to expand their offerings as well as their geographic reach. The newer vendors will build out their product suites and invest in sales and marketing. This will result in a great selection of solutions to choose from, in fact possibly the widest range of options that has ever existed in this space. While it all sounds wonderful, not all is rosy. We have recently met with every vendor mentioned here and more. For established vendors who haven’t’ recently raised funds it may get more challenging to compete with vendors flush with cash. For some of the newer vendors, as you might expect, their marketing messages are a little ahead of their current product realities. Hopefully it will all settle out over time. With great choices, comes great responsibility: it is more important than ever to do your homework and make sure you choose the best solution for your organization.