This week the deal we are digging into is Anaplan (NYSE: PLAN) which priced Thursday night at $17, well above the proposed range of $13-15. It’s a good old-fashioned enterprise SaaS company at the highest end of the “enterprise performance management” segment.
Earlier this year we saw Adaptive Insights (ADIN) get snatched from the IPO alter by Workday WDAY just before pricing. Workday paid $1.5B for ADIN which is double their proposed IPO valuation of $700M.
Of course in this IPO market, we expect every enterprise SaaS stock to double post offering. Witness Elastic (ESTC) last week. Valuations are stretched.
What’s “weaponized analytics?”
Anaplan has taken $300M to build a product sophisticated enough to handle the kind of large and complex planning requirements of enterprise customers in the high end of the Global 2000. These customers tend to have operations all over the world, supply chains, and large numbers of customers – examples include Coca-Cola, Walmart, and Vodaphone to name a few.
Big companies run on plans. They typically spend September and October putting together their operating plan for the next calendar year. Then they adjust that plan based on measured results throughout the year.
Every department gets involved in the process, and results are “rolled up” from the bottom and also driven by top-down objectives. Most of that two month period is making sure the top-down and bottom-up results align with a little “over assignment” at each level to provide some “cushion” for management.
The primary tools companies have used to support the process have been data and analytics and lots of Microsoft Excel. Analytics have become reasonably pervasive with market leaders that include Tableau (DATA).
The problem with all plans, no matter how meticulous is that stuff happens. Years ago during a project with American Airlines operations, they explained that their computers worked all night long to create a perfect plan for the next day. The procedure was incredibly complicated to build because it not only had a vast number of flights but had to take into account crew schedules, maintenance schedules, compliance rules, staff limitations, hotel room availability, etc. But once the first flights took off the plan was useless thanks to mechanical problems, weather, and other events. The only way to make adjustments was via “ad-hoc” methods of trying to use simple rules to patch things on the fly as it were.
