What are some of the options being used for Budgeting and Forecasting software other than Excel, for a middle market company?

As part of my consulting practice, I have completed over 40 Budgeting & Forecasting software implementations for companies moving from Excel to a more robust Corporate Performance Management application. Most of these implementations have been for Mid Market companies with revenues in the range of $50 million - $1 billion.

While I have touched various CPM applications including Hyperion Planning, Adaptive Planning, Cognos, SAP (BPC & BPS), Host Analytics and Prophix, I have spent more time with Hyperion Planning & Adaptive Planning, so will focus my comments against those applications.

Hyperion Planning is the best known and arguably most robust and most expensive tool for Budgeting & Forecasting while Adaptive Planning is the best known Cloud-base/Software-as-a-Service application (based on aided & unaided brand awareness).

What are some of the key differences between these two applications? I find it easiest to compare the two by breaking it down into three categories: 1) Software Functionality, 2) Implementation, & 3) Total Cost of Ownership

Software Functionality

Hyperion Planning is a powerful Budgeting, Planning & Forecasting application that leverages the power of its underlying calculation engine (Essbase) to allow for robust multi-dimensional planning (e.g., by cost center, by customer, by product, by month) while providing a controlled, form-driven end user interface that can either be served up via Internet Explorer or even within Excel itself. While Internet Explorer is often the application used to interface with the underlying data, it is important to realize that Hyperion Planning is typically installed on a company's own servers (and it does usually require multiple servers). Usually, Hyperion Planning comes with rights to 3 Essbase cubes which quite often are used for: 1) Revenue Planning, 2) Personnel Planning, 3) Financial Account Planning. Essbase itself is considered one of the top technology innovations of the last 20 years and can quickly and efficiently calculate/aggregate large amounts of data and has many, many formulas/functions that can be applied to the data. There is much more to say about Hyperion Planning's functionality, but I could literally write hundreds of pages of content and not cover it all. It is both powerful and at the same time, complicated.

Adaptive Planning also has cube technology but there are some differences. For most Mid-Market clients, their cube technology is more than sufficient but they don't have the very extensive array of aggregation/calcuations that Essbase possesses and for very large data sets, Adaptive is likely to take longer than Hyperion Essbase to process. Adaptive, in my opinion, actually does a better job than Hyperion Planning with qualitative information (think text instead of numbers) which can be extremely helpful for Personnel Planning, Capital/Asset Planning or Project-base Revenue Planning. Because Adaptive has less functionality than Hyperion it is much easier to use and maintain than Hyperion. For example, most clients of mine who have Hyperion have 1-2 FTE's to administer the application on an ongoing basis vs. for Adaptive it is usually a small fraction of 1 FTE.

Implementation

Because of the differences in complexity mentioned above and due to the Cloud vs on-premise differences, the implementation process usually is much longer and more costly for Hyperion Planning than Adaptive Planning.

In some cases, clients can be up & running in 6 weeks on Adaptive Planning vs. I have seen clients who have taken more than 6 weeks simply to get the servers set-up with the Hyperion software installed before the actually model development can begin.

Hyperion implementations do tend to be more robust including many days for requirements gathering, user acceptance testing and end user training. Versus most Adaptive implementations are not as formal with these steps and so they tends to be quicker, but not as well developed.

Overall, for clients that outsource their entire model build, I tend to see Adaptive clients get up and running with about 70-120 hours of implementation time at under $200/hour vs. most Hyperion clients are looking at well over 1,000 hours of consulting (including infrastructure set-up) at rates typically over $200/hour.

Hyperion implementations usually are conducted on-site at the client vs. Adaptive are usually conducted "virtually" over the Cloud.

Total Cost of Ownership

We have already touched on part of the TCO equation above, but there are at least 3 buckets to consider when trying to calculate the total cost of a software solutions: 1) Software Licensing & Support, 2) Hardware/Infrastructure, and 3) Services (Implementation & Ongoing Admin)

Because Hyperion is typically "on-premise" licenses are purchased one-time and then a recurring annual fee per user for support. For Adaptive, you don't purchase the software upfront, but instead pay annually for rights to use the software on the cloud as a service.

The 1st seat of Adaptive actually currently includes rights to one Admin seat and 2 standard use seats for a year and costs about the same as the 1st seat for Hyperion Planning. The 2nd year of Adaptive costs about the same as the 1st vs. the ongoing support costs for Hyperion are about 25% of the initial license. So while you would have to do the math to determine your true software cost year-1 and onward, realize that Adaptive will certainly be SIGNIFICANTLY cheaper for year-1, and could very well be cheaper or parity to Hyperion for years-2 onward when support costs are considered.

For hardware/infrastructure, there truly is no comparison between the two applications. With Adaptive you have $0 of infrastructure costs since it is on the cloud. With Hyperion Planning, you will probably need multiple servers available to run the application including at least one physical server to run Essbase itself (it does not work well in a virtual environment). So hardware/infrastructure costs are likely to be $10k's (in some cases even over $100k).

We touched on services above, so I won't go into great detail here. But it is likely that Adaptive services would cost 10% that of Hyperion.

In summary, both Adaptive Planning and Hyperion Planning are wonderful tools and can make your FP&A process much more robust and efficient than Excel alone. Both tools have added significant enhancements in the last 2-3 years. Adaptive is much quicker, easier, and affordable to use. Hyperion is more robust, powerful and complex. I have seen both used successfully in Mid Market companies. I do, however, challenge my clients (and potential clients) to prove to themselves that they can't do what they want to do with Adaptive Planning before spending the time, energy and money on Hyperion Planning. In some cases the requirements will lead them to Hyperion, but Adaptive has made significant advances in their functionality, so the gap between the two has shrunk.