Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Host Analytics takes on the CPM giants

by
8th May 2012
Save content
Have you found this content useful? Use the button above to save it to your profile.

Cloud-based corporate performance management (CPM) is growing market share - by more than 100% in the case of Host Analytics, according to CEO Jon Kondo, who recently visited the UK to open the company’s first international office in Stockley Park, near Heathrow airport.

The concept of CPM has been around since the 1990s, he explained. It is built around a sequence of simple financial analysis and reporting tasks that use actual performance data to refine business models and forecasts through the next planning and budgeting cycle.

“Typically you plan and execute that plan, then consolidate the results into reports for internal and external consumption,” says Kondo.

Since its inception, CPM has been the preserve of developers that have since been absorbed into global technology conglomerates: Cognos (IBM), Hyperion (Oracle) and Business Objects SAP. As a long-term Hyperion veteran, and north American general manager for the software after it was acquired by Oracle, Kondo is very familiar with that history. But he flew the nest in 2008 because he could see a much wider potential market for Cloud-based CPM tools.

“We’ve disrupted market by delivering all that functionality in the Cloud,” Kondo told AccountingWEB.

The web-based Host Analytics tools include budgeting, planning, and forecasting modules that can cope with multiple departments and levels, as well as consolidation and reporting based around the web-compatible version of Microsoft Excel. At the heart of the system are other familiar Microsoft tools such as SQL Server and its attendant Analsysis Services modules.

For reporting, however, Host Analytics has formed an alliance with Birst to extract easily adaptable KPIs and reports from the core database. “The actuals, accounting treatments, currency conversions are all dealt with and output into management and statutory reports,” Kondo said.

The online application has a catalogue of connectors to bring data in from most transactional systems including NetSuite, FinancialForce.com, Intacct, Oracle, Lawson, JD Edwards. It can also bring in external data sources, for example to compile or compare non-financial KPIs.

Based on conversations with his previous customers, Kondon said: “The Hyperion community is waiting for the next wave of CPM. They see Hyperion products being sunsetted and just don’t want to put in big on-premise systems. We’re starting to see larger companies accept that SaaS is a viable alternative.”

Because of nerves about confidential data being held outside the corporate firewall, finance was probably the slowest discipline adopt software as a service (SaaS), he continued. “But it is now the fastest growing part of the market.”

The target market for Host Analytics is among companies turning over $50m-$100m and up, which he said were “underserved” by the bigger vendors.

“Oracle and IBM don’t expend a lot of energy on this sector and smaller vendors can’t handle their requirements: they have a lot of complexity and regulation,” he said.

As a SaaS product, Host Analytics is paid on a subscription basis. An installation for a small finance team using the admin and business modelling modules to serve a community of around 40 managers might run to $40,000 a year. With no software upgrade every 3-5 years, Kondo argued, “Our service costs are considerably less, and we map to existing processes so it takes a lot less time and effort to configure and build the solution. Cost is one perspective, but more profound is the time to value.”

The larger vendors are aware of the competition from Hosted Analytics but the newcomer isn’t competing head-to-head for their users. Rather it is picking up business from companies where the spreadsheet still holds sway.

“We’re bringing the promise of CPM to a much bigger audience. They’re the ones crunching numbers in complex spreadsheet models because that’s all they can afford,” said Kondo. “They spend so much time reconciling multiple spreadsheets that they aren’t able to do any smart things, like interpreting the data.”

Finance managers are keen to get their hands on tools that can reduce the monthly workload to consolidate the numbers, and the subsequent arguments about whether they’re right or not.

Auditors, meanwhile, are very sensistive about material errors creeping in on the consolidation side, but Kondo points out that the biggest errors occur on the planning and budgeting side.

But Host Analytics has not banished the spreadsheet completely from the CPM mix. “Our customers like to see the spreadsheet interface,” said Kondo. “We give them that comfort, but take the bad things away.”

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.