Posted on Friday, Mar 9th 2018
According to a recent report, the global cloud ERP market is projected to grow 8% annually over the next few years to $28 billion by 2022. During the same period, the North American cloud ERP market is estimated to grow to $11.1 billion in 2022. San Francisco-based Anaplan has had a roller coaster ride recently. The company was suspected to have dropped off the Billion Dollar Unicorn club. But recent valuation reports suggest that it is back on track.
Anaplan was founded in 2006 by IBM alumnus Michael Gould who realized that there was a need for a next generation planning software. For the next four years, Michael locked himself in a barn in the UK and coded to build the prototype for Anaplan. Anaplan is built on a Hyperblock platform that integrates a cube, columnar, and cell-based database to deliver a complex business model that can compute at a faster speed.
Anaplan is privately held and does not disclose detailed financials. During my interview with its former CEO Fred Laluyaux in 2014, he had confirmed that Anaplan was operating at an annual revenue rate of $100 million. More recently, Anaplan reported a 75% growth in subscription revenues to $120 million for 2017. For the first time ever, Anaplan’s bookings are now trending at more than $200 million. Anaplan has more than 850 customers, including American Airlines, Anheuser-Busch, and Merck to name a few.
Anaplan is venture funded so far with $300 million in financing raised from PremjiInvest, Baillie Gifford, Brookside Capital, Coatue Management, Founders Circle Capital, Harmony Ventures, Sands Capital Management, Salesforce Ventures, Sands Capital Ventures, DFJ Growth, Shasta Ventures, Meritech Capital Partners, and Granite Ventures. Its latest round of funding was held in January this year, when it raised $60 million from its existing investors at a valuation of $1.4 billion. Valuation has increased from $1.1 billion that it was valued at, back in 2016.
The recent valuation is a thumbs-up to the management changes that have happened at Anaplan. Over the last two years, valuations of startups have become more real. In 2016, Anaplan was also dealing with tighter funding rounds, lower valuations, and austerity. In January 2017, it hired Red Hat veteran Frank Calderoni as the new CEO.
Anaplan’s Expanding Offerings
To drive growth, Anaplan has been focused on expanding its product offering. It recently added two significant advancements to its Connected Planning platform. One of the enhancements is Workflow, which is an integrated feature that engages all stakeholders in the Connected Planning process for faster execution. It is an advanced algorithm-based function that will help individuals collaborate across the organization, both geographically and functionally, to help execute on the organization’s plan.
The other enhancement is Optimizer that uses advanced mathematical modeling and algorithmic problem-solving to identify pathways to outcomes for challenging decisions. It helps planners by showing them preferred outcomes for complex questions ranging from pricing to staffing to capitalization.
Questions for Anaplan’s Board
Anaplan began as a financial planning platform, and it has delivered a very successful cloud based offering. Since then, it has diversified into other functions including sales, supply chain, workforce, marketing and IT. With the unprecedented opportunity in SaaS today, is Anaplan trying to now build a full scale ERP portfolio? I would like to know what other capabilities is Anaplan looking to add? What is the broad narrative for the company as it defines its place in the highly competitive ERP space? And what are the boundaries of where it does or doesn’t want to play?
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns.
This segment is a part in the series : Billion Dollar Unicorns
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