The whirlwind Spring event season is finally starting to wind down…sort of. Most recently I was in San Francisco attending the Anaplan user conference at the Fairmont. Not a bad location to spend a few days. Although I will say the hallways remind me a bit of the movie The Shining. Over the past year, Anaplan has emerged as one of Silicon Valley’s unicorns. With a valuation over $1billion and a large cash infusion earlier in 2016, the pressure and expectations are mounting. Rightfully so, their ambitions appear to be on par – to become the de facto planning platform. In essence they are looking to replace the old workhorse known as Microsoft Excel. Talk about an ambitious and lofty goal.
Anaplan plays in a host of functional areas, ranging from finance and human resources to sales and supply chain (more on the last later) and in a range of industries from financial services to CPG. Their underlying technology allows these businesses to create the planning models and apps required to manage their operations, in many cases taking Excel spreadsheets head on. As Anaplan’s CMO Grant Halloran stated from main stage – Excel has spread like a virus. I don’t think he meant that in a positive way! But the reality is the tool has been on our desktops for decades, its simplicity and lack of a comparable cross industry platform has made it ubiquitous. Because of this it has spread like a virus. And for all its shortcomings it does work. Is it the most robust planning tool out there? No. But sometimes good enough is better than perfect. So does Anaplan have a chance? Their momentum suggests it does, particular for large use cases where Excel has simply withered under the sheer volume of data, complexity of the process, or both. Let’s focus on one area they have invested heavily in over the past 2 years – supply chain.
Gunning for an icon.
First of all, supply chain means a lot of things to a lot of people. While I believe it goes beyond factories and warehouses, the outer boundaries of what supply chain management is remains a moving target. A clear opportunity for Anaplan – but one that will require both focus and execution, as well as making some hard decisions as to what to ignore. Where does the company continue to invest? Do they want to focus on complex planning around bill of materials and sourcing, does it make more sense to focus on demand planning or do they lean on their work with financial planning and look at the sales & operations planning (S&OP) space? They already have an impressive list of customers in the space headlined by the likes of Diageo and Del Monte. Of course these spaces have some entrenched players that Anaplan has been competing against and scoring some wins. However, to continue to build on these successes they need to continue to bolster their supply chain talent across the board, evolve their strategy, and most importantly, keep building the use case library that demonstrates their ability to address supply chain issues.
The challenge for Anaplan remains that their brand is not fully established within the supply chain space. That can be both an opportunity – being the fresh face in the space – but also a challenge – where is your street cred? Supply chain professionals are fickle, they want to know that you have experience and use cases that are tightly aligned with their needs. But nothing ventured, nothing gained!
There is clearly the desire from the top management at Anaplan. As a unicorn with cash, they should have both the resources and cool factor to continue to attract the appropriate talent to make this vision a reality. But the road is full of grizzled veterans and many have tried to displace Excel. I have joked with colleagues that had Microsoft branded itself as a supply chain vendor they would be the #1 vendor, thanks to Excel. Go bold or go home seems to be the name of the game these days, clearly Anaplan is looking to do so. Maybe the new kid has what the grizzled veterans didn’t – the right technology.
For another view of the event please read my colleague Doug Henschen’s piece – click here.
Around this time last year Aptos and their leadership team were still under the Epicor banner, after close to a year as an independent firm Aptos hosted their first user conference. Fortunately for me I was able to head back to Las Vegas for the fourth time in 6 weeks – this time I didn’t test my luck at the blackjack tables. Being in Las Vegas seemed to be appropriate as the investment firm Apax Partners is gambling on Aptos and their leadership team to be successful in a very competitive retail landscape. Time will tell if the gamble will pay off…but first some reactions to the conference:
- It is about the people – at the end of the day, regardless of what business you are in, people buy from people. Maybe one day when bots have taken over they will purchase from each other and we will be left to fend off Skynet. Not only do we buy from other people, but the biggest driver for happy employees are the people we work with and for. Aptos is taking a refreshing take on this, emphasizing the importance of culture and people. The investors in Aptos took to main stage to reinforce this, stating that they were making an investment in the business but also the leaders, from CEO Noel Goggin on down. Noel also emphasized the importance in the team he has built to manage the growth and opportunity for Aptos. This focus on the people is refreshing…and at the end of the day business is about people working with and dealing with other people.
- Leaning on a legacy of cloud – the cloud is no longer an enigma but is firmly entrenched as the preferred vehicle to deliver software. Not simply because it lowers the total cost of ownership (TCO) but today it is starting to show its true business value. Allowing for retailers and others to quickly scale whether in terms of product growth of geographical expansion. A number of the customers we visited such as Tory Burch, Michael Kors and Nike were looking to Aptos to help empower their global expansions – this was made easier due to the cloud-based solution. Other retailers such as Tumi were looking to lean on the cloud-based solution to have a much more dynamic and flexible inventory system. Truly tying together their inventory whether in the store, storage room or distribution center. The cloud is here, the cloud is the preferred vehicle for product and the cloud allows greater business value.
- Further up to the customer or further back into supply chain? So where can Aptos go from here? Granted they have plenty of opportunity within their existing client base as well as closing net new opportunities. But is there a play for Aptos to push further back into the stack and provide their customers with greater views in the sourcing and manufacturing portion of their supply chain? Or move even deeper to the omni-channel needs of the consumer, building on their acquisition of ShopVisible, placing a bigger bet on eCommerce world where the likes of Demandware are present? They have shown an ability to build out the necessary assets, for example QuantiSense brining more powerful analytics to their portfolio. This will provide even greater insights into the customer demands. For Aptos to truly reach its potential we feel they will need to think through some of these strategies, whether they partner or develop their own solutions that is up to Noel and his team to figure out.
Thankfully what happens in Vegas isn’t staying in Vegas for Aptos. They come of out of a successful user event with the wind at their backs. Noel and the team have carved out a nice space to play in. However there are many fierce competitors out there, their honeymoon period is long over. The team is in place and with some strong customer stories it is up to Aptos to step up and really push their story.
If you were to place a bet, Aptos seems to have some favorable odds. But as we all know, nothing in Las Vegas is a sure thing!
I just came back from Nashville, well actually Las Vegas but was in Nashville to start the week. The JDA Focus 2016 event was being held in the Music City. It brought together a large gathering of some of the top supply chain professionals from the around the globe. Per usual, JDA put on a good show, at least the first day since that was what I was able to attend! But even being in Nashville for less than 24 hours, I took away some observations from the event and JDA:
- Talking a good game – The main stage presentations by CEO Bal Dail and Chief Revenue Office Razat Guarav were in stark contrast to the former administrations. How? Much more focused on the disruptors facing the market and with a keen eye on the future. Bal focused on the company embarking in a “big pivot” focusing on how customers are impacting our businesses. While Razat hit on the major disruptors that face supply chains and our industries. More on both later. What was refreshing was a message from main stage that called out and hit on many of the trends and drivers that we are all facing. Both Bal and Razat also started giving the audience a glimpse into how JDA will address these shifts, whether it is the new retail.me offering, greater emphasis on JDA labs or creating a digital hub, all promising efforts to address their customers’ needs. Coupling their willingness to address new disruptors head on coupled with solutions that are poised to take on these changes was refreshing to hear from this leadership team, not always what would come from main stage.
- Facing disruptors…and making the pivot – One of the big threads that we at Constellation Research have been working on with our customers were reflected on main stage in Nashville (as much as I would like to take credit for those ideas…alas I cannot). Razat hit on 5 big themes of disruption: mobile, IoT, social, cloud and big data. We speak at length about these disruptors; feel free to read our research, but what is the biggest underlying driver is the rise of the consumer. Many of these disruptors have empowered the consumer, given the consumer a growing voice in the ecosystem. When it comes to the supply chain whether you are B2B or B2C the consumer has become the driver – your business must make this the center of their strategy. The same goes for the technology providers that are servicing these businesses. Bal and his team have a great challenge ahead as they look to pivot themselves to help their customers’ better address the consumers and the disruptors that have made chaos the new norm.
- So where does JDA go from here? So JDA is painting a picture of awareness and willingness to pivot to meet their customers’ needs. Good. But what does the future hold for JDA? Over the past decade the company has absorbed Manugistics, i2 Technologies and Red Prairie. All were best of breed supply chain solution providers. JDA became, on paper, a supply chain powerhouse being able to address a wide array of industry needs. Ranging from process and discrete manufacturing, retail and logistics. Impressive. But the question remains – what does New Mountain Capital have in mind long term for this asset? While other supply chain players have been focusing their efforts on specific industries – players like Plex focused on manufacturing, Aptos being spun off from Epicor to focus on retail while Epicor can concentrate on ERP. Can JDA continue to find success competing on all fronts? Or do they need to consider following a similar strategy as Epicor and break up the parts? Maybe the pieces competing on their own are more powerful than the whole? I do not believe this is the only direction JDA can take, but at some point New Mountain Capital will want to reap the rewards from their investment. How that happens will be interesting to observe.
JDA remains a major player in the field of supply chain. The leadership and culture have an aggressive level of expectations of themselves and the business – it is now up to the solutions and software to catch up. They are clearly aware and in tune with the disruptors that are impacting all businesses. The next few months will be crucial for the JDA leadership team to implement their pivot strategy and find success.
Disclosure – I worked at i2 Technologies from 2004 to 2009, i2 Technologies was acquired by JDA in 2009.
Earlier this month I was in sunny Florida at the Demandware XChange conference. A gathering of some of the biggest retail brand names – the likes of Cole Haan, Carter’s, vineyard vines, Party City to name a few, also spent time with me in Florida. With over 1400 attendees representing 600 customers, the event attracted a wide swath of brands and retailers.
The biggest message from the event was the dominance mobile has taken on in the retail world. This is something that has long been resonating in the space. When it comes to connecting with the consumer, the mobile phone is firmly entrenched as the de facto touch point. No surprise since many would rather lose their wallet rather than their iPhone. Therefore it is imperative for retailers to focus on the phone to be central to their consumer facing focus. The main takeaways from the event:
- Mobile is the thread that ties in commerce: Mobile phones are always with us – they are the one constant within the commerce ecosystem. This is specific to mobile phones, as tablets are not regarded as “mobile” but more along the same lines as computers. Retailers need to focus on a mobile first strategy. Retailers need to keep in mind that mobile is not simply about reaching conversions via that form factor – rather that mobile plays a role with regards to influencing conversions regardless of where they take place. Conversations between the brand and consumers via mobile can drive conversions – regardless if they are happening on that phone or via a physical store and even through a non-mobile web site.
- Don’t ignore important signals your customers are throwing off: There was a time when abandoned shopping carts were viewed with disdain. While retailers still want to see the highest percentages of shopping carts converted, there is some interesting information to be gathered from what products your consumers place in their shopping carts and why they don’t convert. Savvy retailers are looking at these actions by consumers and learning from them. There is also an opportunity to learn from you consumer’s social actions. Tying in buying functions with social sites such as Pinterest, allows retailers to take advantage of how their consumers’ are behaving and interacting. The lesson – find places where your consumer is sharing insights, ideas and potential demands and figure out how to take advantage of this data.
- Don’t forget the store labor! A major theme we have seen with retail is the growing importance of labor within the commerce ecosystem. Brands such as Party City are leaning on in store technologies to empower their store associates. Not only for more frictionless interactions between store associate and consumer, but also how to better handle inventory. The labor also needs to lean on the mobile access to information and data. Retailers such as Party City lean on seasonal pop up stores to drive sales around such events such as Halloween. The need for a mobile and flexible in store solution is even more imperative to keep up with these changing retail delivery points.
Demandware and their customers are focused on some key topics facing retailers – all focused on the importance of mobile. The question remains how much can the fulfillment side of the retail supply chain weave into this mobile strategy? As consumers continue to influence the retail supply chain, retailers will also need to adopt a more flexible and responsive fulfillment strategy to integrate with their mobile strategy.
Sorry it is the crazy season of United States presidential primaries and I had to tap into the Donald Trump tag line. I think I am a little punchy after spending a few days at the Cosmopolitan casino in Las Vegas. Other than the usually craziness that occurs in Las Vegas, I spend my time with the SAP Ariba team learning of their direction for 2016 and beyond. The biggest theme I took away from the event was the re-positioning of procurement. Evolving from being primarily a spend management tool to a much more global and strategic function. Taken in the context of how commerce, both from a B2B and B2C world have evolved, the ability to approach spending with greater flexibility and insight is crucial to remain not only competitive but to also capture opportunities. The highlights from the show:
- Massive volume of commerce passing through SAP Ariba: With $1 trillion worth of commerce volume passing through SAP Ariba, 8 documents per second and $40 billion in payments passing via their platform and 113 million annual PO-invoice transactions in 2015, it is impressive the volume and amount of commerce that is being handled.
- Simple, Global and Innovative – this was the mantra from main stage right from the get go. SAP Ariba has been hard at work to make the business platform simple to use – almost like the interfaces and transactional systems we are used to as consumers! Both from being able to tie in greater amounts of necessary data, to stream lining the process to the look and feel of the system the simplicity of being able to leverage the tool was apparent from main stage and in conversations with the team. The challenge for SAP Ariba and their team will be with regards to being global and innovative. These terms are too often thrown around with out much thought behind what they truly mean. Being global is necessary to truly meet spend needs from customers but the innovative side is one that SAP Ariba will have to work with their clients to demonstrate true innovation and not have it become an empty tag line.
- Guided buying – bringing the user experience of the B2C eCommerce world to the world of procurement. The guided buying platform brings the interface and ease of use that we expect to as consumers to the B2B space. Similar to our experience as consumers, the system applies a layer of intelligence to allow the user to be guided towards the best options. When we interact with an Amazon as well as other online commerce, we are accustomed to and expect to be providing with suggestions for related products or ancillary goods. With guided buying, SAP Ariba is providing this layer of intelligence to the procurement world.
- Supplier management – the network is only as powerful as the ability to add (and by definition subtract) suppliers to the network. A crucial characteristic of any robust network is the ability for customers to rapidly onboard vital suppliers. Whether it is to find a new source of material, to add new suppliers that can support a new product or entering a new market. SAP Ariba is adding simplicity and efficiency to the process. This is vital as speed and flexibility with regards to buying is crucial as the speed of business continues to accelerate.
Another interesting undertone – is the view of leveraging this platform to become one that goes beyond simply procurement but to being able to added data feeds such as IoT. The example provided revolved around picking up a signal from an IoT beacon around predictive maintenance. The signal would feed the platform warning of a possible break down of a product. Users can then tap right into the SAP Ariba platform to order the necessary part. This was a great example of how the open platform can allow for new business models to evolve and keep pace with digital disruptors such as IoT.
SAP Ariba is working on making “procurement cool again” I would argue they are making procurement more strategic again. Procurement and buying have to be taken into account with all other aspects of the supply chain. As customers continue to drive the ecosystem – regardless of B2B or B2C – a holistic view of the entire network is vital to capable to meet demands and uncover opportunities.
Last Fall, McDonald’s announced it would be offering their breakfast menu all day. It was widely seen as a bold move, but one that had a certain level of risk. Especially when it came to how their supply chain would be able to support the change. We took a cautiously optimistic view of the move – click here for our post. The gamble seems to be paying off for McDonald’s as well as to the detriment of their competitors. Players such as Jack in the Box basically admitted that their competitor’s offering all day breakfast has been detrimental to their business:
“Jack in the Box sales in the last part of the quarter were lower than we anticipated as several competitors began promoting aggressive value offers,” Jack in the Box CEO Lenny Comma said. “We also experienced weakness at breakfast and lunch throughout the quarter, which we attribute primarily to our decision to shift the timing of some of our promotional activity around breakfast to the second quarter as compared to the first quarter of last year. In addition, we believe a competitor’s messaging around its launch of all-day breakfast had some impact on our results, particularly in the 10:30 a.m. to noon period.”
Click here for the full post on McDonald’s breakfast results.
The undertone of this shift with McDonald’s and the positive results they are enjoying, goes back to the rise of the customer. The customer spoke, those that listened are reaping the benefits. The restaurant and food industries are retail sub-segments that are particularly sensitive to customers’ tastes…literally. As we have witnessed customers’ power growing in the relationships with retailers, this is never more apparent than in the food sub-segment. Restaurants and grocers have to be acutely in tune with the changing winds of demand from their customer base. Especially as food has become a fashion extension – foodies of all shapes and forms are abound.
As McDonald’s offered all day breakfast, not based on a whim but due to what they perceived as an unmet demand from their customer base. The lesson to take from these results is not only that McDonald’s has found success with their venture, but they also had the proper basis to make this decision. Weighing perceived customer demand, pent up market need and impacts on margins have to be taken into consideration when launching into a new product and direction.
Congratulations to McDonald’s on finding success with their all day breakfast. But as we all know, success can be fleeting. The Golden Arches cannot rest on their laurels. Not only will their competitors refocus on how they can retake some market share but the customers’ demand will evolve in manners we have not yet thought of. It is up to these entities to try and stay ahead of this wave. Not an easy task.
For an in-depth look at the food supply chain, click here for our latest research.