What has happened?
Anaplan has signed a definitive agreement to acquire Fluence Technologies. Fluence is a fast-growing vendor, founded in 2019, that offers a cloud-native product for financial close, consolidation, disclosure management and reporting. The acquisition is expected to close in the next few weeks.
Why is it important?
Anaplan is a market-leading vendor for planning and performance management. Its Anaplan platform was officially released in 2008. The company’s name is a combination of analytics and planning, which underlines its core focus and strategic positioning so far. Anaplan is a purely cloud-based platform and represents a new generation of planning, forecasting, modeling, and performance management platforms.
Financial consolidation is a natural extension to Anaplan’s core competency in planning to make it more useful to finance departments. While Anaplan, according to its press release, evaluated the in-house development of a finance consolidation solution, they finally decided to acquire Fluence to faster provide value to their existing customer base of more than 2,000 customers as well as new potential customers. Fluence is a good fit to Anaplan’s purely cloud-based approach and there are just a few functional overlaps in both vendors’ portfolios.
What is interesting about it?
Performance management can be divided into corporate performance management (CPM) and financial performance management (FPM). While Anaplan has so far been able to demonstrate its strengths particularly in classic CPM use cases such as planning, budgeting, and forecasting as well as via supplementary functions for analytics, the acquisition opens up new opportunities to address the Office of Finance more comprehensively.
Fluence’s strengths – financial consolidation and close, disclosure management and financial reporting – are core use cases for FPM. As the recent BARC study “The Financial Consolidation Survey 24” has shown, many companies are currently investing in better software support for group accounting. Financial consolidation as well as financial reporting and disclosure are key use cases, not least due to increasing regulatory and new requirements (e.g., ESG and sustainability reporting). This is precisely where Anaplan’s expanded offering comes in, offering broader and deeper support for holistic performance management in the future.
Potential positive effects for customers and prospects
- Anaplan is poised soon to deliver a more comprehensive solution for the Office of Finance with the potential for better integrated software support for the key capabilities needed.
- Anaplan’s comprehensive strengths in planning, budgeting, and forecasting are supplemented with comprehensive capabilities for financial consolidation and close, disclosure management and financial reporting.
- While Fluence’s solutions could be a valuable addition for Anaplan’s existing customer base of over 2,000 customers, also Fluence’s existing customers may find Anaplan to be a valuable extension for planning, which until now has been addressed with partner products.
- Once the integration of Fluence into Anaplan is complete, companies looking for new software will have another attractive option for integrated financial and operational performance management.
Potential negative effects for customers
- Focusing on the integration of both platforms ties up resources and could temporarily lead to reduced innovation speed in both products (with potentially greater impact on the acquired company’s customers). BARC expects integration at front-end level in the short term before deeper integration and unification of the two platforms can be achieved in the medium term.
- Risk of increased employee turnover and thus a brain drain in the acquired company, as has been seen in many similar acquisitions.
- Partner enablement to implement and support both platforms in combination will take time.
- Fluence has formed partnerships with several dedicated planning vendors, besides Anaplan also Pigment and Vena. As a result, support for previous integrations of Fluence with competitor products of Anaplan may become increasingly limited in the future.
Strategic outlook
Many performance management vendors have expanded their products and portfolios in recent years or completed them through acquisitions (e.g., Board, Jedox, Unit4 or Prophix). Hereby, financial consolidation was high on the agenda as a natural addition to corporate planning. Anaplan’s acquisition is therefore a major step for two reasons. On the one hand, it is important not to lose touch with the competition in terms of functionality and to close the gap to market-leading platforms (e.g. OneStream, Oracle or Wolters Kluwer | CCH Tagetik); on the other hand, changing customer demand requires more comprehensive software support for the Office of Finance.
For this reason, we believe the acquisition makes sense and creates various market opportunities for Anaplan customers, but also potential benefits for Fluence’s customers. The acquisition adds approx. 100 employees to Anaplan’s workforce and 900+ customers to its customer base.
Anaplan and Fluence have only minor functional overlap, making their combination a good fit for many to extend functionality for their Office of Finance. BARC will continue to observe with interest Fluence’s integration into Anaplan and keep you updated.
