What happened?
Lucanet has announced the acquisition of Causal, a UK-based provider of cloud planning software. Causal is Lucanet’s third acquisition in the last two years to add new functionality to its product portfolio, following the addition of Amana (disclosure management and tax) and ementexx (cash management) in 2023. Causal is a five-year-old venture-backed company with around 50 employees, mainly in the UK and US.
Lucanet has been in the planning market for a long time, with a clear focus on financial planning. The lack of flexibility for modeling individual operational sub-plans has been a competitive disadvantage for some time, so it is not surprising that the company is now closing this gap.
Why is it important?
The CPM market is experiencing a shift toward functional consolidation. Whereas a few years ago, most vendors specialized in individual functions—such as planning, consolidation, or modules like disclosure management and tax—today, major vendors are increasingly competing with comprehensive suites or platforms trying to cover the full spectrum of CPM capabilities. Some of the vendors are building out their portfolios with additions developed in-house, while others use acquisitions to fill gaps and expand their portfolio. For example, planning specialist Anaplan acquired financial consolidation specialist Fluence earlier this year to create a more compelling unified offering.
From a CFO perspective, there is a huge and growing demand for integrated or unified performance management platforms that tightly integrate operational and financial planning with consolidation. We clearly see this demand in the mid-market while in very large organizations, with their often-separated organizational units for financial consolidation, it is still common to make independent software decisions for planning and financial consolidation.
What is interesting about it?
- Lucanet has a strong market position as a consolidation solution and has successfully expanded its reach through the acquisition of Amana in disclosure management and taxes. Now Lucanet is entering the operational planning market, an area with a much higher number of competitors.
- Lucanet’s primary market remains Central Europe, though it has expanded internationally in recent years. At the same time, Lucanet is now moving into the operational planning market, while some globally established planning providers—such as Pigment, Planful, and Workday—are starting to enter the Central European market. Additionally, there are strong, established players in the DACH region, like Jedox, Board, and Corporate Planning, with a solid local customer base. This influx of new and established competitors is expected to further intensify the already competitive landscape in Central Europe over the coming years.
Background and technological fit
- Lucanet has its roots in a strong market position in the mid-market. With the acquisition of Amana last year, it bought a vendor that also had a strong footprint in larger organizations. This has increased the overall perception of Lucanet as a vendor that can serve larger organizations.
- Causal is positioning its software for its core target group of start-ups, targeting a segment of significantly smaller customers. Although the vendor claims that this is more a matter of go-to-market strategy than a question of product capabilities, it will be interesting to see how the combined offering will meet the needs of Lucanet’s larger customers.
- Technically, Causal is based on a different database architecture and Lucanet has indicated that it will keep the solutions separate, at least for now, but offer an integrated experience on the front end.
Potential negative effects for customers
- Product bundling alone does not add value, and the deeper technical integration could even slow down the development of the individual components for a period, delaying the delivery of needed features.
- Causal’s focus on smaller organizations, such as start-ups, could mean that the software is – at least initially – not perfectly suited to cover more scalable and complex operational planning requirements.
- As with any acquisition, the integration process could disrupt development. And while Lucanet has an excellent track record in integrating Amana into its product portfolio, the two companies already had a long-standing partnership.
- Another area where customers often feel disruptions is in product support. Merging support teams often leaves customers of acquired vendors with an experience below what they were accustomed to.
Potential positive effects for customers
- We see high demand for integrated CPM solutions that cover both operational and financial planning as well as consolidation and disclosure management, especially in the mid-market. Lucanet promises to have a strong mid-market story once the components are thoroughly integrated. But when, how and how well this will happen remains to be seen.
- Customers who currently wish to extend their Lucanet installations with more advanced planning capabilities have the option to purchase from their existing provider, which can make the process much easier.
Strategic outlook
Functional consolidation in the CPM market will continue. Looking at just the two major building blocks of CPM, planning and consolidation, more and more vendors are rounding out their portfolios and offering competitive solutions in both areas. This will increase the pressure on the remaining planning and consolidation specialists to extend their portfolios through internal development or acquisitions.
BARC currently sees an increasing number of vendors with more and more functionally complete CPM suites. However, at this point in time, we see the core competency of each product mainly on either the planning or the consolidation side. We continue to see planning vendors with additional and often limited consolidation capabilities (e.g., Jedox, Board) or consolidation vendors with additional planning capabilities that sometimes lack flexibility for individual use cases (e.g., OneStream, Tagetik). Much of their “DNA” is determined by the underlying technology, which is either better suited for planning or consolidation, but not equally good at both. Finally, there is also a third group of vendors with strong offerings in both planning and consolidation; however, these solutions are not yet fully integrated. Examples include Anaplan, Prophix, and now LucaNet. It will be interesting to see which of these vendors will achieve a strong market position in both areas over time, and which integration approaches will resonate most with prospects and customers. This competition has already begun and has intensified further with LucaNet’s recent entry!
