Domo Delivers on Managing Business Performance


Over the last four years Domo, a new brand in cloud-based data and analytics software, has worked to enable its customers to understand, collaborate and act on data to achieve business results. Led by its founder and CEO, Josh James, the company has worked to deliver software that provides both a good user experience and business value. Recently, at its 2015 customer conference Domopalooza, the company presented itself and its products to the general public. I had a chance to meet with company executives, employees and customers and view its products at this high-energy event and entertainment that I have not seen in years.

I believe that the key to what Domo has done is its having designed into its offerings how people need to work with data to effectively support decision-making, enable actions and stay informed on the state of the business. Domo takes a different approach than vendors that focus on visual discovery for analysts or try to create the perfect dashboard. Its simpler approach aligns to how people actually work in business. This is a major reason the company received Ventana Research Overall Business Technology Innovation Award for 2015.  VR2015_InnovationAwardWinner

We see five areas where the Domo product stands out from others and has attracted its substantial customer following. Here is a look at each of them.

First, its design reflects an understanding that business people do not have countless hours to navigate through charts looking for information. Instead Domo notifies them of critical changes through Alerts – a feature that is missing in most other analytics tools that are mostly aimed at analysts. The notifications and alerts can be sent as SMS or email and through the mobile devices that many business people now rely on.

Second is a collaborative feature I really like called DomoBuzz. It provides contextual discussions and enables interactions with others in the same view as the analytics. This is much better than the many minimal approaches to collaboration through email and discussions outside of the context of the actual data. DomoBuzz enables people to have open or closed discussions about what is happening with the data, do root-cause analysis or examine new opportunities. Collaboration within analytics applications has long been a priority for business, but vendors designing products for IT use ignored it. Here again, Domo ensures that this capability works across the Web and mobile devices.

Third, Card Builder enables rapid assembly of information in an easy-to-understand tile that is a visual rectangle used to contain information that is presented and is interactive and collaborative. It automatically interprets data the user selects and suggests the proper visualization and presentation. These “cards” can be assembled into pages and slide shows and can be gone through by gestures on mobile devices. I think these cards could easily be expanded into a summary paragraph that anyone can read to get a high-level view of the business.

Fourth, Domo extends analytics through Tasks, which enables users to create projects, add participants and set checklists that track progress and results. Domo is the only provider I know of that has embedded the ability to assign, track and complete any range of tasks and projects within the analytics environment. And let’s be honest: Analytics generates so many potential actions and tasks that we must create lists of items to follow up on, and these usually are done in email or a document and easily set aside.

Fifth is Profiles, which provides information on Domo users that is essential for effective collaboration and assigning roles and responsibilities. It also provides the means to contact them and even connect with them on social media. This enhances personalization and enables dialogue to interact and improve, and is an excellent complement to DomoBuzz.

vr_DAC_20_justification_for_data_preparationTo utilize Domo requires gathering data from any necessary application, system or source, and the company has invested to ensure that data access is not a barrier.

Domo Magic shortens the time from data to insight and action by enabling users to transform the data. Our data and analytics in the cloud benchmark research finds that the most common impediment to efficiency in using analytics is the time spent on data-related tasks like preparing data (cited by 55%) and reviewing data for quality and consistency issues (48%). Domo Magic allows business professionals to click on and connect to data sources and extract data without IT involvement. It takes a visual approach to data mashups and what we call data preparation that blends the selection, merging and flow of data in ways much easier to use than standard ETL or data integration.

It’s simple to connect to specific data sources through a variety of connectors that can mash up data from many application sources, social media and Internet information sources, which our research reveals as the top three most important external data sources, each cited by more than 40 percent of organizations. Domo also easily connects to IT integration tools such as those from Informatica, which I saw demonstrated, and other enterprise data sources from its cloud-based environment.

To help new users get started, Domo VR2015_LeadershipAwardWinnersupplies a range of QuickStart Apps that facilitate connecting to data sources and role- and industry-based applications. All of these apps are available on the Web and mobile devices so there is little or no load on IT to support Domo.

At Domopalooza the company showcased customers that have found the Domo approach easy to use. We heard testimony from SAB Miller, Schneider Electric, Stance and dozens of others. Our firm was so impressed that we selected SAB Miller (led by Ross Moncur, group head of business analytics) for the 2015 Ventana Research Leadership Award in Business Analytics. The overview video provides a glimpse of the dynamics of what SAB Miller has done with Domo and how it is using analytics to business advantage. It harnessed a significant number of data sources into a single application to guide and execute on business performance.

Domo has created a new generation of software to help organizations manage their business to optimal performance using analytics, collaboration, personalization, presentation and project and task management, all in an application that helps people optimize their processes and improve their actions and decisions. It is not a typical analytics or visualization product but cloud-based software that accelerates the time to gain insights from data, take action and achieve desired outcomes in a new way. Timing in the market for software is always essential for success, and in this case Domo has arrived during a transformation in how businesses will use information and technology to manage and optimize their efforts. They are looking for more than dashboards and pretty visualization but at the same time want software that any of their employees can use, not just analysts or data scientists. If you have not taken a look at Domo, now is a good time to do so.

Regards,

Mark Smith

CEO and Chief Research Officer

Workday Financial Management Gains Momentum


Workday Financial Management (which belongs in the broader ERP software category) appears to be gaining traction in the market, having matured sufficiently to be attractive to a large audience of buyers. It was built from the ground up as a cloud application. While that gives it the advantage of a fresh approach to structuring its data and process models for the cloud, the product has had to catch up to its rivals in functionality. The company’s ERP offering has matured considerably over the past three years and now is better positioned to grow its installed base. Workday recently added Aon, the insurance and professional services company, to its customer list (becoming its largest customer to date) and reported that its annual contract value (ACV – the annualized aggregate revenue value of all subscription contracts as of the end of a quarter) has doubled since the second quarter of this year, albeit from a low base. This is an important milestone because for years the company’s growth has come from the human capital management (HCM) portion of the business, not financials. Workday has around 160 customers for its financials (more than 90 of which are live) compared to more than 1,000 customers for HCM.

The latest release of Financial Management, Workday 25, enhances its analytics and dashboards, including an audit dashboard with 14 prebuilt reports that can, for example, flag issues in separation of duties. The company’s Composite Reporting, introduced last year, enables users to automate the assembly of highly configurable reports that can combine operational and financial data to provide a more complete picture of a company’s performance without having to use a separate business intelligence system. These multidimensional reports also enable users to drill down and around to underlying information – the why behind the what. The ability to quickly get to authoritative numbers that describe the underlying causes of issues and opportunities does away with delays in people “getting back to you with that information” and enables faster response to changing conditions. These reports can be viewed on mobile devices to enable more interactive dialogues about a company’s condition and performance.

Workday 25 also adds an inventory module to address the need of many services companies to manage their indirect inventories (materials that are not incorporated in final products such as computers or facilities maintenance items) on an end-to-end basis (which speeds their completion and ensures data integrity). It also has improved its global configuration engine to make the product more useful to entities around the world (including subsidiaries operating in jurisdictions in a range of countries). And now the mobile expenses app finally includes direct posting from captured receipts rather than requiring manual entry.

Reflecting the maturing of its Financial Management offering, management will assign all of its salespeople quotas for this product in the upcoming fiscal year. Achieving a large, sustainable presence in the ERP segment is essential to Workday’s long-term success. Longer-term prospects for the financial software are best understood in the context of the evolving ERP software market and the company’s strategy of positioning its offerings as easier to own and use than others.

The outlook for the multitenant software-as-a-service (SaaS) ERP market – which will impact Workday – is simultaneously encouraging and vr_Office_of_Finance_20_finance_prefers_on-premiseschallenging. Revenue and user growth in the ERP segment of enterprise software (both in the cloud and on-premises) is coming almost exclusively from cloud adoption, mostly in a multitenant format. At the same time, however, our Office of Finance benchmark research finds that nearly half (46%) of participants still say their company prefers to deploy its ERP systems on-premises. (By analogy, on-premises ERP may be a dinosaur, but we’re only at the start of the Cretaceous period and extinction is a long way off.) That insistence apart, the percentage of on-premises ERP has been declining and likely will continue to decline over the next five years. One reason is that resistance to the cloud for security reasons in this category is waning. An increasing number of companies are realizing that their on-premises servers are likely to be more vulnerable than those operated by a cloud ERP provider. For many companies, a cloud deployment can provide higher quality of service than on-premises (because of better hardware and the greater competence in maintaining the software compared to one’s internal IT staff), and its total cost of ownership can be lower.

However, anyone looking for a replay of the rapid-growth, 1990s-era ERP client/server applications market will be disappointed. Multitenant cloud software doesn’t have the substantial advantages that vr_Office_of_Finance_01_ERP_replacementclient/server had over the mainframe applications of that era nor the Y2K rationale for immediate replacement. Demand for financial management systems in midsize and larger corporations is almost always driven by the need to replace an existing one. Our research also shows that replacement has slowed over the past decade. Companies are changing ERP less frequently than a decade earlier, on average every 6.4 years as opposed to 5.1 years in 2005.

Another significant challenge for multitenant SaaS ERP vendors like Workday is that their market potential is actually constrained by a key benefit of multitenancy. Because buyers configure the features and capabilities rather than customizing the core code base, implementations can be done faster and cost less. Note, though, that ERP deployments by large, complex organizations are still difficult. For example, Aon expects to spend 14 to 15 months implementing Workday Financial Management. A related benefit is that since all customers are running the same code base, when the software vendor issues new releases or modifications to the software, those changes are quickly made to the code that everyone is running, either immediately or after a grace period. This requires far less work for the customer than on-premises versions and patches. Moreover, the changes are implemented accurately and securely. The trade-off, however, is that the core software cannot be customized. If the cloud software offering cannot be configured to meet the customer’s feature, functionality and process requirements, and if a potential customer cannot adapt its operations to these limitations, it isn’t a feasible solution. Unlike with on-premises software, there is no option to customize multitenant SaaS offerings to the needs of a single customer unless the vendor is willing to make changes to its code base within timing acceptable to the customer. So Workday and other cloud software vendors are finding it necessary to target specific types of businesses in order to focus development efforts on specific business needs. In this company’s case, for Financial Management these verticals are chiefly financial services, business services, software and Internet services, higher education, government and nonprofits.

On the other hand, some software categories lend themselves to a multitenant SaaS environment because the needs of most companies are easily accommodated through configuration. Sales automation, travel and entertainment and human capital management are in this category and consequently have benefited from rapid adoption.

Not so with ERP, which is less amenable to the SaaS multitenant model because of the inherent complexity of the business processes the systems manage and the difficulty in creating SaaS offerings that are sufficiently configurable – as I’ve written previously. This is one important reason why on-premises remains an attractive option; even though sales in this segment are not growing, they are still a large percentage of the market. ERP systems must be able to handle the specific needs of users, which can differ considerably from one industry to another and even between specific microverticals. A large company’s ERP requirements might span multiple business units in multiple industries in multiple locations and jurisdictions. Many manufacturing and product-centric businesses have found multitenant offerings impractical because their requirements cannot be met by available software. Workday is not targeting these types of companies.

As resistance to cloud-based ERP wanes, Workday will benefit as ERP software buyers evolve from a nearly complete focus on features and functions to a more nuanced set of requirements that include ease of use, reliability and security. The maturing of the category and advancing technology are behind this shift. Total cost of ownership and the ability to meet business requirements are becoming gating factors (packages that don’t fit the basic needs don’t make it to the short list), but increasingly vendors will have to differentiate their ERP software based on the user experience and – for cloud services – the ability to minimize disruptions and eliminate vulnerabilities to disasters and hackers. From the start, Workday’s product strategy has been to provide customers with a user experience that addresses many of the issues that business users have had to date with ERP systems. Its focus on providing a practical, pleasing and productive working environment gives it an edge in successfully addressing the needs of companies that do not have complex operating requirements. For example, Composite Reporting makes it easier (compared to many on-premises systems) for companies to get actionable information out of the software by combining analytical capabilities with transaction management. Technology limitations made this extremely difficult until recently and forced companies to invest in and maintain business intelligence and reporting systems. (This capability is not unique to Workday and is likely to become a baseline requirement for ERP systems within the next several years.) Another objective is to simplify the process of creating dashboards and reports in order to provide individuals with the information they need and to do so with the shortest possible time lag. Having a rich set of employee data in the same data structure as the financials, companies that are in people-centric businesses can find it easier to create performance metrics to improve management effectiveness.

Workday’s Planning application (due for release in 2016) also illustrates its approach to using technology to provide a better user experience. Does the world need another planning application? At first glance, not really. The category at the enterprise level is decades old. Perhaps because of that, our 2015 Business Planning Value Index confirms that the category is a commodity. Although there are differences among the packages offered by vendors that can drive preference, all that we evaluated rated highly in handling this task. Their plusses and minuses netted out to a tight range of scores. Moreover, at this stage in its evolution Planning lacks many refinements that are useful for companies operating in dynamic business environments. But unlike other planning applications, Workday Planning is not designed to address complex planning requirements in dynamic business conditions. It is designed to address the needs of organizations that must manage to fixed budgets. This group includes higher education (especially universities with limited commercial or for-profit activities), government and nonprofits – key targeted vertical industries for Workday. Unlike business enterprises that operate (largely) from a common pot, departments and other units are allocated specific amounts at the start of the fiscal year and are not permitted to exceed that amount. Properly configured, Workday Planning can alert department heads, controllers and others when there is a risk that a limit will be exceeded at the point where a purchase order is entered into the system and before it’s approved. In some cases, predictive analytics can be used to generate alerts if it looks as if specific funds accounts are in danger of being overspent. In these types of organizations, the focus on simplicity of use and native integration with the general ledger should help attract buyers since it is often the best way to ensure high participation and compliance.

Very soon “the cloud” will cease to be a point of discussion. It’s likely that within a decade software as a service will be the favored means of consuming ERP functionality, either in a multitenant or a hosted single-tenant format. Shortly, software vendors, industry analysts and journalists will have to focus on the more substantive qualities of specific business applications. In this era, total cost of ownership, system performance and security will be pass/fail gating factors in selection. For vendors offering multitenant services, the ability to configure their offering to suit the operating needs of the company (highly objective) and the user experience (highly subjective) will be the key determinants driving preference. Workday has succeeded in creating a brand image that emphasizes a useful, simpler user experience. Its strength in HCM provides an advantage in selling Financial Management into these companies. However, it also will be facing stiff competition from other vendors (especially Infor and Oracle) in its targeted verticals. Financial Management has advanced significantly over the past several years. To achieve a significant position in the ERP market, it will be necessary to sustain a rapid pace of product development to expand its scope of configurability and keep pace with a rapidly evolving set of user experience norms.

Companies that find they need to replace their ERP system should assess whether the available multitenant offerings can address their requirements. To do this, they need to sort out requirements that are essential to running their business from those that can be adapted to the capabilities of the individual offerings. I recommend that organizations on Workday’s list of targeted verticals investigate whether its Financial Management application will fit their needs.

Regards,

Robert Kugel – SVP Research