Today, Adaptive Insights, a corporate performance management (CPM) vendor, announced the placement of Tom Bogan as CEO. Founder & Chairman, Rob Hull, will remain as chairman of the company. Adaptive has been around since 2003 and makes a number of cloud, multi-tenant, in-memory financial accounting applications. Their applications are favorites with firms needing better forecasting, predictive, budgeting, planning and other tools. Their in-memory/big data capabilities let finance and other users utilize operational and other data as part of their reporting mix.
The CPM space is currently a very bright, hot space in the financial/accounting software world. Firms like Adaptive, Anaplan, Host Analytics and Tidemark are just some of the players experiencing rapid growth, increasing revenues and large customer acquisitions with their cloud applications. With this growth, some of these firms may initiate public offerings or attract potential M&A suitors. Who would want a CPM vendor? Large ERP firms, looking to bolster their anemic cloud credentials would find a good CPM vendor to be a solid cloud resume builder. Likewise, cloud ERP vendors would find these solutions particularly attractive, too. What CPM vendors generally offer these suitors are lots of cloud customers, cloud revenues and modern technology that are generally accretive to their more traditional financial software offerings (e.g., accounts payable, general ledger, etc.).
Adaptive has been looking for a new CEO since July of last year (see below).
Top leadership changes at 'hot' tech companies are often signal changes for something else afoot. Sometimes, it indicates dissatisfaction with the prior administration's results. Sometimes, it indicates that the company needs a leader to move the company into a liquidity event (e.g., IPO, acquisition, private equity investment, etc.). Sometimes, the board believes the current leader has reached the end of their capability set and a more skilled/able person is needed at this point in the company's evolution. Whatever the reason, there usually is more changing than just the single executive.
When I spoke with Rob and Tom yesterday, they wouldn't get pinned down on the question of why this change and why now. But an examination of Tom's background is interesting. Tom's been President and COO of Rational Software and guided the firm's revenue to $750 million prior to it being acquired by IBM. He's Chairman of the Board of Citrix and he's been a partner with VC firm Greylock Partners (where Workday co-CEO Aneel Bhusri has been an investor/executive). He's also a former CFO. So, Tom's got liquidity event, CFO, venture capital and other expertise. If Adaptive wanted someone to ensure that they never run out of capital as they continue to grow their revenues and acquire more cloud customers, he's probably a great choice. The only thing I saw missing on his CV was IPO experience - a liquidity event I could foresee in Adaptive's near-term future.
So, will anything change in Tom Bogan's era at Adaptive? Customers should expect to see a lot more of the same - and that's fine as Adaptive's been doing quite well on a number of financial, customer and other fronts. Tom did indicate that he felt Adaptive has been good at developing great thought leadership in the CPM space and will continue to do so. I asked about his thoughts around an observation of mine in the CPM space that some competitors of Adaptive sell upscale spreadsheets or complex tools when CFOs and Controllers want finished, brilliant pre-built applications. He agreed that CFOs want a finished solution vs. a tool and he added that this will continue to be a focus for Adaptive.
Tom's VC background should help him with Adaptive's venture backers - a veritable who's who of venture capitalists. According to Adaptive, their investors include: ONSET Ventures, Norwest Venture Partners, Information Venture Partners, Bessemer Venture Partners, Cardinal Venture Capital, and Monitor Ventures.
When handicapping software firms, I look for five critical executives. One of these should be the tele-evangelist. A tele-evangelist is especially adept at telling a compelling 'afterlife' story to prospects. They don't talk about the current product's functions and features. No, they describe the land of milk and honey that customers with version 99 of the product will experience in the years to come. A great tele-evangelist doesn't even need salespeople as buyers want the product so desperately they'll pay most any price to get it. Think about the effect Steve Jobs had on Apple. Has anyone camped out at an old-school ERP vendor's offices lately to buy their offerings? No but they will at an Apple Store.
I sometimes see great CEOs become the tele-evangelist. But, more often, I see socially awkward techies, finance folks, etc. try to assume this mantle and fail to inspire others. Buyers want to believe that the vendor they're spending so much money with has an awesome vision. They don't want a vendor that lacks vision or can't articulate its vision.
Tom will need to articulate the next visionary stages for Adaptive. His employees and prospects will be expecting it. Alternatively, he will need to put forward the internal executive who will assume the tele-evangelist role and let him/her loose on the market.
Adaptive's posted some nice numbers for 2014. The firm states that it has:
- 2,500 active customers
- More than 50% YoY bookings growth
Forbes reported in July 2014 that previous CEO, John Herr, had changed status with the company moving from CEO to adviser. Herr held the CEO position starting in 2011.Writing for Forbes, Ben Kepes detailed the response he received from Adaptive regarding that management change:
"Adaptive Insights announced a number of changes that position us for our next stage of growth. John Herr has resigned as CEO and will transition to a senior advisor role, with Founder Rob Hull stepping into the role of Chairman. New President & Chief Revenue Officer Keith Nealon and Audit Committee Chair Jim Kelliher bring significant experience in scaling and managing both pre-IPO and publicly-traded cloud companies. These changes come amid record performance, as we continue to focus on building a great, successful company as the leader in cloud BI & CPM"
You can read Adaptive's press release here.