Recently, Gartner released the magic quadrant of enterprise low code application platform in 2021. Gartner has strictly selected global well-known manufacturers through multiple dimensions such as product service, operation, market influence, customer experience and marketing execution.Appian was named the industry challenger。
Appian, as the first low code listed share, was issued at US $12 in 2017, with a market value of US $16.6 billion. Although the current market value has dropped to US $6.2 billion, continuous technological innovation and strong channel partner construction also make it develop continuously at an annual growth rate of nearly 30%. At present, the cumulative number of customers is less than 700, but the annual revenue reaches US $300 million. How does Appian maintain growth by relying on the strategy of four or two thousand pounds? Let’s have a look.
The world’s leading low code automation platform
Appian was founded in 1999 and headquartered in McLean, Virginia.As a leading low code automation platform in the world, it accelerates the creation of applications with complex business logic and enables customers to automate their business processes。 Its perfect automation technology, including industry-leading workflow engine, robot process automation (RPA), leading case management function, and integrated Google based artificial intelligence (AI), contributes to the digital transformation and differentiated competition of enterprises. Founder Matt Calkins was a product manager of MicroStrategy and a director of the Northern Virginia Technology Council, Virginia public access project and Sorensen Institute.
Figure: Appian development history
Appian’s rapid performance growth in recent five years is mainly due to the upgrading of products and services and the transformation of revenue model.
Product service upgrade
In 2004, Appian began to transform its business from a traditional BPM software service provider to a PAAS model. Appian platform has always focused on the development of BPM business, and has successively added case management, RPA and AI functions. Until now, Appian platform has developed into a world leading integrated low code automation platform. In 2019, it entered the AI field, strengthened the vertical ecological construction of products, and immediately launched a low code + AI product platform.
Transformation of income model
Since 2014, Appian has significantly increased its investment in subscription charging products and gradually abandoned customized development and deployment services with low gross profit margin. From 2014 to 2017, Appian’s revenue grew explosively, providing a beautiful financial background for its listing in 2017. From 2014 to 2020, Appian’s subscription revenue increased by 435%, accounting for 66% of the total revenue from 41%.
Although the product layout and revenue model have been significantly upgraded, Appian has positioned the target customer group at the government and large enterprise customers since its establishment, and is well aware of the needs of the government and large customers for product safety and effectiveness. Between 2004 and 2010, Appian was committed to technology development and service improvement, and won multiple security certifications from the federal government, the Ministry of education and the general affairs administration, becoming the first low code platform with security recognition in the industry.
Focus on BPM solutions
Technology enabled iterative upgrade of low code platform
Appian originated in BPM market,The company focuses on applications with complex business processes。 The first low code platform product was launched in 2016, and its low code product capability was improved by integrating RPA capability in 2020. In 2021, the low code platform was upgraded for the second time by laying out AI technology field, and Appian + AI platform was launched. Although the product has expanded from focusing on BPM solutions to low code products, its essence is to better meet users’ needs for BPM through BPM + technology empowerment.
Appian low code platform has excellent adaptability to companies with complex business rules and workflow. Users can quickly develop applications through drag – pull – drag and point – click Tools. The platform has various general components. Users do not need to design for web, MAC, PC, IOS and Android respectively. They can run on all devices only once.
At present, Appian low code automation platform includes the following four services:
① BPM(Business Process Management): use industry-leading intelligent business process management to design, execute, manage and optimize complex processes
② Case Management: solve customer cases faster by automating collaborative work and exception handling
③ RPA(robotic process automation): improve productivity by automating routine tasks in integrated workflows using Appian low code RPAS or third-party RPAS
④ AI: integrate the artificial intelligence of Google, AWS and azure, so that users’ applications can intelligently mine information and analyze data. Use intelligent document processing to easily process a large number of forms.
Focus on large-scale customers
It is not difficult to see from the pricing logic of Appian products,The enterprise focuses on serving key customers. The target customer group is selected based on the subscription threshold of 100 people. The sales team is more focused on transformation, and the human efficiency can reach US $680000 per year。
In addition to standardized products, Appian also supports customers to enjoy customized services according to their needs. The product portfolio will be more diverse and the collocation will be more reasonable. According to Morgan Stanley customer research, Appian’s product quotation is lower than the industry average, but the service quality and user satisfaction are much higher than the industry average.
Users focus on large enterprises and institutions
Vertical finance, insurance, health care and government
The goal of the Appian platform is always to serve large enterprises and institutions (enterprises or institutions with 2000 + employees or annual revenue of $2 billion +). 69% of subscription revenue comes from finance, insurance, health care and government agencies. It is worth mentioning that among Appian’s customer base, government customers account for 20.9% of the total customers. The natural credibility of government customers and the requirements for the absolute safety of products make Appian products have strong market adaptability.
Although the total number of Appian customers is not large, Appian’s customer base is quite concentrated and the growth is stable. The average customer unit price can be stable at about US $500000. In recent three years, customers with a customer unit price of more than US $1 million account for more than 10%.
Rely on channel partners to drain growth
Appian marketing model is divided into two categories: direct sales and channel partner drainage. Direct selling means that salespeople directly contact customers to introduce products by means of e-mail, telemarketing, door-to-door marketing, etc. In order to ensure the service quality, Appian is responsible for all services in the sales process. Channel partners refer to Appian’s dependence on consulting institutions such as KPMG, Deloitte, PricewaterhouseCoopers and Accenture.In 2020, 70% of new customers will be recommended by channel partners。
Since its listing in 2017, Appian’s customer growth has declined for two consecutive years, and the traditional direct selling model has encountered a bottleneck. In 2019, Appian began to build partner sales channels. The partner model helps to influence customers’ purchase decisions, help Appian obtain new sales opportunities, collect market demand and improve software products. Appian products lower than the industry price also greatly improve the conversion rate of customers’ paid purchase.
In 2020, Appian’s customer growth rate reached a new high, with 160 new customers, more than 110 from partner channels, and even more than the number of new customers in 2019. According to the Morgan Stanley research report,Appian will continue to expand the depth and breadth of cooperation with channel partners, relying on the service efficiency of partners and their short sales cycle to drive the development of enterprises。
Compared with competitors such as servicenow and PEGA, Appian has lower investment in sales and marketing costs, which account for less than 30% of its annual revenue in 2020. However, due to the credibility of key customers and government customers, Appian has a good reputation and industry communication. It is a natural marketing channel.
Future development trend
Industry research and development, ecological construction, focusing on vertical fields
Production research and development
According to the disclosure of the enterprise research report, Appian acquired Lana laboratory, a German process mining company, in 2021, so that Appian platform strengthened the automatic optimization and automatic analysis of repetitive business workflow.
Appian’s acquisition direction mainly focuses on the vertical development of core business and uses advanced technology to empower the business. Both the acquisition of Jidoka to obtain RPA and AI functions and the acquisition of Lana to strengthen process control are the performance optimization and function expansion of BPM and case management, so that Appian platform can have a stronger adaptability to the complex business processes of large enterprises in different industries. It is believed that low code + AI construction will be the technical direction for enterprises to continue to strengthen.
Since 2019, Appian has focused on building an ecosystem of channel partners and achieved remarkable results in 2020 (a record 30% customer growth rate and 70% of new customers provided by partners). Appian will continue to expand the depth and breadth of cooperation, so that partners will not only be the “third party” supporting customer communication and consignment tasks, but also become Appian’s “loyal customers”, “service providers” and “product distributors”, forming a strong partner ecosystem.
Focus on vertical areas
Appian’s growth and expansion have never left its core areas BPM and case management. Appian’s development path has the characteristics of single product, stable customers and concentrated industry. In 2020, 70% of Appian’s annual revenue will come from financial, medical and government institutions. Moreover, in the development plan for the next few years, Appian does not intend to particularly strengthen the performance of other industries, but to increase the investment in the training of professional knowledge related to finance, medical treatment and public utilities for sales personnel. Appian still chooses to plough deeply in its specialized field to strengthen its unique competitiveness.
If the reasons for Appian’s steady development over the past 20 years are described in two words, it can be said to be focus. Whether at the product function level, it focuses on BPM as the core, the solutions focus on the financial, medical and government fields, and the product target customers focus on key customers, government and enterprises. However, with the gradual slowdown of enterprise revenue (several securities companies predict that the future revenue growth will be about 10-15%), it is worth further thinking and exploration by Appian enterprise management to focus on whether it can still become the driving force for its long-term and steady development, and whether it needs to continue to make further breakthroughs in product capacity and service field in the future.
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