Acumatica and the Power of Three

Three must be Acumatica’s lucky number. In reviewing all that was covered in a recent (industry) Analyst day, I was struck by how often things came in 3’s:

  • 3 types of partners
  • 3 cloud models
  • A goal to eliminate 3 C’s: cost, complexity and customization
  • 3 veteran Acumatica execs presenting alongside 3 relative newcomers
  • Even the customer in attendance had the Acumatica partner demo 3 different systems side by side and then was up and running in 3 months
  • That partner… typically does 3 integrations per installation

In the competitive world of ERP, it is often quite difficult for solution providers to differentiate themselves. Basic functionality has become somewhat of a commodity, although the basics aren’t so basic any more. Most vendors are responding to the dominant trends impacting enterprise applications… cloud, mobile, social and analytics (aka big data). And yet, differentiation was indeed the theme of the day for Jon Roskill, CEO (and one of the 3 relative newcomers to Acumatica, along with VP Partner Strategy and Enablement, Richard Duffy and brand new CMO Kathy Visser-May).

3 Types of Partners

Apart from the lengthy list of 3’s, Acumatica can claim one easy point of differentiation. Unlike most ERP vendors and definitely unlike other SaaS vendors, it sells exclusively through an indirect channel. And in keeping with the power of 3, Acumatica has 3 different kinds of partners: Value Added Resellers (VARs), Independent Software Vendors (ISVs) and OEMs. How does it define the difference?

Think of a VAR as a typical reseller of the Acumatica software. The “value add” might simply be the implementation and consulting services provided along with the purchase of the software. Or it might include some customization, or add-on functionality developed by the VAR. In providing this value add, the VAR might also be providing specific knowledge or expertise of a certain software, industry or country requirements. The VAR in attendance at the Analyst day, BHE Consulting, is quite typical in that it resells Acumatica along with 2 other applications, both on-premise solutions. BHE’s customer, Menck Windows truly appreciated this diversity as it allowed the evaluation team to work with a single partner, but look at 3 different solutions, side by side.

VAR revenue for Acumatica grew 70% last year, making it one of the fastest growing ERP companies today from a percentage standpoint. While the growth percentages are impressive, they are tempered by the fact that Acumatica is still small compared to key rivals like NetSuite, SAP and Microsoft Dynamics. Yet the company did announce its 1000th customer at its partner event last August – quite a significant milestone.

The value added by an ISV is more specific. An ISV adds value through extensions to the product. Some ISVs you might have heard of include: Avalara (for sales and use tax management), Adaptive Planning (for financial planning, budgeting and forecasting), ADP for payroll and more recently Magento for eCommerce software and platform. Others might expand the addressable market for Acumatica beyond its standard financial, distribution, project accounting and CRM. For example, JAAS Systems adds advanced manufacturing features to Acumatica’s solution. ISVs (like JAAS) might also be VARs and other VARs may also resell solutions from ISVs. Indeed any partner that sells to manufacturers today must also partner with JAAS for a complete solution.

OEMs are a little different. These companies will use Acumatica technology to build their own solutions, sold under their own brands. So Acumatica will be “under the covers” so to speak. The two most notable of these relationships are Visma, a provider of business software solutions to SMBs in Northern Europe and MYOB, an Australia and New Zealand-based company that enjoys market shares as high as 70% to 80% within its operating markets. The deal with MYOB, announced in August 2013, enables MYOB to localize and distribute Acumatica’s ERP solution. Visma offers Visma.net, a complete business solution including a white-labeled version of Acumatica’s ERP as a key component.

3 Cloud Models

Acumatica was developed as a cloud-based solution. It was born in a browser and therefore has always had a zero footprint on the client, making it accessible any time, from anywhere. No legacy issues here. It is built from the ground up with cloud technologies and can be run on a variety of cloud platforms including Microsoft Azure, Amazon Web Services (AWS), IBM cloud and CenturyLink.

The downside of being “all in the cloud” ordinarily means less choice. Typically a cloud-based solution is only available as software as a service (SaaS). Not so with Acumatica. The solution is designed to be a multi-tenant cloud solution, but that doesn’t prevent Acumatica from offering it in a variety of different environments and Acumatica is quite unique in this regard.

Acumatica offers 3 different models through its partners:

  • A traditional multi-tenant option where a single instance of the application can be load balanced for scalability
  • A multi-tenant application, but each tenant can have their own separate database
  • Single tenant, where the customer has a dedicated application and database.

While SaaS purists might argue against this kind of choice, the 2015 Mint Jutras Enterprise Solution Study found when it comes to cloud, not everyone wants the same thing (Figure 1).

Figure 1: How do you prefer your cloud?

Acumatica Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

What is most important to Acumatica is that all 3 options use a single code base, which allows the company to deliver on another promise of 3: it schedules releases every 3 months. The ability to deliver more innovation is one of the benefits of a SaaS solution that is often overlooked and under-valued by consumers of ERP accustomed to upgrades being time-consuming, costly and disruptive. Acumatica has customers like this, and therefore it offers two different “tracks” for updates – quarterly and annually. Which leads us to another of the 3’s.

Eliminating the 3 C’s: Cost, Complexity and Customization

Most everyone today (including our Enterprise Solution Study participants) recognize the potential for cost savings in deploying a SaaS solution. Each year we include a question in our study regarding what respondents find appealing about SaaS. Cost savings consistently rise to the top of the leader board, including reduced total cost of ownership, less cost (and effort) of upgrades, lower hardware, maintenance and startup costs and fewer IT staff required to simply keep the lights on.

But in order to eliminate all 3 C’s (cost, complexity and customization) you need a solution that is broad and deep, yet flexible and agile. Building more and more specialized functionality into the core solution has the potential of turning it into a battleship – complex, unresponsive and hard to maneuver. Instead, Acumatica has made every effort to make its core solution generic but extensible.

By design, the core solution Acumatica itself delivers is a horizontal one, and therefore it will have functional gaps in certain vertical industries. Acumatica looks to OEMs and ISVs to fill the gaps, providing more opportunity for these partners and also shielding individual customers from having to deal with added complexity arising from specialty functionality that serves no purpose for them. Special platform technology helps Acumatica support this approach while making it easier for partners to extend the solution.

As with many modern solutions today, Acumatica has 3 layers: presentation, business logic and data access. Each can be modified through a “customization engine” that can extend the layer without touching original code or binaries. New functionality can be added through extension packages and multiple packages are supported on a single runtime version. The partners, or even the customers themselves, can create packages and they are “automagically” merged together. New data fields can be added and the entire database is split into base tables and extension tables. Even in a multi-tenant environment, different tenants have access to different extension packages and tables.

A good example of using ISVs to extend functionality is in the realm of eCommerce. Acumatica and Magento have partnered to help customers connect eCommerce to the back office functions supplied by Acumatica. This is a different approach than one of Acumatica’s key rivals, NetSuite, which has authored its own eCommerce suite. This is the classic example of weighing “best of breed” functionality versus ease of integration. While the NetSuite approach takes a tightly couple suite approach, Acumatica chose Magento as a market leading “best of breed” solution. That is not to say NetSuite’s SuiteCommerce solution will never match Magento in terms of functionality, but it still has a ways to go. And in the meantime Acumatica offers “out-of-the-box” integration and recognizes that some current Magento users will be reluctant to let go of that “best of breed” functionality and that specific solution.

Another example can be found in Acumatica’s approach to mobile applications. Acumatica has begun to deliver a small number (so far) of these specialized apps. One analyst at the recent event asked why not take a “mobile first” design approach, rather than creating add-on mobile apps? But for Acumatica, this is not an “either/or” approach, but rather “both.” The entire Acumatica ERP, being browser-based, is available from virtually any device with a Wifi connection. The additional mobile apps can be used in a disconnected mode, even when a Wifi connection is not available. Data is later synchronized automatically. So these mobile apps are in addition to (general access through a mobile device) and purpose-built for a particular function.

There is Power in Those 3’s

Being a relative newcomer to ERP, Acumatica has a ways to go before it becomes anything close to a household name. But then, for an industry as mature as ERP, there are indeed very few household names. If it were to rely on a direct sales force to grow its customer base one customer at a time, it might never reach the kind of penetration needed to be taken seriously. But with 327 VARs (200 in North America), OEMs like MYOB and Visma and ISVs like Avalara, Magento and Adaptive Planning, the company will definitely have a leg up.

With the cloud at its current tipping point (for new software acquisition at the very least), Acumatica is well positioned, offering choice, while also preserving the advantages of a cloud-based solution.

On the product side of the house, it has some stability with veterans like Mike Chtchelkonogov (founder and CTO), Ali Jani (VP Product Management and Services) and Gabriel Michaud (director of product management). While continuity is a key factor here, I expect the pace of innovation to accelerate, leveraging key partnerships and new technology.

And yet Acumatica has been smart to infuse some new blood into the organization with Jon Roskill (CEO) and Kathy Visser-May (CMO), both from Microsoft and Richard Duffy, recruited from SAP Business One. All 3 newcomers have pedigrees firmly rooted in the small to medium size business market, where Acumatica intends to stay. All are hungry – and well-equipped – to make a name for themselves and Acumatica in this rapidly changing, cloud-based world of ERP.

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2 Responses to Acumatica and the Power of Three

  1. Tim Rodman says:

    I like your “battleship” metaphor. Most ERP vendors build functionality as fast as they can, resulting in a “battleship” that can be hard to maneuver. Acumatica seems more cautious to do this and instead focuses on making it easier for you to build the functionality yourself (or use an ISV solution).

    I personally like this approach because I have found that oftentimes it takes more work to “tear down” functionality than it does to “build up” functionality. It’s like doing extensive renovation work to a house versus building one brand new.

    Because of this, many organizations end up asking the wrong question when it comes to implementing a new process. They ask, “how does our ERP system handle this process” rather than asking “how do WE want to handle this process”.

    Asking the first question leads to molding the business around the software whereas asking the second question leads to molding the software around the business.

    In the past, the second question was feared because changing the system too much resulted in a customization nightmare. But the Acumatica customization tools are starting to make the customization process feel more like “configuration” rather than “customization” which is a good thing for those companies what want to maintain the unique business processes that give them a competitive advantage in the market.

  2. Pingback: 4 Reasons Why Acumatica is the Fastest-Growing Cloud ERP

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