It’s partner summit season in the world of enterprise applications. These events, combined with a Mint Jutras research project on channel strategies (still underway), have led me to dozens of conversations with software vendors and their partners over the past few weeks. Acumatica held its Partner Summit last week, providing me even more opportunity to dive deep into the partner relationships that are fueling business for this cloud ERP vendor. My impressions can be summed up in two words: All in.
“All in” was a phrase repeated several times on stage by Stijn Hendrikse, Acumatica’s chief sales and marketing officer. Stijn used it in the context of growth, products, partners and the cloud.
All In on Growth
Being a relatively young company (founded in 2007), you might expect double-digit growth from Acumatica. After all, it is much easier to increase millions of dollars of sales by 10%, 20% or even 50%, than it is to apply those percentages to billions. But triple digit growth? Yes. According to CEO Yury Larichev, “Acumatica is on track to meet its growth target for 2013, which means we’ve grown more than 300% again in revenue, just like we did in 2011 to 2012. We think we may hit 350% this year.”
But Yuri’s goal is to achieve $1 billion in annual revenue within 10 years. He’s going to need a lot of partners to achieve this, because Acumatica is also “all in” on partners.
All In on Partners
One hundred percent (100%) of Acumatica’s business is indirect. In fact management went as far as to say on stage, “No way are we going to sell direct or sell out to someone with a different strategy.” One on one, Stijn said to me, “I’m excited to be excited again. I don’t have to balance priorities between direct sales and the channel. Instead we have a high appetite to reduce channel friction and shorten the sales cycle.”
As a result of an intense recruiting effort, the company added 50 partners to its channel this year, including more than 40 in the last four months. Even attendance at its partner summit more than doubled, from 135 attendees last year (its inaugural event) to 282 this year. Those attendees came from 12 countries and 98 partners. Its global network currently includes 221 partner organizations.
But Acumatica knows that in order to grow its channel, it needs to demonstrate its commitment. While of course one way is through its product roadmap and platform innovation, another is to insure the company is easy to do business with. And I believe it has made a sincere effort to do just that. Acumatica is extending its CRM to its partners and providing strong incentives for the partners to manage their own businesses with the Acumatica business solution. Acumatica University has been a recent addition for training and education. These are becoming table stakes for a world-class partner program. But Acumatica has taken a few steps further.
Its latest software release includes a new licensing engine that facilitates license key distribution for every product module and automates renewals, a feature that is obviously easier to deliver operating in the cloud. It has also introduced a new partner portal, which will include leads, opportunities, invoices, product keys, support cases, guidance on up-sell and cross-sell opportunities and a tool to manage accounts. Partners will be able to see license keys and renewals as they are issued.
All in on Product
Product roadmap and platform innovation is key, but this 100% commitment to the channel puts an interesting spin on Acumatica’s product and channel strategy. Acumatica believes that in order to grow a successful channel, it must leave room for the partners to add value. It is not unusual to rely on partners to take a solution into new verticals, sub-verticals or micro-verticals. In fact other vendors also encourage this in order to expand their addressable markets without diluting their own efforts.
Acumatica has three 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 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) and ADP for payroll. 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, just announced (August 19, 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.
So does this philosophy of leaving room for partners to add value mean Acumatica isn’t “all in” on their own product? My answer is: I seriously doubt it. If “leaving room” had become a convenient excuse for the Acumatica development team to deliver less innovation, I might think otherwise. So far this does not seem to be the case at all. In fact just the opposite seems to be true. The upcoming 4.1 release was intended to be a minor release, but has become a major one and plans are already underway for version 5.0.
And these new innovations seem to be closely aligned with the characteristics of what Mint Jutras calls “next generation ERP” including improved user experience, more innovation and better integration. And of course the ability to operate effectively in the cloud is also becoming table stakes for competing in the enterprise applications market today.
If “leaving room” means Acumatica relies on partners for specific functionality for a particular market niche, that’s a good approach. Inserting too much niche functionality into the base product serves only to clutter it up with added complexity. Better to have that supplied by a partner thoroughly familiar with the niche requirements and made available only to those that require it.
The question is: how opportunistic or purposeful are these efforts? One Acumatica partner developed a solution to manage auto loans at a car dealership. Something tells me Acumatica didn’t have a burning desire to get into that niche, so that was an example of opportunistic expansion. But if it desires to expand into process manufacturing for example (JAAS targets discrete), Acumatica will have to launch a directed effort to recruit a very specific type of partner, or convince an ISV like JAAS to expand its solution and market. It is still too early in the game to fully understand how much of these efforts will be strategically planned and how much will result from a VAR and/or ISV seeing a need and jumping on an opportunity, and therefore it is hard to predict exactly where Acumatica is headed. But wherever that is will be under the umbrella of the cloud.
All In the Cloud
Acumatica is definitely all in when it comes to the cloud. A “cloud only” solution has its pros and cons. On the plus side, the Acumatica solution 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: SOAP, web services, HTML5, Azure, Amazon, etc.
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. Lots of choices here: multi-tenant SaaS, single tenant SaaS (more like a hosted model), or even traditional on-premise deployments. You can purchase a perpetual license or pay a subscription. It 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.
Some industry observers, including those that have their own specific definition of what constitutes “true SaaS,” might argue against this approach. While Mint Jutras is seeing a major shift in acceptance of SaaS solutions, our research also proves that there is still a lack of understanding and even misunderstanding of cloud, hosted and SaaS offerings. While pundits argue about multi versus single tenancy and architectural nuances, our Understanding SaaS survey (data collected from 300 respondents about one year ago) showed the vast majority of survey participants don’t know or care about these aspects. They are simply looking to unburden themselves from the care and feeding of enterprise apps like ERP. They are attracted by lower costs, easier upgrades, less hardware and IT staff and are less worried about a single prescription of how cloud solutions are delivered. They are looking for business partners they can trust and having more choices in how they address these needs can be very attractive.
Are Customers All In?
One final note: Acumatica wants its customers to be “all in” as well. John Howell, one of Acumatica’s founders, is also still actively involved in the company’s product and corporate strategy. In his keynote address he talked about different market drivers, including Metcalfe’s law. If you aren’t familiar with it, here is Wikipedia’s definition: “Metcalfe’s law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system.” John’s interpretation is: involve everyone. The value of ERP is equal to the square of the number of users. This makes terms like “ease of use,” “usability,” “the customer experience” all that much more relevant. All of these factors were addressed on the main stage throughout Acumatica’s Partner Summit.
John may well be onto something here. A cloud solution can go a long way in making ERP more convenient and accessible. According to our Mint Jutras 2013 ERP Solution Study, on average, 65% of employees in companies with SaaS ERP actively use ERP, compared to 45% in those companies with more traditional on-premises implementations. This represents a 44.5% differential and does not include those casual users that are limited to access to specific self-service functions (e.g., paid time off requests, purchase requisition requests, etc.). Actively engaging more of these knowledge workers also keeps all on the same page, making decisions that are data-driven, rather than based on gut feel.
This also reaches into the higher echelons of decision-making in the organization. Executives where SaaS ERP is deployed are 24.4% more likely to have access to and regularly use ERP, with 84% having some direct access (limited or regular use).
The challenge for Acumatica’s partners will be to make this the reality with each of their own customers. Are they up to this challenge? Is Acumatica willing and able to help them reach more broadly and deeply into their addressable market? The desire is definitely there; the goals are aggressive. Acumatica, its partners and its customers all need to be “all in.”