manufacturing

Enterprise Odd Couple: Plex Systems Partners with Workday

Pre-Packaging 2-Tier ERP for Manufacturers

Last week at its annual PowerPlex user conference, Plex Systems announced Plex Connect, along with several new partnerships and packaged connections. The goal of this new open integration framework is to “make it easier for manufacturers to connect people, things and applications to the Plex Manufacturing Cloud.” One of these partnerships stands out as being somewhat unique in that it is forged with another Enterprise Resource Planning (ERP) solution provider… Workday.

At first glance these two might seem like the proverbial odd couple. As another ERP vendor, Workday would appear to be a competitor. But it is not, because Workday is not a solution that is focused on the needs of manufacturers. And companies that “make things” are the only targets for Plex Systems. So if Workday isn’t for manufacturers, why would any Plex customer be interested in connecting to it? Because typically corporate headquarters doesn’t make anything, but might have sophisticated accounting requirements to support global operations. This partnership is all about delivering a pre-packaged 2-tier ERP.

Making the Case for 2-Tier ERP

Operating across a distributed environment has become a way of life for a large percentage of manufacturers today, even smaller ones. In fact 77% of all manufacturers that participated in the 2015 Mint Jutras Enterprise Solution Study had more than one operating location served by ERP (Figure 1). And 67% operate as a multi-national company. Even those with annual revenues under $25 million average just over 2 operating locations and that average grows steadily as revenues grow. This means very few companies today are able to conduct business as a single monolithic corporation.

Each operating division will have operational needs and must then feed to corporate financials for consolidation and reporting.

Figure 1: Environments Are More Distributed and Remote

Plex WDAY Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

Note In Figure 1 company size is determined by annual revenue.

  • Small: annual revenues under $25 million
  • Lower-Mid: $25 million to $250 million
  • Upper-Mid: $250 million to $1 billion
  • Large: revenues over $1 billion

In years gone by all the different operating locations depicted in Figure 1 were likely to be left on their own to evaluate, select and implement a solution to run their operations. However, that scenario is quite rare today. The vast majority (90%) has established corporate standards for enterprise applications (Figure 2).

Figure 2: Have you established corporate standards for enterprise solutions?

Plex WDAY Fig 2Source: Mint Jutras 2015 Enterprise Solution Study

But this doesn’t necessarily mean a single solution runs the whole enterprise. Very often the ERP solution installed at corporate was selected for its ability to report and consolidate across multiple divisions. Very often these corporate accounting solutions (like Workday) don’t have the necessary functionality to run the operations of its divisions, especially if those divisions are manufacturing sites. In these cases, the standard solution for these manufacturing operations is a different solution – one like the Plex Manufacturing Cloud. Hence…

The Emergence of 2-tier ERP

In fact this 2-tier standard has become quite commonplace. Of those that have established corporate standards, less than half (47%) uses a single standard where all units, including corporate headquarters, use the same solution (Figure 3). At the same time, 31% have established a 2-tier standard and another 22% have a multi-tier standard. This latter category is most typical in a diversified corporation where you might see different types of businesses at the divisional level – you might have distribution warehouses or sales and service locations in addition to manufacturing sites.

Figure 3: Is this a single, two or multi-tier standard?

Plex WDAY Fig 3Source: Mint Jutras 2015 Enterprise Solution Study

It is this middle 31% that is targeted by the Plex Systems/Workday alliance, although it might work equally well in the multi-tier scenario. In fact if the non-manufacturing sites are sales and service operations, Workday itself might be the chosen standard for those divisions, eliminating the need for more than two different ERP solutions.

Plex Systems acknowledges that its solution is not the best for non-manufacturers. In fact Plex makes that point in its bold move to implement Workday for its own operations. The initial knee-jerk reaction might be, “What? They don’t sip their own champagne?” (An analogy I much prefer to eating one’s own dog food!) But while Plex knows and serves manufacturing very well, it isn’t a manufacturer. It makes software. While software companies that deliver on-premise solutions might burn CD’s, package them with documentation and ship a physical product to a customer, as a pure cloud provider, Plex sells software only as a service. The accounting for software, services and subscriptions is very different than accounting for shipping and delivering a physical product. But at the same time, this decision also underscores the fact that Plex is not afraid to make the right business decision in managing its own business.

But getting back to the 2-tier scenario, in the past we have seen solutions from SAP and Oracle dominate the corporate scene. Yet solutions like Workday, born in the cloud, are starting to chip away at the dominance of these two major players. And an alliance like this will only serve to accelerate this erosion. Very often a decision for SAP and Oracle might have been influenced by the efforts involved in integrating and rolling up financials from the distributed sites. While these have typically not been “out of the box” in the past, popular sentiment is that if you go with one of these “giants,” you will likely find systems integrators and other service partners who have done it before. That means they have a lot of experience with SAP and Oracle. You still pay for the connection, but you are at least dealing with a higher level of expertise.

With pre-packaged connectors, the need for this prior experience goes away and the expense of forging the connection drops dramatically.

Impact on Roadmap

So after hearing about this and other partnerships (with Salesforce and DemandCaster) the first question I posed to Plex was regarding the impact these might have on their own road maps. In terms of Workday, my specific concern was over enhancements planned to make its ERP more “global.”

Plex already has customers running the Plex Manufacturing Cloud from more than 20 countries, but it has let its customers essentially “pull” them into those countries and doesn’t necessarily support all the localizations and legislative regulations required in each… or all the complexities of growing multi-national companies. About a year ago Plex Enterprise Edition made its debut at PowerPlex 2014 along with an aggressive roadmap to support complex, global, multi-plant manufacturing organizations with multi-entity financial and supply chain management requirements.

In answer to my question, Plex has assured me none of these partnerships will result in taking planned innovation off the table. It will continue to invest in these globalization efforts. Similarly, other solutions such as DemandCaster will not prevent Plex from developing its own forecasting / demand and supply planning software. The alliance with Adaptive Insights will not prevent Plex from developing more robust financial planning and budgeting offerings. But I am thinking Plex doesn’t really need to compete against Salesforce for CRM.

 Conclusion

In the meantime and well into the future, Plex Connect should indeed make it easier for manufacturers to connect people, things and applications to the Plex Manufacturing Cloud. And in today’s connected, digital economy, isn’t that what it’s all about?

A Side Note: Is Workday ERP?

In the past I have posed the question about Workday: Is it ERP? Does it Matter? Many refer to Workday as ERP, but by my definition (an integrated suite of modules that provides the operational and transactional system of record of a business) an integrated finance and accounting solution that does not manage the “order” falls a bit short, But it does manage a contract, which for “talent intensive organizations” including software and Internet service companies like Plex) is equally, if not more important. Feel free to read my full analysis in the highlighted link above but for purposes of our discussion here in terms of 2-tier ERP, I am comfortable in referring to Workday as ERP.

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Plex Systems Takes a Page From Manufacturer’s Play Book

CONTINUOUS INNOVATION DRIVES ERP DEEP ON SHOP FLOOR

Continuous improvement has long been the mantra for many manufacturers. Kaizen and other formal programs like Lean, Six Sigma, and Total Quality Management (TQM) have dominated the manufacturing scene for years. But what about the world of enterprise software for manufacturing? Not so much. Many of the solution providers that serve the manufacturing sector understand the concepts, but don’t apply them to software development. Sure, these software vendors innovate, but not in a continuum, especially when it comes to broad applications like Enterprise Resource Planning (ERP). Except for one: Plex Systems. Believe it or not, Plex can and often does deliver enhancements to its Plex Manufacturing Cloud on a daily basis. Too much, you think? Not at all; its customers love it!

Why Do Consumers of ERP Expect Less?

Many consumers of ERP are conflicted over innovation and upgrades. On the one hand, when functional gaps or missing features or cumbersome processes are detected, customers demand enhancements. On the other hand, we find manufacturers unwilling and unable to actually go through the upgrade process. So the whole process becomes a Catch 22.

If these enhancements are delivered through the normal upgrade cycle, customers can find themselves waiting a long time. Major upgrades to ERP are typically delivered once every 12 to 18 months, or sometimes over a longer cycle, partly by customer request. They simply can’t accept and consume upgrades any faster. But that doesn’t mean the typical ERP client waits “just” 12 to 18 months for a requested enhancement. If your enhancement request just misses the planning phase of the cycle, you might have to wait for another cycle before it is even considered, which means you might wait two to three years for it to be delivered. And even then, it might not make the cut.

But let’s say it does and your enhancement is delivered with a major upgrade within a year (or maybe two or three). Do you jump right on the release? If you are like most of the manufacturers participating in our annual Mint Jutras Enterprise Solution Study, the answer is, “probably not.” Only 14% of manufacturers tend to be early adopters of releases (Figure 1). About a third (34%) upgrade on a regular basis but not as early adopters. This means they will likely wait for those early adopters to shake out all the bugs and for the solution provider to smooth out all the rough edges. This might take three months? Six months? Another year?

Or you might be like the 31% that are likely to skip releases. You might not get too far behind, but if you skip a release, and upgrades happen every 12 to 18 months, you won’t experience any real innovation for at least two to three years.

Figure 1: Approach to Upgrades

Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

Why? Largely because upgrades can be disruptive and costly. We asked our survey respondents to stack rank five individual factors in terms of the likelihood each will keep them from upgrading when a new release is available. We used a scale of 1 (least likely) to 5 (most likely). The results are shown in Table 1. As you can see, potential disruption to the business is at the top of the list, but the rankings are very close. Your typical manufacturer understands the cost and effort of a traditional upgrade and will be reluctant to spend the time and money without expecting a significant payback.

Table 1: Ranking of factors preventing upgrades

Table 1Source: Mint Jutras 2015 Enterprise Solution Study

 As a result, although software development is typically a continuous process, the results are not delivered continuously. Most solution providers create enhancements, bundle them up, test them out and issue major upgrades periodically, hence the traditional 12 to 18 month cycle, with just some bug fixes and/or minor releases in the interim.

Plex Customers Have Come to Expect More

While this type of upgrade cycle has been generally accepted and expected by those running traditional, on-premise solutions, Plex customers have come to expect more. Perhaps they were frustrated by delays, got impatient and dissatisfied and were seeking more from their software vendor. Or perhaps they chose Plex for other reasons. Either way, they soon became spoiled by the “Plex way” of innovating.

Of course any solution provider that offers its software exclusively as a multi-tenant SaaS solution has a distinct advantage of only having to maintain a single line of code. Solution providers that deliver on-premise solutions are forced to maintain multiple versions of the software. Very often the software is offered on a choice of platforms and databases, and the vendor must support multiple release levels determined by their customers’ ability to keep pace with upgrades. For every person-day they spend on innovation, they spend another multiple of that day making sure it works across various environments. The more choice they offer, the more permutations and the higher that multiple.

More and more we find vendors riding the cloud wave. They are taking on-premise solutions and moving them to the cloud and offering alternatives for deployment. Some of these moving to the cloud will be multi-tenant; others are single-tenant, delivering more of a hosting option. But even those that offer multi-tenancy will still be forced to maintain multiple versions and will be limited by their on-premise customers’ ability to keep pace with innovation. Only those that offer a multi-tenant SaaS solution exclusively can devote their entire development budget to innovation. That’s the real beauty of having (and maintaining) a single instance of the software, and nobody takes better advantage of that than Plex Systems.

The Plex Manufacturing Cloud is not the only ERP solution that is offered exclusively as multi-tenant SaaS, but it is one of a very few designed exclusively for manufacturers. And of these SaaS-only manufacturing ERP solutions, Plex’s is (by far) the most mature. But not all SaaS vendors take full advantage of the opportunity for continuous innovation. Some do offer more frequent updates and all relieve the customer of much of the burden of the upgrade process. But nobody else (that I know of) does it like Plex.

 Daily Updates – Responsibly

Plex can and often does update the solution every day. You heard (or read) that correctly: every day.

Of course Plex doesn’t pull the rug out from under its customers every day. The development team adds all new features in such a way that a customer must “opt in” to use them. Many of its customers evaluate these innovations on a periodic basis, much like a release cycle. But they are never faced with the “all or nothing” kind of scenario so common in upgrading on-premise software. If they know a valuable new feature is coming, they might jump right on it and not wait for that periodic review.

User Interface Refresh

Plex’s new, redesigned user interface (UI) is the perfect example of this. Plex is methodically updating every screen used by its users, including the navigation screens used to perform back office functions, as well as the control panels used on the shop floor. As each of these are completed, they are introduced into the live product, but the old screens and the old navigation methods are still there.

Of course Plex is only converting those functions its customers are actually using. Over time, newer and better features and functions may have replaced some of the screens, inquiries and transactions. Eventually people stop using the old functions and Plex can then get rid of them. In an on-premise environment, solution vendors have no visibility into what is actually being used and what is not used. So, once code is delivered, it tends to live on forever.

But because all customers are using a single instance of the software running in the Plex Manufacturing Cloud, Plex has full visibility into not only what is being used, but also how often it is used. While this might seem to be a bit big brother-ish to some, customers don’t seem to mind. And it puts Plex in the unique position of being able to eliminate code. In fact the development team recently deleted 30% of its existing source code. And as Jim Shepherd, Plex’s Vice President of Corporate Strategy noted, “If we couldn’t get rid of code, ours would get as big and unwieldy and ugly as everyone else’s.”

You know how good it feels when you finally clean off your desk at work, or clean out your closets at home. Think how good the software developers felt when they could clean out 30% of the code, making that much more room (figuratively) for all the new features, functions and innovation they continue to work on. And indeed the development team has been busy. Combine that with the fact that Plex perfected rapid application development processes more than a decade ago and you get a regular cadence of new features and new offerings.

Here’s an example of some of the areas they have been working on:

Investment in process manufacturing

In order to address the market sitting right outside its doors in nearby Detroit, Michigan, Plex got very good at addressing traceability. The strength of the traceability functions built for automotive discrete manufacturers have led Plex into a fair number of food and beverage and similar process-related industries. Further investment in lot management, lot attributes, lot tracing and unit of measure management will be made in 2015. That investment will also continue into the future with even more sophisticated unit of measure management, costing, yield management, recipes and pricing/promotion management, as well as further work on compliance and FDA validation.

Finite Scheduling

Plex has already released its Advanced Production (Finite) Scheduling modules, but work continues to bring attribute-based grouping (e.g. watch out for allergens!) and sequencing and sequence-dependent changeover time determination (better go from light to dark when applying coatings), and labor-driven capacity determination (knowing how many machines is not enough).

Plex Enterprise Edition

Plex Enterprise Edition is a suite of applications built to support complex, global, multi-plant manufacturing organizations with multi-entity financial and supply chain management requirements. It was first introduced at PowerPlex 2014, with finance and accounting capabilities (accounts receivable, accounts payable, general ledger and cash management). But work continues throughout 2015 on centralized sales and purchasing functionality, along with inventory work in progress. The team will then move on to enterprise manufacturing (engineering, scheduling, production) and enterprise asset management (fixed assets, treasury management and human resources).

Tech Gadgets and Automation

These are just a few examples of the types of feature/function development that has been underway at Plex. In addition, the team has also been busy experimenting with new technology. This team is led by the ultimate “gadget guys.” But this is not frivolous work. The team also “knows” manufacturing and is always in search of new ways to make manufacturers more efficient and productive. This means new ways of capturing data, automating processes and engaging with ERP both in the back office and on the shop floor. The shop floor was the prime focus of a very interesting demo the Plex team put together about a year ago, but has recently updated.

The demo a year ago was an interactive demonstration of a manufacturing process that took you from the receipt of material through to shipping of a finished product. It was, and still is, a good example of new and different ways of engaging with ERP. You see, we didn’t use a keyboard. But we did use scanners and sensors, a light curtain and yes, there was even a blue button that you might call the “easy button” that signaled an operation was complete. Never once did we go through a traditional menu structure. Each work center looked and felt a little different, and even the devices used for data capture varied, because the work being completed was different. This was a far cry from early days of ERP and confirmed my belief that the best user interface (UI) is really no UI at all.

And this year there were some new “wearables” on the (simulated) shoGoogle glassp floor, some of which were just being prototyped. Plex is participating in the new Google Glass @Work program including Google Glasses built into safety goggles. It is experimenting with smart watch and blue tooth technology and beacons that recognize when someone wearing these devices comes within range of a work center. The goal is to make smart watchdata capture as easy, automated and hands-free as possible.

Manufacturers are widely known for their pragmatism. Unlike some consumers today, they will not go out and buy the latest new gadgets just to look cool or simply because they can. These devices need to add real value Beaconand that is exactly what the Plex team is searching for in this experimental phase.

Not Slowing Down Anytime Soon

With a history that spans almost 20 years, and a product that has matured significantly, you might think innovation might be slowing down at Plex. Quite the contrary. The Plex development team has nearly doubled over the past couple of years. Even though it is already a complete manufacturing ERP solution, with particular depth in functionality in manufacturing execution (MES), there is still lots to do. Along with the wearable technology and the refreshed user experience, it is also working on a universal search capability, master production scheduling, advanced manufacturing intelligence, along with the additional process manufacturing, finite scheduling and multi-national, multi-location capabilities mentioned earlier. And much more.

As an industry analyst, it is my job to stay objective. But every once in awhile a company comes along that does something very unique. Plex’s combination of rapid application development, cloud delivery and commitment to customer satisfaction is the prefect trifecta for this uniqueness. And on top of that, Plex does it very well. Kudos to the Plex team for taking a page from the manufacturers they serve so well and delivering continuous innovation.

 

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What are you running your business with? Is it ERP?

Perhaps you’ve heard me ask the question, “Is it ERP?” about various solutions on the market. Maybe you were thinking, “Does it matter?” The answer to that question is, “Yes and no.” “No,” in that ERP, like any software category, is just that. It’s a category, a label and you shouldn’t read too much into that. “Yes,” in that the category is often misused and maligned.

While the acronym itself (short for enterprise resource planning) can be somewhat misleading, I have always been very clear on my definition of ERP:

ERP is an integrated suite of modules that form the operational and transactional system of record of the business.

The rest of the world doesn’t see it quite this clearly. Of course my definition is intentionally quite broad, but it needs to be simply because the operational and transactional needs will vary quite significantly depending on the very nature of the business. You can’t run a service business like a manufacturing or distribution business. Retailers, government and non-profits all have their own unique requirements.

This situation is also clearly exasperated by the fact that the footprint of ERP has grown to the point where it is getting more and more difficult to determine where ERP ends and other applications begin. Functions like performance management, talent and human capital management, etc, that used to sit squarely outside of ERP, today might sit either inside or outside that boundary. While operational accounting has long been a core competency of ERP, more robust financial management can be an integral part of ERP, or a stand-alone solution. Likewise, the footprint of solutions that have traditionally been marketed as financial and accounting solutions have expanded as well. No wonder there is so much confusion out there.

As a result, I thought it would be a good idea this year to see what people actually think they are using to run their businesses. While I have been conducting an annual ERP survey since 2006, much of the data I collect is relevant to other solution providers as well, particularly those that focus primarily on finance and accounting, with perhaps some project management and/or human resource management included. So this year I changed the name of the study to the Mint Jutras Enterprise Solution Study and added a new question at the very beginning.

Question: Which of the following best describes the software you use to manage your business?

  • Primarily enterprise level finance and accounting solutions (might include project management and/or human capital management)
  • Integrated enterprise level finance and accounting solutions supplemented with other operational applications (e.g. inventory, warehouse management, etc.)
  • An integrated suite of modules that provides a full system of record of our business (often referred to as ERP)
  • Desktop solutions such as Quicken, QuickBooks, Peachtree, etc.
  • Mostly spreadsheets and/or some low-cost or free tools (Google apps, Zoho, etc.)
  • Don’t Know

While data collection is still underway, we have collected almost 300 responses thus far and the results are quite interesting.

Note that participants checking spreadsheets and “Don’t Know” were disqualified and therefore will not be represented in any results. While those running desktop solutions qualified, only 1 participant checked this option and therefore I will only include the first three listed above in our discussion here.

During the course of the survey, participants are asked to check off all the different accounting/ERP solutions they have implemented across their entire enterprises and then asked to select one of those and answer implementation and performance questions for that specific solution. While 84% of the participants selected a solution that is clearly marketed as ERP, only 33% of this segment selected the third option above, which is reflective of the Mint Jutras definition of ERP. So they have purchased an ERP solution, but by my definition, they aren’t running ERP.

The remaining 16% selected solutions that are generally marketed as finance and accounting solutions. And yet 21% of these participants described the solution they were running as an integrated suite that provides a complete system of record of their business (i.e. ERP). So it would appear the majority of those running full ERP solutions are not making the most of what they have. And at least one in five of those running solutions primarily marketed as accounting solutions seem to have all they need to run their businesses. The full breakdown of responses is summarized in Figure 1.

Figure 1: What runs your business?

Figure 1 Blog postSource: 2015 Mint Jutras Enterprise Solution Study

These (somewhat surprising) results caused me to dive a little deeper, looking for, if not an explanation, at least a pattern. This early sample represented a pretty diverse group with the largest representation from manufacturing (41%) and service related businesses (36%). Given ERP evolved from MRP (material requirements planning), one would expect a higher adoption rate and more mature ERP implementations in manufacturers. While very few manufacturers run the solutions marketed primarily as finance and accounting solutions, 41% indicated the software running the business was primarily a finance and accounting solution. Another 26% had integrated finance and accounting solutions supplemented with other operational solutions such as inventory and warehouse management, presumably purchased from another vendor or a partner of their ERP solution provider. Again, only 33% described their implementation as full ERP. So no, manufacturers are not ahead of the pack.

I also looked at individual solution providers where I had a sample of at least 20 responses for smaller vendors or 40+ for larger ones. What segments were most likely to be running an integrated suite that provides a full system of record? The answer: Those running solutions that specifically target small to mid-size businesses. Does this mean small and mid-size businesses were more likely to describe what they were running as ERP? Not necessarily. It depends a lot on the solution provider and the solution itself.

Sixty-eight percent (68%) of those running Aptean’s solutions and 67% of those running SAP Business One described what they were running as ERP, per the definition above. Those running Acumatica’s cloud-based solution were also more likely to do so at 55%. And yet those running any of the four Microsoft Dynamics ERP solutions (AX, NAV, GP, SL), all of which target small to midsize enterprises (SMEs), were less likely, with only 28% indicating they were running a full ERP. Instead, they were more likely to report running integrated enterprise level finance and accounting solutions supplemented with other operational applications. My guess is that the partners that sold them the Dynamics solution (note: all Dynamics solutions are sold exclusively through partners) provide these other operational applications. Yet clearly these add-on’s are not so fully embedded and seamlessly integrated that they appear to simply be part of the ERP solution.

This is in stark contrast to solutions sold by Intacct partners, where I have noted previously that it is nearly impossible to distinguish where Intacct ends and the partner solution begins. As a result, 23% of Intacct customers indicated they were running an integrated suite that provides a full system of record, even though Intacct doesn’t portray its solution as ERP. It is one of those financial and accounting solution providers.

Another factor at play here is the whole concept of 2-tier ERP implementations. A full 85% of our survey respondents operate in more than one location and 69% are multi-national enterprises. This lends itself to the scenario where each operating location (division, subsidiary, business unit, etc.) may be run as a business all on its own. In fact if these units are in different countries they are also separate legal entities, requiring their own P&Ls. So you might have one system running at corporate headquarters (HQ) and other systems running the divisions.

The requirements at corporate HQ are largely financial, particularly if all orders are placed and fulfilled at the divisional level. This contributes to a larger percentage of respondents only running financials.

In days gone by these operating units might have been left to their own devices to find a solution to help them run their individual operations. Those days are long gone though. Today, 96% of our survey participants with multiple locations have established corporate standards and 64% of the time these are multi-tier standards, meaning a different ERP is used at the divisional level than at corporate. But even with a corporate financial solution in place, divisions still need some sort of finance and accounting in order to roll up to corporate. You can push the corporate financials down to the divisional level and then supplement them with other operational solutions. Or you can implement a full ERP at the divisional level and then integrate the divisional ERP with corporate financials.

This alone could be a very good reason why SAP Business One customers are more likely to be running a fully integrated suite. Of course if they are truly a small stand-alone business, they need a complete solution and probably don’t have the budget to be looking for disparate solutions that need to be integrated. Even if they are part of a large corporate enterprise, there is a pretty good chance corporate is running some version of SAP ERP. Because SAP Business One is pre-integrated with SAP ERP, the division has an integrated suite of modules providing a full system of record of the division’s business, that also happens to roll up to corporate financials.

With this as a likely scenario, you might think that the vast majority of SAP ERP customers are simply running integrated financials. They are not. Only 19% reported running primarily enterprise level finance and accounting, while 29% reported running integrated financials and other operational applications and a (relatively) impressive 52% reported running full ERP. Many assume SAP, being the 800-pound gorilla and therefore open to attack, is so complex and hard to implement that many never get beyond the basics of accounting. Yet in comparison to others, it is actually more likely to provide that full system of record.

This is not the case with Oracle, the other giant in the ERP industry. Almost half (46%) of Oracle users participating in the survey characterize their implementations as primarily accounting and only 28% describe them as ERP.

So while I would like to conclude that I found a distinct and recognizable pattern in all this data, the bottom line is that implementations vary quite significantly, particularly in comparing different solution providers. I am excited to have the beginnings of this new and extensive data set and look forward to sharing other insights as we move through the data collection and analysis phases.

Solution providers interested in collecting data from your own installed bases, feel free to contact me directly at cindy@mintjutras.com. There is still time but the window of opportunity will be closing soon!

 

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SYSPRO U.S. Provides Critical Visibility with Voyage & Container Tracking

Mobile, Cloud or On-Premises Supply Chain Management

In a world where international shipments are so commonplace, it is amazing how many global manufacturers and distributors lack visibility of goods that are in transit, often for weeks at a time. Even though the ownership of purchased goods transfers as soon as a container is closed, for most, particularly for small to medium-size businesses (SMBs), materials simply disappear into a black hole, before they (hopefully) are received from half a continent or half a world away. To solve this problem, and also add visibility to shipped products, SYSPRO U.S. has added a new Voyage & Container Tracking solution to its portfolio and made sure it is fully integrated with its enterprise resource planning (SYSPRO ERP) software and complemented with useful analytics. This is perfectly consistent with its “Einstein” market positioning favoring “simply smarter” solutions for what the mid-market customer actually needs, versus simply succumbing to industry hype.

A Real Solution for a Real Problem

Once upon a time, in the not-so-distant past, globalization was the domain of large, multi-billion dollar enterprises. Yet today, almost every company, regardless of size, trades internationally. Low cost country sources have sent even small manufacturers and distributors in search of lower cost materials and small companies themselves have become more distributed. The 2014 Mint Jutras ERP solution study found 66% of all manufacturers operate from more than one location and even small manufacturers (those with annual revenues less than $25 million) have an average of 1.6 operating sites (Figure 1). These types of changes in the business environment have brought an unprecedented level of complexity to supply chains and those supply chains extend across the globe.

Long lead times add uncertainty, which is difficult for any company to deal with, but particularly so for small to medium-size companies that have fewer resources and less clout with their customers — customers which often are very large and demanding. Yet shipment tracking, accurate determination of true landed costs and visibility into where goods are and where they are coming from, have typically been features only available in specialized software packages that are well beyond the reach of an SMB.

Figure 1: Even small companies operate globally

SYSPRO fig 1Source: Mint Jutras 2014 ERP Solution Study

Note: Size is based on annual revenue

SYSPRO U.S. turned to its customer base to help define and design the features and functions required to close this gap in visibility and then it spent the last two years refining it with the assistance of one company in particular: Wormser Corporation, a privately held cosmetics manufacturer and distributor based in Englewood, New Jersey. Wormser’s biggest challenge was in tracking shipments from its manufacturing location in Shanghai to its 40 warehouses in the United States.

Three Major Components

The embedded features of SYSPRO U.S.’s new Voyage & Container Tracking solution are delivered through three major components.

  1. Release Matrix: This component identifies and manages items that are available for shipment through a multi-part release operation. Items included in both purchase orders and sales orders can be combined in a single release. Users are provided visibility into what is available and can adjust quantities and view expected departure and delivery dates.
  2. Container Management: This component is used to determine which products or parts will travel in which containers. It provides the flexibility to consolidate releases from multiple orders into a single container or split a single order across multiple containers. While today the solution does not explicitly manage the capacity of each container, it does provide visibility into container usage. SYSPRO U.S. plans to enhance this capability in the future to include optimization of containers. Through the assignment of goods to these containers, the SYSPRO customer gets added visibility and predictability of departure and arrival dates as well as source and destination ports.
  3. Disposition Management: When a container reaches its destination, this component takes over. Each container may be processed separately or all containers on a voyage can be handled as a single shipment. Upon arrival at a port, the goods in the containers may be placed on quarantine hold or transferred to another segment of the journey (e.g. from ocean vessel to truck) for delivery to the next or final destination. This component performs the inventory and fiscal transactions necessary and provides more visibility. Charts and graphs are useful in analyzing elapsed time between ports, management of the number of containers shipped and landed costs.

These charts are just some of the analytical tools provided. SYSPRO U.S.’s survey of a sample of its own customer base convinced the solution provider that the vast majority of its customers found messaging within the enterprise software industry about “big data” and analytics either difficult to understand or only somewhat understandable.

Yet the lack of understanding does not mean there is no value in these types of analytical tools. It simply means small to mid-size manufacturers and distributors need help in understanding how to leverage these tools. And it also means they will only be receptive to learning more if the tools solve a very real and practical problem. They are not interested in elegant technical solutions in search of problems. They have plenty of problems of their own to solve.

Potential Benefits

The potential benefits of SYSPRO U.S.’s new solution should be very appealing to these pragmatic manufacturers and distributors. The potential benefits include:

  • The ability to track shipments both at an order line level, as well as a summary level. This tracking data will also be available for analysis for both strategic and operational decisions.
  • Better visibility to inventory, even with long lead-time items. This visibility will be helpful in improving full, on time delivery.
  • The ability to analyze performance by product origin through the recording of departure and arrival cities and individual ports.
  • Better vendor performance management through more detailed measurement of promised and actual shipments.
  • Full determination of not just material costs, but full landed cost, whether free on board (FOB) or not.
  • Improved communication and collaboration between departments, locations, and vendors, along with fewer mistakes.
  • A single source of the truth. Because of the seamless integration with SYSPRO ERP, all shipping and financial data is combined in a single source of data.

Proof Positive: Wormser Corporation

With six locations around the world, Wormser Corporation’s biggest challenge was in tracking shipments from its manufacturing location in Shanghai to its 40 US-based warehouses. All these different locations were using different systems and ultimately Wormser turned to SYSPRO for a full and integrated solution for its global operations. SYSPRO ERP was a great fit for daily operations, but Wormser approached SYSPRO U.S. for a custom tracking module for overseas inventory tracking. This was the genesis of the voyage and container tracking system now being released as a standard offering.

In October 2012, Wormser’s six international locations (New Jersey, California, Texas, England, Germany and China) went live with SYSPRO ERP and the newly- developed intercompany modules. All supply chain transactions between entities were automated. In addition Wormser tracks partial and full container shipments from vendors.

By collecting all this data, from all these locations, as well as from vendors, Wormser is able to produce analytical reports and graphs that aid in comprehensively managing a complete supply chain. Analysis can be done at an order line level, all the way up to and including location and the full company. Vendor performance is also tracked and Wormser now has data for strategic, as well as operational decisions.

Summary and Key Take-Aways

This new Voyage & Container Tracking solution provides an enormous opportunity for many of SYSPRO U.S.’s customers. Any that deal with long lead times, complex supply chains and/or international, containerized shipments can potentially derive a lot of value from this newest solution. And as a SYSPRO U.S. offering, it is both affordable and pre-integrated to the SYSPRO ERP solution being used to manage back and front offices across the installed base of SYSPRO U.S. customers around the world. By infusing analytics into the solution, it becomes a potentially powerful tool for decision-making – both from an operational and a strategic decision-making perspective. With this new option, SYSPRO U.S. companies faced with real supply chain challenges, particularly those with multiple locations, can gain new efficiencies with real solutions.

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Can SYSPRO Put a Genius in a Manufacturing Executive’s Pocket?

Espresso Mobile Solution: a Single Portal to All Your Applications

As Mint Jutras has noted in prior reports, SYSPRO is clearly inspired by the genius of Einstein. Over the years Einstein has influenced many of its initiatives, including its “Simply SMARTER” strategy (an acronym that stands for Strategy, Methodology, Accountability, Resources, Technology, Education and Customer Rewards) and its SYSPRO Quantum Architecture. Back in December 2012 it announced its plans for a new mobile platform (a “wired” Einstein on Espresso) that would bring the customization capabilities of its Enterprise Resource Planning (ERP) solution for manufacturing and distribution natively to multiple mobile devices including Android, Apple I-OS and Blackberry. Now with the release of SYSPRO 7, more advances to this mobile platform are available. While in the past decisionmakers may have shied away from accessing ERP directly, assuming it was too complex and hard to use, SYSPRO Espresso now puts intelligence directly into the hands (and pockets) of executives with mobile devices.

Making the Business Case for “Mobile”

SYSPRO’s objective in this release is to provide “leading edge” solutions to a market segment not particularly well known for its aggressive and pioneering use of enterprise software. While manufacturers might be pioneers in their own industries, typically they are more interested in spending their capital budgets on new equipment for the plant or shop floor than on hardware and software to run their back and front offices.

In fact SYSPRO recently conducted one of its SNAP (SYSPRO Needs Answers Please) pulse surveys, this time on Information Technology (IT) priorities. The survey found a growing recognition of the impact IT has on a manufacturer’s ability to compete today: 87% said IT has a moderate to substantial impact on their competitiveness. While in the past manufacturers might have chosen to invest in facilities, people and equipment instead of enterprise software and the servers needed to support it, more and more of these same companies are realizing they need to invest in both in order to take full advantage of the new capacity.

According to SYSPRO’s survey, 9% of participants said they fairly regularly choose to undertake both such projects at the same time and 48% say this is a decision they have made at least once or twice. While the SYSPRO team was surprised by this, Mint Jutras is not. Once a manufacturer expands capacity, either through capital investment in existing facilities, or through expansion into new geographies or new markets, the game is changed. These same manufacturers now need new tools to manage that capacity for profitable growth.

While data collected in Enterprise Resource Planning (ERP) has always been important to executive level decision-making, in the past very few executives ever put their hands directly on ERP. Instead they relied on subordinates or super users to collect data and investigate, delaying decisions and sometimes even distorting the view from above. Why? Because the perception (and often the reality) was that ERP was complex and hard to use. Executives simply didn’t have the time or inclination to “figure it all out.” And yet today the pace of business has accelerated to the point where any delay in decision-making can be fatal.

The Mint Jutras 2013 ERP Solution Study first showed executive access to ERP on the rise and that trend continued this year (Figure 1). More and more executives are directly connected to ERP, with the percentage of manufacturing companies saying all have access and regularly use ERP increasing from 47% to 57% year over year.

Figure 1: What level of access does top executive management have to ERP?

SYSPRO figure 1Source: Mint Jutras 2013 and 2014 ERP Solution Studies

And yet we see little progress in putting dashboards from ERP on mobile devices or sending alerts or giving these executives the ability to take action directly from these devices. Whether they want it or not, whether they know it or not, they need immediate and direct access to ERP, and these mobile devices may just serve as the catalyst and the game-changer. But nobody wants to just lift and shift the same old monolithic ERP.

This might explain why even with the proliferation of these devices and the “always on” environment they create, the priority for access to ERP data and functions from a mobile device remains close to the bottom of the list of ERP selection criteria (Table 1).

Table 1: Selection Criteria in Evaluating ERP

SYSPRO figure 2Source: Mint Jutras 2013 and 2014 ERP Solution Studies

In the age of “there’s an app for that” few people equate ERP to that “app.” While only 21% of manufacturers ranked mobile access to ERP as a “must have,” 38% indicated that mobile access to business intelligence (BI) was a “must have.” And 32% wanted access to BI from their chosen device (BYOD). What seems to get lost in the shuffle: many don’t realize most data from which they are likely to derive that intelligence resides in ERP.

We need a catalyst that can bridge this perception gap.

SYSPRO 7 Espresso Mobile Solution

SYSPRO has taken many steps to insure that SYSPRO 7 Espresso is that catalyst. Its goal is to provide a “leading edge” solution without losing sight of what manufacturers and distributors really need.

A Strong Platform

First of all it needs a solid platform that supports the needs of a mobile deployment, including the following:

Device and platform independence: With “bring your own device” (BYOD) rapidly invading the business world, users expect to interact with enterprise data using the same user interface features that attracted them to the device to begin with. Even more importantly, users can easily change devices. Switching from a Blackberry to an iPhone? No problem. Use both an iPad and a Samsung Galaxy 5? No problem. Moving to a Surface tablet? Not a problem. SYSPRO Espresso can be used on all major mobile device operating systems and is compatible on all web browsers that support HTML5.

Users can personalize their user interface (UI): Customization is truly as easy as dragging and dropping different screen components.

Real-time or offline access: This is huge.What happens when you lose your Wi-Fi or mobile signal? SYSPRO Espresso lets you continue working offline. Any transaction made while working offline can be synchronized when you reconnect. Yes you have to press the button, but it really is that easy.

Secure communication: Often businesses ignore the possible vulnerabilities introduced through mobile devices. Either that or this potential scares them from allowing mobile access. Transmission between mobile devices and the SYSPRO server are encrypted using SSL secure communication standards. In addition, administrators of the SYSPRO system can configure menus and applications by company, role and user.

Enable alerts to be sent via push notifications: Receiving alerts on a mobile device is always the top priority for business users. According to our Mint Jutras ERP survey, 76% say they receive alerts based on enterprise data either often (35%) or occasionally (41%). Yet only 18% get alerts from ERP. We conclude that the vast majority of the alerts received are delivered via email or text messages as a result of some manual intervention. SYSPRO Espresso automates this and connects the user directly back to ERP, the source of the data.

Uses active tile technology: This too is huge. If you are monitoring certain metrics, a static image only shows you a moment in time. Using SYSPRO Espresso, an icon or tile is constantly refreshed and dynamically updated every few seconds. You are always looking at the real results.

Multi-lingual support: Supporting the same languages SYSPRO ERP supports.

Mobile applications packaged with Espresso and via the SYSPRO App Store: SYSPRO Espresso comes standard with a growing number of applications. But given the simplicity of developing new apps, and the simplicity of making them available on the SYSPRO App Store (for free or for a fee), SYSPRO fully expects partners to also contribute and this number will grow significantly.

A single app for all applications: Only one app needs to be downloaded from the App Store to a device. Mobile users only needs to log into the menu system once to gain access to any applications they have permission to use. As additional apps become available, they can be pushed to the user’s device, removing the need to download anything else. This brings the process of provisioning to a new level of efficiency.

Development platform that supports deployment to any device: A free plugin to Microsoft Visual Studio 2012 allows developers to build custom applications once, using one set of source code that can be deployed on all major mobile device platforms. This preserves the native operation of a device without a proliferation of code. This includes native device capabilities such as a camera and GPS tracking, both supported by SYSPRO Espresso. An ink component is also supported to allow capturing of signatures or drawing of simple diagrams.

Easy Movement Between Devices: Perhaps a sales rep begins entering an order in the field, but has not completed the task when it is time to pack up and head back to the office. Upon return, the sales rep can log onto a laptop or desktop computer and pick up exactly where he or she left off.

A Library of Pre-Built “Apps”

Part of the lack of urgency in providing access to ERP data and functions from mobile devices is likely due to the monolithic approach used in delivering legacy ERP in the past. ERP was this massive application, touching many different functions of the business. Figuring out how to navigate through the pieces and processes that impact any one particular user was hard. Contrast this to the typical mobile app. Because these mobile apps are purpose-built for a very specific function, they are intuitively easy to use.

SYSPRO has taken the same approach to delivering Espresso apps. There are a number of pre-built applications, which are free to any licensed Espresso user. Below is a list of apps that are immediately available with the initial release of SYSPRO 7, but this list will continue to grow over time and is also likely to be supplemented by others added to the SYSPRO App store by users and partners.

  • Aged Sales Orders
  • Bank Query
  • Customer Maintenance
  • Customer Query
  • GIT Reference Query
  • Inventory Maintenance
  • Inventory Query
  • Inventory Valuation (chart)
  • Job Query
  • Lost Sales Orders
  • Price Query
  • Purchase Order Query
  • Quotation Query
  • Ratio – Asset Turnover
  • Ratio – Leverage
  • Ratio – Liquidity
  • Requisition Query
  • Sales Analysis
  • Sales by Month
  • Sales Dashboard (charts)
  • Sales Order Commitment
  • Sales Order Entry
  • Sales Order Query
  • Sales Order Taken
  • Supplier Maintenance
  • Supplier Query

Summary and Conclusion

While more and more executives today are looking for answers and a return on their investment in ERP, many still struggle to connect through the same mobile devices that keep them “always connected” to the business. In spite of using these mobile devices to receive alerts, many still respond by turning the smart device, on which they receive the alert, into a dumb device. They call or text. They turn to others to further investigate, to track down answers. They won’t be able to take direct action until they are easily connected directly back to ERP.

Any kind of knowledge worker today needs new ways of engaging with ERP, ones that make the connection easy, ones that answer their specific questions and address their specific issues.

Just lifting and shifting a massive application like ERP to a mobile device, without these new ways of engaging is useless. Instead, workers need “an app for that.” Yes, that app is ERP, but it needs to be disguised as something else, something that is purpose-built to answer questions and resolve issues. The savvy executive today should be looking to put a genius in his or her pocket. For a SYSPRO customer, that means SYSPRO Espresso running on the mobile device of choice.

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Think The Plex Manufacturing Cloud is Just for Small Companies? Think Again

Plex Enterprise Edition Makes its Debut at PowerPlex 2014

Recently at its annual PowerPlex conference, Plex Systems announced Plex Enterprise Edition, a suite of applications built to support complex, global, multiplant manufacturing organizations with multi-entity financial and supply chain management requirements. As always, Plex worked closely with its customers to define those requirements and has the first component of Plex Enterprise Edition — Financials — for centralized accounting and cash management ready to deliver the end of this month. Many of its competitors (and even some industry analysts) write Plex off as a non-threat except perhaps in small companies. Big mistake! Even without the multi-entity capabilities announced this week, Plex has been providing continuous innovation and steadily expanding the range in size of companies that are attracted to its Plex Manufacturing Cloud solution.

Clearing Up Some Misperceptions

Why do competitors assume Plex is just for small companies? One reason is the fact that Plex has exclusively offered its solution as Software as a Service (SaaS) since 2001, long before the cloud became popular. And many also wrongly assume SaaS ERP is only for small companies. Yet the Mint Jutras ERP Solution Study found the willingness to consider SaaS as a deployment option for ERP only grows with company size (Figure 1).

Figure 1: Willingness to Consider SaaS Grows with Company Size

Plex Fig 1Source: Mint Jutras 2014 ERP Solution Study

NOTE: Mint Jutras believes these percentages may be understated. We ask participants to select all deployment options they would consider if they were to purchase a solution today. “Hosted by your ERP vendor” is often confused with SaaS. Percentages of participants considering that option were similar to those shown in Figure 1 above.

Why Might That Be?

As companies grow, they become more distributed. Most companies, both large and small trade internationally and our ERP Study found 66% of manufacturers operate across multiple locations and the number of sites grows along with annual revenues (Figure 2).

Figure 2: Distributed Environments

Plex Fig 2Source: Mint Jutras 2014 ERP Solution Study

Defining Corporate Standards

In the past it was very likely that these different operating locations would have been left on their own to find and select a solution to meet their local needs for manufacturing. However, more and more companies are defining standards for enterprise applications. Companies have been talking about this kind of consolidation of solutions for years, but now it is really happening and World Class ERP implementations are most likely to have defined and executed a strategy that includes a standard ERP solution (Figure 3). What better way to control and enforce these standards than implementing a SaaS-based solution throughout the enterprise?

Figure 3: Have you defined corporate standards?

Plex Fig 3Source: Mint Jutras 2014 ERP Solution Study

Of course not all standards involve just a single ERP. In some cases we see two (or more) tier standards where one ERP solution is implemented at corporate headquarters and a different standard (or standards) is defined for the operating locations. This is most evident in manufacturing companies where the corporate solution is strong in financials, consolidation and reporting, but perhaps lacks the features and functions required to manage manufacturing processes. The operating locations require these manufacturing functions and also balk at the complexity often imposed by these corporate financials.

With a two-tier approach, a single ERP is also selected for the manufacturing facilities, in addition to an ERP for consolidated financials at corporate headquarters. In a multi-tier environment, often we see different types of operating locations (for example, distribution versus manufacturing, or significantly different styles and methods of manufacturing) requiring multiple standards (Figure 4).

Figure 4: Single, Two or Multi-tier Standard?

Plex Fig 4Source: Mint Jutras 2014 ERP Solution Study

While almost half of others with multiple operating locations choose this multi-tier approach, not so with Plex customers. A full 93% have decided on Plex and expect the solution to be their only solution. So it is not surprising that customers have collaborated with Plex to fulfill this need.

Of course, if a company has grown through acquisition, or the enterprise is extremely diversified or simply a holding company, there is an increased likelihood of multiple ERP solutions. But many view a single standard almost as a no-brainer when it comes to expansion in pursuit of green field opportunities. Many Plex customers have grown like this, leading Plex into parts of the world where it might not have previously ventured.

Case in Point: Shape Corporation

One such Plex customer is Shape Corporation, North America’s top manufacturer of automotive bumpers. Shape also manufactures impact energy management systems and performs advanced custom roll-forming for furniture, agricultural, recreation and health care industries.

While based in Michigan, Shape also has locations around the world, including China, Japan, the Czech Republic, Mexico, Germany, Korea and other locations within the United States. “All are running the same Plex system. Our users in China run on the same system as our users in Mexico, our subcontractors in Alabama, and everyone on the shop floor in our Michigan facilities. All our expansion is into new green field territory. We can have the Plex system up and running in a new location in a matter of weeks,” said Molly Hunting, Director of Information Technology

As Shape grew back in the 1980s and 1990s, it had acquired and implemented separate stand-alone systems, upgrading and linking them as needed. Maintenance became cumbersome and resource-intensive, inspiring the company to seek a single solution: the Plex Manufacturing Cloud.

The Plex solution replaced several separate systems for preventive maintenance, production, gages, problem controls, reporting, and more. While the solutions it replaced were not able to communicate with each other, all Plex functions are completely integrated.

The Plex Manufacturing Cloud now manages all core shop-floor functions for Shape, including bills of material, purchasing, receiving, inventory, manufacturing, basic quality, planning and scheduling, shipping, key measures, EDI, engineering change tracking, subcontracting, financials, and document control. Shape also implemented Plex’s advanced human resources, quoting, maintenance, advanced quality, and program management functions. “We probably use as much, if not more of the Plex solution than any other customer today,” according to Ms. Hunting.

The Desire for a Complete and Comprehensive Solution

This also is indicative of another consistency across the Plex customer base: the preference for and the implementation of a broad and comprehensive solution. While the majority of all manufacturers surveyed (92%) prefer an end-to-end integrated solution, the larger portion of that majority is cautious about sacrificing functional requirements for ease of integration or the luxury of dealing with a single vendor (Figure 5).

Figure 5: Preferences for a Suite?

Plex Fig 5Source: Mint Jutras 2014 ERP Solution Study

Only 26% have an overriding preference for a complete, fully integrated end-to-end solution supported by a single vendor. But that percentage more than doubles (to 53%) across the Plex customers we surveyed. Clearly these customers are drawn to the Plex Manufacturing Cloud, at least in part, by the breadth of the solution, shattering another misperception that customers only run shop floor-centric processes or an otherwise incomplete solution from Plex Systems.

Ms. Hunting acknowledged only one weakness in the past: support for multi-entity finance and supply chain operations. Tax and regulatory compliance requirements force companies like Shape into a multi-entity environment as soon as they set up shop in a foreign land. So while Shape’s preference is to have a single solution and solution provider, for now, it is using a solution from an independent software provider to manage the consolidation and financial reporting requirements.

But this type of solution has its drawbacks when it comes to managing the supply chain issues. Any movement of goods between multiple entities and any joint sales opportunities between these locations create not only financial requirements, but also supply chain issues. While operationally movement of inventory is a simple transfer, in fact behind the scenes it must be treated as a purchase of one entity and a sale to another. And that’s the easy part. What happens when multiple operating locations sell to a common customer, who of course, wants to take advantage of corporate discounts based on total volume? And what about your own purchasing? Do you have master purchase agreements that need to be managed across sites and across legal entities?

And all the while each of these separate legal entities needs to be managed as its own business, probably with its own language, localizations, tax and regulatory reporting, global labeling and printing. It doesn’t take long before you realize just how complicated your business has become. The typical Plex customer does not want to add to the burden of that complexity by adding new “add-on” software products or, even worse, different ERP solutions.

This is exactly why Plex worked closely with several of its customers that are large manufacturing organizations, to design and develop applications to support the complexities of multisite, global manufacturing operations. Inteva Products was one of these customers actively engaged in the design and development of the new Enterprise Edition.

Customers Help Define the Problem: Inteva Products

Inteva is a global tier-one automotive supplier with 14 manufacturing locations and two joint ventures covering three continents, six countries and four U.S. states. While many of Plex’s customers grew into larger multisite manufacturing organizations over time, as a former division of Delphi Corp., Inteva was an instant multisite, global enterprise with multiple entities and all the associated challenges. Needing to get off its former parent’s systems within 12 months and being tasked to reduce IT costs from 2% of revenue to less than 1%, Inteva chose the Plex Manufacturing Cloud and never looked back.

Plex met Inteva’s tight time frame for implementation and migrated all sites from Delphi’s systems to Plex in less than 12 months. Germany was first, followed by one in Mexico, then two manufacturing facilities in Alabama three months later. The remaining launches were completed three months afterwards at all of Inteva’s remaining locations in Mexico, Europe, and the United States. As a result, it certainly had the experience to bring to the design table to help Plex.

“Plex enables us to run more than 30 manufacturing facilities around the world, all on a single cloud platform,” said Dennis Hodges, chief information officer of Inteva. “Just as important, the Plex Manufacturing Cloud gives Inteva access to continuous innovation, so my team can take advantage of new opportunities to drive our business forward, whether that means deploying Plex in a new facility or enabling new functionality. Plex makes enterprise software a business decision rather than an IT decision, and that’s transformed how we run our operation.”

Sharp Corporation will be looking more closely at the phased delivery of Plex Enterprise Edition, but will continue to operate with its third party solution until more of the required pieces are in place.

 A Phased Delivery Planned

The first phase of delivery is Plex Enterprise Financials, available now. It includes centralized accounting and corporate cash management.

Centralized accounting includes

  • Entity relationship management, which may be hierarchical across a group and may include due to and due from accounts
  • General ledger chart of account management, with full chart segment replication
  • General ledger journals with inter-entity journal accounting
  • Transaction level drill down from consolidated financial statements

Corporate cash management delivers:

  • Consolidated cash disbursements, including accounts payable invoices for multiple entities
  • Consolidated cash collections, including invoices for multiple entities
  • Consolidated bank reconciliation with the option of a single bank account representing multiple entities

Plex Enterprise Supply Chain, scheduled for the second half of 2014, includes:

  • Sales Order Management, which enables central administration of customer sales orders and billing, allowing any facility in the organization to fulfill orders
  • Purchasing, which similarly provides for a single, central operating unit to order goods and services on behalf of any business entity and manage purchase orders executed by any unit across the group.

Both centralized sales order management and purchasing also support automated inter-entity billing as part of the distributed order fulfillment process.

Plex Enterprise Edition also enable provides consolidated visibility and insight across the entire business, as well as deep-dive analysis of specific plants and products — all through Plex’s embedded business intelligence.

Summary and Key Takeaways

This is a massive undertaking by Plex. It is not short-circuiting the process or shrinking from the complexities of this global world by any means. It “gets’ multi-entity financial and supply chain issues. It is working directly with customers to define real needs for real manufacturers. Those needs are complex, and impact multiple facets of a manufacturer’s business.

Those unfamiliar with Plex’s rapid application development capabilities might think the company is getting out of the gate too late to make a big impact in the world of complex, global, multi-plant manufacturing organizations with multi-entity financial and supply chain management requirements. But Plex has already carried many of its customers through growth phases. Its engaged customers and its aspirations to play on a bigger stage will help them continue that momentum.

In addition, Plex Systems is not your average software developer. It has mastered the art and science of delivering continuous innovation. Not only does it “do” rapid application development, and do it well, but also Plex has a distinct advantage over those that do not deliver a multi-tenant solution deployed exclusively as SaaS. Plex only needs to maintain one single set of code. It is not juggling multiple versions, running on different operating systems, different platforms, or even different databases. So it only has to develop innovations once and it is done. This too is a huge advantage.

Plex Systems also knows how to make money in a SaaS-based business. This is important for customers and prospects alike. Nobody wants to do business with a company that is living hand to mouth, nor does talent want to work there. Plex has been one of only a few SaaS-only companies that can claim this. While it has been self-funded in the past, investment firms Francisco Partners and Accel Partners have infused it with new capital and it has made more progress. Now more recently T. Rowe Price and another round from Accel Partners has resulted in a new infusion of $50 million.

Competitors say they don’t see Plex in deals. Look for this new round of funding to allow them to put far more feet on the street, both direct sales as well as channels. When that happens, look out! When they get invited to the party, they are typically a big hit. Look for that to happen more and more. Competitors that might be tempted to write them off: Be warned. Do so at your own risk.

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Thoughts From NetSuite’s SuiteWorld: What’s wrong with calling it ERP and CRM?

There seemed to be lots of talk and a bit of controversy floating around NetSuite’s SuiteWorld conference this week about the future of ERP (enterprise resource planning), CRM (customer relationship management) and other TLAs (three letter acronyms). NetSuite itself is a provider of ERP, CRM and ecommerce. Yet CEO Zach Nelson opened this door by attacking other vendors that don’t have solutions with footprints quite as broad as NetSuite. Zach said Salesforce wasn’t CRM because it didn’t capture the customer order. WorkDay’s HCM and accounting applications aren’t ERP. Zach has been known to go on the attack before, so this wasn’t out of character, and to a certain extent I agree with him. Sales force automation (which is Salesforce.com’s claim to fame) is often referred to as CRM even though I would argue it is only a subset. And Workday’s solution doesn’t fit my definition of ERP. (To be fair, I also haven’t heard Workday call its solution ERP.)

However, some “influencers” in attendance also picked up on this theme. One went so far as to suggest ERP and CRM should go away as software categories. Another stated that “cloud ERP” is redefining what we mean by ERP.

I disagree on both counts.

Companies in search of solutions to run their businesses need a frame of reference, a starting point to define what it is they need. They can’t start with a search for vendors offering “something to run my business.” As loosely as ERP and CRM are often defined, they do accomplish that. And I also don’t believe ERP needs to be redefined, at least not the way I define it.

Too often industry analysts and other influencers over-complicate definitions, perhaps in an attempt to prove just how much the average businessperson needs them, or perhaps to prove how smart they are. I prefer to keep it simple. I define ERP as follows:

ERP is an integrated suite of modules that provides the operational and transactional system of record of the business.

Of course, today most ERP solutions do more than this, and I have been saying for years now that it is getting more and more difficult to tell where ERP ends and other applications begin. But this definition is timeless. It also implies ERP cannot be static. The way companies operate is changing and therefore ERP must also evolve to reflect new ways of transacting business. NetSuite has been responding to this challenge over the past few years, through its approach to omnichannel commerce and with several announcements this week including:

  • A brand new, modernized, mobilized user experience (first available on Apple IOS, to be followed by Android)
  • The unveiling of a “next-generation services resource planning (SRP)”, a unified cloud solution to meet the combined needs of project- and product-based businesses. The solution can be configured as a stand-alone SRP solution or combined with NetSuite’s ERP. It targets software, IT services, consulting, advertising and marketing services companies.
  • A new SuiteGL, intended to “transform the general ledger from one size fits all into a custom business asset.” New capabilities are being developed to add

o   New custom segments to the chart of accounts (example: to support fund accounting and advanced managerial reports)

o   Custom lines (example: you might post additional journal entries based on the country in which the transaction originates)

o   Custom transaction types (example: vendor billing accrual, employee expense report accrual, payroll journal, depreciation journal, statistical account entries)

  • Mobilization of its newly acquired HCM solution: NetSuite TribeHR Mobile for iOS brings collaboration tools, enterprise search capability, time off management and employee recognition (kudos) to Apple iPhone, iPad and iPod Touch mobile devices.
  • A new B2B Customer Center built on NetSuite’s SuiteCommerce platform providing

o   A self-service customer portal

o   Customization, billing and payments, account and product management capabilities, including lists for seasonal purchasing

o   Responsive web design capabilities that can optimize sites for multiple devices

So NetSuite is in tune with the desire and need for business transformation, largely based on the new requirements of this digital age. But… back to the issue at hand.

What impact does the cloud have on this perceived need to redefine what we mean by ERP? Cloud does have an impact, but it is not so much changing what we mean by ERP as changing what we should expect from ERP, a subtle difference, but a very meaningful one. We still need to track inventory assets, record orders, deliver, invoice and collect payment. In a B2B environment, these end-to-end business processes (like order-to-cash and procure-to-pay) have traditionally spanned weeks or months. The cloud connects us and it might help us automate processes, compressing them to days, hours or even minutes. But we still need to keep that system of record. We still need ERP. We just need a better ERP.

I spent a lot of time evangelizing these new and better ERP solutions in 2013. I called them “next generation” ERP: providing better ways to engage with ERP, replacing invasive customization with configuration that is preserved from release to release, more innovation and better integration. Much of what NetSuite has done, and is still doing, is driven by the need for a modernized, technology-enabled ERP.

But what about CRM? Zach declared Salesforce wasn’t CRM because it didn’t manage the customer order. I will leave a formal definition of CRM to those that specialize in that category, but I would argue that the customer order doesn’t belong in CRM anyway. It belongs in ERP because it is a fundamental element of the system of record of the business. But does it really matter? Not when we’re talking about NetSuite’s solution, because ERP, CRM (and eCommerce) are all built as one system. And because it is all one system, everything works seamlessly together and there’s no redundancy of data. The end user doesn’t really know or care if it is a function of CRM or ERP, unless of course they only subscribe to one or the other and not both.

So yes, NetSuite certainly has a leg up on Salesforce in providing what CRM vendors traditionally promise: a 360o view of the customers. NetSuite can and Salesforce (or any CRM-only vendor) can’t. And that is because it is delivered all in one set of code: a fully integrated suite. If sales or support representatives need to see all outstanding quotes, shipped orders, open or paid invoices, they just go to NetSuite. They don’t need to worry about whether it is part of CRM or ERP.

Some analysts have started to call this “a platform.” While I would define “platform” differently, my definition really doesn’t matter. Whether you call it a platform, an integrated suite, or just extended ERP, I suppose it does strengthen the argument for making ERP and CRM go away. You don’t need ERP and CRM. You need this integrated platform. But now we’re just getting into semantics and we’re not really adding value to the conversation. For a prospect or customer buying ERP today, the real question is what are the boundaries of the solutions being considered and how much of the needed functionality does it provide?

The footprint of ERP has grown steadily over the past three decades. We’ve reached a point where the boundary of where ERP ends and other applications begin has become quite blurry. Those in search of solutions should strive to clearly understand these boundaries, which will vary from solution to solution. CRM is only one such complementary application now offered by ERP vendors. But not all CRM solutions offered by ERP vendors are developed and delivered like NetSuite’s solution. A NetSuite customer can subscribe to either of these as a stand-alone NetSuite application, but if you subscribe to both, they operate as a single tightly integrated solution. This is not the case with all solution providers. Just because you are buying both from a single vendor doesn’t guarantee the two (or more) applications have been designed and developed as a single integrated solution, particularly if the complementary solution has been acquired.

In the past an integrated module of ERP tended to provide lighter-weight functionality than that provided by separate, so-called “best-of-breed” applications. So there was a clear trade-off between specialized functionality, which came with the added cost and effort of integration. But the capabilities of those built-in ERP modules today often rival or even exceed the capabilities of stand-alone applications. And the connected cloud and other modern technologies have made integration easier. So the trade-off isn’t quite so clear.

We explored this a bit in our 2014 Mint Jutras ERP Solution Study, asking participants about preferences for a suite approach (like NetSuite’s ERP and CRM) or a more specialized solution (like NetSuite’s partnership with AutoDesk for PLM).

It is clear that while there is an overwhelming preference for an integrated solution, most will be cautious about sacrificing functional requirements for ease of integration or for the purposes of having either a single throat to choke or a single back to pat (Figure 1).

Figure 1: Preferences for a Full Suite

Netsuite fig 1Source: Mint Jutras 2014 ERP Solution Study

This of course puts added pressure on software vendors like NetSuite to continue to innovate and expand their solutions. The easiest way to deliver a seamlessly integrated, expanded solution is to develop it internally, rather than to go shopping for additional features and functions (through acquisition or partnership). Those solution providers that exclusively deliver through a multi-tenant SaaS model will have an advantage in this regard because they maintain a single line of code. NetSuite, for example, delivers two releases a year.

Those that offer only licensed, on-premise solutions, or the same solution through the cloud and on-premise don’t have that luxury. Minimally they will have to maintain multiple releases to accommodate those customers that can’t or won’t upgrade. And very often they offer the software on different operating systems and different databases. Any combination of these increases their support and maintenance efforts exponentially and leaves fewer resources to apply to pure innovation. These vendors are more likely to deliver releases every 12 to 18 months.

Of course acquiring functionality (like NetSuite did with TribeHR for HCM) and even partnering (like NetSuite did with Autodesk for PLM) are options as well, providing the integration is seamless enough. NetSuite has proven that it is capable of delivering on all these different fronts.

While vendors and industry observers argue over what to call these solutions, most good business decision-makers tune out to these discussions. Most are more interested in solving business problems than in redefining what we call the solution. The labels we have today: ERP, CRM, PLM, HCM… are all fine as long as we continue to ask and expect more from them. I, for one, am more interested in helping those business leaders better understand the almost limitless possibilities for business transformation, than in coming up with the next new label – or even worse, the next new TLA.

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Epicor Insights 2014: Epicor Responds to Trends in ERP

Epicor Software held its annual user conference this week. True to its name, Insights 2014 did just that… provided insight into recent innovations and roadmaps for the future. Epicor experienced some management changes this year, bringing in a new CEO, Chief Product Officer (CPO) and new General Managers (GMs) for the Americas for both its ERP and Retail businesses. But there were some familiar faces in the executive ranks as well, some with tenures between 15 and 20 years with the company, striking a nice balance between old and new blood, so to speak. The goal of these management changes is to raise the game in terms of technology-enabled products that turn customers into “raving fans for life.”

Throughout the conference, attendees heard reference to what have emerged as the top trends in the enterprise software industry: cloud, mobile, “big data” and social. In addition I believe Epicor addressed the different components that I have been touting as characteristics of “next generation” ERP: providing better ways to engage with ERP in order to encourage more and better use, focus on configuration to replace customization, more innovation and better integration.

Towards that end, Epicor made four announcements:

  • The availability of Epicor ERP version 10, redesigned for device mobility, deployment choice, accelerated performance and social collaboration
  • Support for SQL Server 2014: Not only is Epicor ERP version 10 fully optimized for SQL Server 2014, but Epicor has “purified the technology stack.” That means it only runs on SQL Server in a Microsoft .Net environment.
  • The introduction of the Commerce Connect Platform, fully integrated with Epicor ERP Version 10, to drive rich B2B and B2C online experiences for consumers, customers and suppliers, supporting mobile access and secure PCI-compliant payments
  • New Epicor Windows Phone 8 touch-optimized apps for time and expense tracking, supporting multiple devices and “bring your own device (BYOD)” strategies

Amidst these announcements and as a result of speaking with both Epicor executives and customers, here are my key take-aways from the event.

Protect, Extend Converge Lives On

This has been Epicor’s mantra for many years: promising investment protection and continued innovation that will extend the footprint of its customers’ solutions, while also converging multiple product lines acquired through the years. The “protect” and “extend” part isn’t unique. Many vendors promise the same, although some do a better job of delivering than others. However, Epicor is unique in having delivered on a convergence strategy. The result was Epicor ERP version 9, originally called Epicor 9, reflecting that it was the result of converged functionality of nine different ERP products. The “9” has now become “10,” but that is not because it has merged a 10th product, but is more reflective of a traditional “version” level.

With the merger of Epicor with Activant a few years back you might have expected Epicor to bring those new products into the fold, so to speak. Yet instead it appeared to diverge a bit from this convergence strategy. The lion’s share of Epicor’s ERP products target manufacturing, and to a lesser degree distribution, largely due to the overlap of the two industries. Manufacturers often distribute their own products and more and more distributors might engage in some form of light manufacturing. But I would call Epicor ERP a multi-purpose ERP. Activant brought multiple products to the party but each was focused squarely on distribution. Not only were Activant products purpose-built for distribution, but also over time each has become even more focused and fine-tuned to specific segments of wholesale distribution.

So it seemed to me at the time that Epicor was diverging from its convergence strategy. Rather than bringing a new ERP to wholesale distributors, instead Epicor began to converge them on a technology level, bringing its ICE technology to the distribution party. This seemed to me to be a smart move. Don’t get me wrong; I applaud Epicor’s convergence strategy. Back in 2012 I wrote:

Thus far Epicor has been not only first, but also unique in promising (and then delivering) a single rationalized ERP solution. Other ERP companies have toyed with the idea and even announced such plans, but then either pulled back upon encountering resistance from their installed base of customers or subsequently decided against such a strategy. While at first glance these decisions may have seemed to be in the best interest of their customers, these ERP solution providers may in fact have done customers a disservice in tacitly encouraging them to remain on old, outdated technology that simply cannot serve them well in today’s fast-moving and connected world.

And yet, the resistance from customers was typically not resistance to new technology (like Epicor ICE), but resistance against a perceived, or real forced march to a new product. Each customer wants to move forward and/or make a change at its own pace and on its own terms. And if its current ERP is not perceived to be “broken” the customer is not in any rush and procrastination is the result. At times this procrastination is the product of an older generation of IT professionals who would be content to manage familiar solutions right up until retirement. In fact many of them would benefit from a gentle push.

While Epicor has never forced anyone to move, by boldly declaring Epicor ERP as the future, it provided more incentive to consider moving to it, encouraging those stuck in the past to replace solutions with aging, legacy architectures. Most saw the value in re-implementing rather than carrying forward decisions that had been constrained by limitations of applications and technology in the past. Instead of a mass revolt, as feared by others, many customers embraced this and saw it as an opportunity to justify moving forward.

I still strongly believe in what they are doing with Epicor ERP and in fact Epicor executives still say they have a long-term convergence strategy that includes distribution and the Activant products. But I am not sure they need to bring the two together into a single ERP for two reasons:

  • Epicor is big enough and strong enough to manage two product lines, particularly if they are supported by the same underlying technological architecture (ICE)
  • ICE provides a framework whereby development efforts can be shared across product lines

There will be features and functions shared by all companies, some shared by distributors (or manufacturers) only and some required for niche markets or micro-verticals. For like needs, the Service Oriented Architecture (SOA) and Web 2.0 capabilities of ICE allow Epicor to build once and deploy across multiple solutions, freeing up resources that would otherwise be required to satisfy those requirements in each product line – freeing them up to work on more targeted functionality which has the potential of helping its customers in wholesale distribution (and possibly other markets) achieve a measure of competitive differentiation. This could also help Epicor reach into more narrow micro-verticals that might require more specialized features and functions. But (at least for now) Epicor will leave that opportunity to partners.

Developing “shared” components is the top priority for Epicor right now, not only to share across manufacturing and distribution, but also to add more value to its suite of solutions for retail. An example might be using the ERP functions to strengthen financial management options for retail. You will hear Epicor talk in terms of developing more “granular” functionality and other vendors and influencers will talk about “loosely coupled.” Regardless of the terminology, the net effect is to allow customers to add more features and functions on top of what they already have (with less disruption) and to allow vendors like Epicor to build features and functions once and re-use them across different products and customer bases.

Why is this so important? The obvious answer: to deliver more innovation.

Accelerating Innovation

I’ve written a lot about “next generation” ERP over the past year and I have also written a lot about cloud and SaaS. When it comes to more innovation, the two are connected. First of all the increased pace of innovation is supported through the use of web-based services, object-oriented data models and component architecture. All these combine to support more rapid development of new features and functions, which are more easily consumed as needed. ICE is a key factor in helping Epicor keep pace. So how does SaaS fit in?

A vendor that delivers a product exclusively in a multi-tenant SaaS environment has a clear advantage in delivering enhancements. Solution providers that deliver on-premise solutions are forced to maintain multiple versions of the software. Very often the software is offered on a choice of platforms and databases, and the vendor must support multiple release levels determined by its customers’ ability to keep pace with upgrades. For every person-day vendors spend on innovation, they spend another multiple of that day making sure it works across multiple environments. So if the vendor only delivers innovation in a pure, multi-tenant SaaS solution it needs only support and develop a single line of code. This means it can spend more time on pure innovation and that raises the bar for all vendors.

Epicor’s convergence strategy has helped it compete, but it does support both on-premise licenses and SaaS deployments and until now has offered its converged ERP on multiple platforms. Purifying the stack and limiting the solution to a SQL Server based Microsoft .Net environment reduces development efforts and allows Epicor to optimize for this environment, which adds (2X) speed and (4X) scalability. So while it doesn’t enjoy the same economy of scale as a provider of a pure multi-tenant SaaS solution, it has helped stack the deck for improved development productivity. In addition, it has honed its skills in rapid application (agile) development. And in case you are wondering how this will be received by existing customers, I am told that 90% of Epicor ERP customers are already running on the Microsoft stack. As a result, I expect user resistance to be low, particularly with the demonstrated improved performance.

So I would expect the rate of innovation to start to accelerate from here, at least in terms of Epicor ERP 10. To effect further gains, it will have to carry this strategy over to the distribution side of the house, or it will need to complete the convergence to include the Activant products.

In the meantime Epicor is leveraging the ICE technology to bring more “next generational” characteristics to all its products. Bringing its Epicor Business Activity Query (BAQ) tool to Prophet 21 (an Activant product) is an example. New features of Epicor ERP 10 like…

  • a social collaboration framework that lets users collaborate with one another and “follow” business activities and events
  • a live-tile-style browser interface that’s touch-enabled for any tablet

are enabled by ICE and therefore it is likely these features will be also made available to other Epicor ICE-enabled products as well.

So while Epicor doesn’t enjoy the luxury of maintaining a single code base, it is positioning itself to more rapidly replicate functionality across those different sets of code, thereby accelerating the delivery of new user experiences, better configuration replacing the need for customization and easier integration… all hallmarks of next generation ERP. Time will tell whether customers will turn into “raving fans for life” but if the mood and tone of Insights 2014 is any indication, Epicor has a clear runway ahead to achieve its goals.

 

 

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ERP with an Easy Button? Plex Systems Says “Yes!”

Last year I got on a Star Trek kick, writing a lot about next generation ERP. In case by some small chance you missed it, you can catch up on the 4-part series here. But if you didn’t (miss it) you might recall one of the four ways to distinguish an ERP as “next generation” was to provide new ways of engaging with ERP. The consumerization of IT and the introduction into the workforce of a new generation that never knew life before the Internet have combined to make stumbling through hierarchical menus unacceptable as the sole means of engaging with ERP.

Plex Systems has really taken this element of next generation ERP to heart, blending a deep understanding of manufacturing with an intimate relationship with its customers to deliver new ways of engaging with the Plex Manufacturing Cloud (ERP). While Plex doesn’t have the largest installed base (it has about 400 customers), I have never encountered a more engaged community. This level of engagement is a direct result of its unique approach to product development, which delivers more of what customers want, exactly the way they want it. So is it any surprise more employees are directly engaged with the product when running Plex?

Our 2014 ERP Solution Study found on average 52% of employees in manufacturing companies use ERP, not including those that only have occasional access through self service functions like paid time off requests, benefit administration, purchase requisition, etc. Overall this percentage isn’t bad, and represents significant progress over the past few years. Yet the average percentage of employees using ERP increases to 63% at companies running any ERP solution deployed as software as a service (SaaS). I believe this is directly linked to the access any time, anywhere nature of SaaS. But this percentage jumps to a whopping 76% at companies running the Plex Manufacturing Cloud. Very impressive and a clear indication that Plex has cracked the code, so to speak, in terms of providing new ways to engage with ERP.

This week I had the opportunity to experience this first hand. Along with Frank Scavo (@fscavo), Dennis Howlett (@dahowlett) and Vinnie Mirchandani (@dealarchitect), I spent a day with the Plex executives in their offices in Troy, MI. We were privileged to get a preview of some of the projects they are working on to be showcased in June at PowerPlex, and I think customers will be pleased. But a highlight of the day was an interactive demo of a manufacturing process that took us from the receipt of material through to shipping of a finished product. This was particularly interesting to me for a number of reasons:

  1. I “grew up” (professionally) in manufacturing, so for me, it was like going home.
  2. I used to do demos for a living. I spent about 10 years in pre-sales from the mid 80’s to the mid 90’s. Although it was quite a long time ago, I still remember what is involved. Back in the day, before the Internet, before web-based access, before solutions were as robust and flexible as they are today, my best demos were the ones where my hands hardly touched the keyboard. I got very, very good at talking a prospect through a process. This was nothing like that. Although there wasn’t even a keyboard in sight.
  3. I got to actually participate … And yet, while I never touched a keyboard, that doesn’t mean I didn’t touch, feel or see the software in action.

No, we didn’t use a keyboard. But we did use scanners and sensors, and yes, there was even a blue button that you might call the “easy button.” Plex had a badge for each of us as employees of a fictitious company called Edge. We scanned our badges to “clock in” and were assigned to work centers and tasked to go make key fobs like the ones we all carry to open our car doors.

We received material (resin) by scanning the label attached by the vendor and we produced a label to attach to the bin where we were directed to put it. We then scanned it again to send it to be injection molded. OK, this part wasn’t really “real.” But when Dennis arrived at the work center the system told him he wasn’t qualified to work there. And the light curtain seemed real enough when it dinged Vinnie for scooping out several molded parts instead of one at a time. Those molded parts were then delivered to the next work center where Frank struggled with some decidedly low-tech assembly and I excelled. (What does that say about me?) And when we had collectively assembled all the parts, the Plex supervisor (aka demo guy) pressed a blue button to signal all were complete and a shipping label was automatically printed. Someone from the group then hit the button again but that just printed a label telling us we couldn’t possibly have made more because no more components had arrived to be assembled.

The demo concluded with the shipment of product and some back office investigation of potentially contaminated material.  This involved some backward and forward lot traceability, which the Plex Manufacturing Cloud handles quite well in terms of requirements of the automotive industry and some other sectors. But look for this aspect of the product to be significantly enhanced in the future.

Also look for Plex’s approach to corporate and product strategy to evolve. Some of the changes will be subtle, some not so much. Plex has been quite well known among its close followers as a company that has uniquely leveraged customer-driven development. This has been unique in two ways. First, the lion’s share of innovation came from customer-driven enhancements and customer-driven also means customer funded. So a customer would pay Plex Systems to enhance the product and other customers would benefit. This was a smart move for an early-stage ERP company in “boot strap” mode.

The second point of differentiation comes from the speed of development. Plex first started delivering ERP in a SaaS model in 2001, not because the company wanted to be a pioneer in SaaS, but because it was already a pioneer in rapid application development (RAD). A SaaS model was simply the only way it could deliver product as quickly as it could develop it. Back a few years ago, as the development team was demonstrating a new feature they were developing for a large customer, I was struck with a rather unique thought. In the time it would have taken your typical development team to tell you why they couldn’t do this, the Plex team had delivered the proto-type.

While this approach has served the company well, it does limit growth potential outside of the markets in which it is already successful. Letting customers guide product direction has many benefits, including an engaged installed base, and a more robust solution to meet the needs of its target market. But significant growth will likely require Plex to expand its target markets. To really grow significantly, Plex will have to take the reins and determine for itself where it needs to take the product. That means less customer-directed enhancements and more Plex-directed (and funded) innovation.

Now is definitely the time for Plex to make this next step. The product has reached a level of maturity that makes it very competitive in manufacturing, which is where Plex intends to stay. So for the markets where it already plays, there are fewer, if any gaps to fill. And with its acquisition by global private equity firm Francisco Partners in June 2012, followed by a $30 million strategic investment by global venture capital and growth equity firm Accel Partners, there is certainly less need to boot strap. But the expectations for growth have also been amplified and accelerated, and there has been a changing of the guard to reflect this. CEO Jason Blessing has spent the past year assembling a strong management team.

But in a category where the market leaders have tens of thousands of customers, Plex has a long way to go before it can claim the mind share it needs to be recognized as a leader. It has taken its first steps in that journey with a well-defined corporate strategy, supported by a strong technology and product road maps. But it also needs to increase its brand awareness and its marketing presence. If you have been following me over the past several years you have probably already heard of Plex. But obviously, a lot of folks haven’t and many of its competitors underestimate the company and the solution, assuming it can’t compete.

Well, you know what they say about people that assume.

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Cloud ERP: Is Kenandy and Force.com a marriage made in heaven?

When Marc Benioff talked Sandy Kurtzig into coming out of retirement and founding Kenandy back in 2010, it was clearly seen as a business marriage of sorts. You can define marriage today any number of different ways, some of which are very controversial, some quite safe. Erring on the side of safe, I would define marriage as a “union of two things.” In this case the marriage is between an application development platform (Force.com) and an Enterprise Resource Planning (ERP) application. While the marriage between Kenandy Cloud ERP and Salesforce Force.com might not be made in heaven, the wedding at least was right up there in the cloud.

While I am not overly superstitious, when I got married I wanted to stack the deck in favor of marital bliss. I wore something old, something new, something borrowed, something blue. It must have worked because more than 37 years later, I am still happily married. So amidst all the seemingly obligatory predictions for the New Year (no I don’t publish mine), let’s apply the same old adage to Sandy’s new venture and see if we can predict its success. Can we find something old, something new, something borrowed, something blue in this union?

Something Old

When I look for something old, my thoughts first go to “old friends.” I joined Sandy’s first company (ASK) exactly 30 years ago today: January 2, 1984. While this is a new company for Sandy, there is a lot to be gained from the experience in building that first one. During her 20 years as founder, chairman and CEO of the ASK Group, she grew the company from a one-woman show to one of the ten largest software companies in the world.

Her first product, MANMAN, short for Manufacturing Management, was an enterprise application that helped manufacturing companies run their business. In fact it still is. Having survived several acquisitions, MANMAN is now owned by Infor and still has fans in manufacturers around the world. In spite of running on what is now old and outdated technology, for more than a few, you will have to pry MANMAN from their cold, dead hands. Their perception: It just works.

Her new product, Kenandy Cloud ERP, has similar aspirations. Like MANMAN, its target market is manufacturing. Those that “know” manufacturing intimately understand the complexities associated with this type of business. Those that don’t tend to over simplify the solution needed. Fans of Workday for example constantly laud the company for its simplicity. Workday has a great product, but of course it is simpler. First of all it is Human Capital Management (HCM) and financial management (accounting) software, but it isn’t full ERP. And second, it doesn’t even try to address the manufacturing market. It takes a lot of manufacturing experience to satisfy this market. Sandy “knows” manufacturing.  You might say she is an “old hand” at it.

Something New

But it is not MANMAN that Kenandy is selling. It is a completely new product. As I mentioned before, MANMAN is now based on old and outdated technology. While many are satisfied with what it can do, quite frankly, they shouldn’t be. Any company still running MANMAN, or any number of other older business applications, are at a very serious competitive disadvantage today.

I wrote a lot about “Next Generation ERP” in 2013. If you are running an older ERP solution, especially those implemented prior to the year 2000 (Y2K), you may not even be aware of what you can expect from a modern, technology-enabled, next generation ERP. A lot of the basics required by a manufacturer today are the same, but the basics aren’t enough any more. The footprint of ERP has grown steadily, to the point where it is sometimes hard to figure out where ERP ends and other applications begin. So you need a very broad footprint to compete.

But it isn’t the depth and breadth of functionality that qualifies an ERP solution as “next generation.” It is the underlying technology. And conversely, it is that new technology that enables ERP footprints to expand at an accelerated rate. This is what makes the marriage of Kenandy Cloud ERP with the Force.com platform so important. When Kenandy decided to enter the market, the company started by building a new product from scratch. In one way, this made it much easier. As you are developing a new product, you don’t have to worry about keeping any existing customers happy with product or implementation decisions they may have already made. You can start from a clean slate. It is sort of like building a new house. It is much easier to start with an empty lot and a design plan, than it is to remodel an existing structure.

And yet Kenandy set out to build a very big and complex structure. One of my all-time favorite quotes from Sandy Kurtzig dates back to that year I joined ASK. I don’t remember who we were talking to, but I remember what she said just as clearly as if she said it yesterday, not 30 years ago. We were talking about the software competitive landscape. ASK was a market leader at the time and Sandy was very confident in its ability to maintain that leadership role. She said, “To get into the software business and compete, you have to match me line for line of code. It’s like having a baby. You can’t put nine women on it and do it in a month.”

Yet when I first communicated with Sandy in the early days of Kenandy, what she emphasized most was the speed of development that was possible with the Force.com platform. I reminded her of that quote from 30 years ago and asked her if she was trying to put nine women on it and do it in a month. Sandy chuckled, but didn’t really answer. I think time has answered the question. It is now almost three years later and Kenandy has delivered the baby. In order for it to be a real “baby” it needed to live and breathe on its own. That means for any company running it, it must provide a complete operational and transactional system of record for a (potentially complex) manufacturing business. I can’t tell you exactly when the baby was first delivered so it is hard to say whether it took the traditional nine months or more like three. But it is living and breathing in a handful of companies.

And I would say it meets the qualifications I have been promoting as necessary to be classified as a next generation ERP. It must include new technology that enables:

  • new ways of engaging with ERP
  • custom configuration without programming
  • more innovation
  • better integration

Many of these capabilities are derived directly from the Force.com platform.

The Kenandy baby didn’t necessarily need to walk or run when it was first delivered. But if it wants to compete against the big guys, those mature ERP solutions offered by big companies with deep pockets for continued development, it better help the baby grow up quickly. The more advanced features it can add easily through the Force.com platform, features like mobility and social collaboration, the faster the baby will grow and mature.

This will be particularly important to Kenandy because the target customer is also somewhat different from the old ASK customer. Yes, Kenandy is still squarely focused on manufacturing, but it is diverging from the MANMAN target, as well as the prime target for most other cloud companies. The sweet spot for MANMAN was in the lower end of the mid-market, often a division of a large company, but seldom a large enterprise. This has typically also been the target for emerging Software as a Service (SaaS) providers. Not so for Kenandy. It has its eye squarely on the large multi-national enterprise. While my data does confirm that the interest level in cloud ERP actually increases with the size of the company, I question the size of the target market. There are far more small companies in the world to sell to than large, and selling to the large enterprise is typically a replacement sale. So Kenandy not only has to sell into a large enterprise, they also have to oust the incumbent – certainly not an impossible task, but count on it being a long and involved sales cycle.

Something Borrowed

Quite frankly, no company could produce a product from scratch and make it competitive in three years without borrowing. Much of the technology that supports new and advanced features will come from the Force.com platform. So in a way, you could say it is borrowing those features. The best news about borrowing in this context: you never have to give it back. You gain the benefits for life.

But perhaps even more important is borrowing that knowledge of manufacturing from prior experience, and also the philosophy that made ASK a leader in its day.  Part of the evaluation process in selecting business software has always included checking references. As in any major purchase, before making a capital investment (or even taking on operating expense in a cloud environment) a prospect wants to talk to someone else that has walked in its shoes. Typically the software vendor provides one or more references.

But how much confidence does this really build in the prospect? By definition, any reference provided by the software vendor will be a good reference. Would it voluntarily provide a bad reference? Of course the prospect could instead get involved in user groups and/or do research on its own, but that is time consuming. And will the prospect even be able to get beyond the screening processes that occur naturally today? ASK used to handle references differently. When asked for a reference, the sales rep would hand over the entire customer list. As the customer list grew the “thud factor” alone was enough to win business. It will be awhile before Kenandy achieves that thud factor, but it fully intends to provide its entire customer list as references.

Something Blue

OK, so have we run out of our analogy with this final “something?” Hardly. Blue could represent any number of factors. Back in the ASK days, blue meant Big Blue, or IBM. In the early days when ASK was delivered on minicomputers, they were definitely not blue. The likes of BPCS (owned by SSA, now Infor) and PRMS (owned by Panasophic, then Computer Associates, then SSA, now Infor) ran on Big Blue. ASK ran on HP and DEC. But that all changed with UNIX and open architectures. Underlying hardware was no longer a point of differentiation. And with the entrance of SaaS and cloud, it is no longer even a consideration.

Blue could refer to blue sky. And blue sky could be exactly where the cloud resides, which is where the wedding took place: Kenandy Cloud wedded to ERP Force.com the cloud-based development platform.

But I prefer to consider blue sky in the context of: creative, knowing no limitations or boundaries. The sky’s the limit. After all, isn’t that the case if a marriage is made in heaven? As a woman and as an entrepreneur, perhaps I am a bit biased. While I will continue to watch and even be critical where appropriate, nothing would please me more than seeing this marriage achieve exactly what I was seeking in wearing something old, something new, something borrowed, something blue: marital bliss.

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