Accelerating Out of the Curve of its Own Transformation

Over the last few decades Enterprise Resource Planning (ERP) solutions for manufacturing have evolved from their roots in Material Requirements Planning (MRP), and have become quite mature. Throughout that time we’ve seen solutions and solution providers proliferate and then consolidate, leaving a select few that develop and support a single ERP solution dedicated to filling the needs of manufacturers. Plex Systems is one of those few, but even within this select group, Plex is unique. Not only does its Plex Manufacturing Cloud (PMC) satisfy the back-office needs of manufacturers, it also dives deep into the shop floor, with strength in quality management and manufacturing execution. Born in the cloud, Plex’s ERP has been offered exclusively as Software as a Service (SaaS) since 2001, making the company a true cloud pioneer.

For years following 2001 Plex Systems was in the high-speed lane on the straight-away, rapidly expanding its depth and breadth of functionality. PMC became the performance engine driving growth and profits for a steadily growing customer base. But just as manufacturers today must undergo a transformation in order to compete effectively in the global, digital economy, so must Plex. And in the course of that transformation it must navigate some curves. It must evolve its platform and architecture, embrace new digital technologies, support disruptive business models and adapt to changing expectations of today’s workforce.

Whether driving a muscle car or a business, you know you need to ease up a bit on the accelerator as you enter a curve in the road. But if you have a performance engine under the hood, there is nothing more exhilerating than accelerating out of that curve. Where is Plex Systems today? Is it about to explode out of the final turn?

The Straight-Away: A Bit of History

In its early years Plex offered the only ERP for manufacturing that was available exclusively as Software as a Service (SaaS). In order to fully appreciate why Plex was indeed in the fast lane, on the straight-away, you have to understand why Plex became a “SaaS only” company in 2001. It wasn’t because SaaS and cloud were the hottest topics back then. Back in 2001 “SaaS” and “cloud” were not even part of the vocabulary of the typical manufacturer. It wasn’t because the company wanted to be on the bleeding edge of new deployment options. Most manufacturers weren’t even knowingly and willingly considering SaaS.

The real reason was because the founders had developed technology and processes to rapidly develop applications and SaaS was the only way they could deliver software as fast as they could develop it. They wanted to share new functionality and new technology as it was developed, not 12 to 18 months later, when the next release was scheduled. As a result, early on, customers didn’t buy the Plex Manufacturing Cloud because it was SaaS. They bought it because of the broad and deep functionality and the company’s willingness and ability to respond to their needs… in spite of the fact that it was deployed and delivered through the cloud.

And yet back in the early 2000’s Plex was not only a fledgling company, but also a self-funded SaaS solution provider. Of course, back in 2001, ERP systems in general, especially those offered by small start-ups like Plex, were not as full-featured as today and this naturally led to gaps. However, when you have a development team excited about new rapid application development tools and anxious to please customers, those gaps get filled quickly. During this “straight-away” phase, Mint Jutras once observed that in the time it took a traditional development organization to tell its customers/business users why something couldn’t be done, the Plex development team would have had a proto-type of the solution up and running.

Unlike most providers of multi-tenant SaaS solutions, Plex willingly “customized” the software. But the enhanced software wasn’t custom for long (if at all). Plex always incorporated these enhancements into the product. As a multi-tenant SaaS solution, every single customer runs the exact same software. It just might not look or behave identically from customer to customer because most of these enhancements could be selectively turned on… or not.

Throughout this time, the lion’s share of innovation came from customer-driven enhancements. In the early days, customer-driven also meant customer funded. So, a customer would pay Plex Systems to enhance the product and other customers would benefit. In other user communities this does not happen, at least not consistently. The typical way of thinking is, “I paid for it and it’s mine and only mine.” In the land of Plex, customers simply viewed this as making a contribution to the community. And they expected others to do the same. Each gave a little, and everyone got a lot. When everyone is running the same software, literally, not figuratively, it creates a unique sense of community, one of being “all in” together.

The Turning Point

This strategy worked brilliantly for years, but then Plex reached a point in its own maturing process where it no longer made as much sense. The gaps in functionality had been filled and Plex needed to formulate its own strategy for growth, rather than let itself be led entirely by its customers. Adding functionality that was not mainstream, or features that perhaps led down a path Plex deemed not to be strategic, would only add unwanted complexity to the solution. So, several years ago Plex took charge of the roadmap and began to phase out customer-funded development and increased its R&D investment.

But there were other factors at play here as well. This decision came at a time when disruption had become the norm. We live in disruptive times. Last year, the 2018 Mint Jutras Enterprise Solution Study found 89% of companies believe they face some level of risk in their businesses and/or industries being disrupted by new innovative products, new ways of selling or pricing existing products or services, entirely new business models, or some combination of all of the above. And then of course there are still the more traditional disruptive factors like expansion and growth, organizational restructuring and regulatory changes, just to name a few.

All this disruption can have a cascading impact on business application requirements, making agility – the ability to easily innovate, evolve and change – even more important than current functionality. Software delivered as a service is only one of the ways innovation is delivered and consumed faster and more easily. This speed is largely dependent on the way your ERP solution is constructed and the platform on which it sits. This caused Plex to focus some attention on the underlying architecture and what Mint Jutras calls “foundational” technologies.

Table 1 shows how our survey participants perceive the value of foundational technologies that are embedded in enterprise applications.

Table 1: Perceived Value of Embedded (or Foundational) Technologies

Source: Mint Jutras 2019 Enterprise Solution Study

While a growing percentage of manufacturers perceive these technologies as providing strong value, on average almost one in three (32%) are unsure of the value. Essentially, they are saying, “Show me.” And another 9% (the average across all) simply don’t know. And yet investment in these kinds of technologies is essential to the continued health and well-being of any solution used to run a business today. As Plex turned its attention to these underlying technologies, it very likely appeared as if innovation was slowing down. In fact, investment increased; Plex was (and is) just navigating a curve. To understand what Plex is doing, and why, we need to step back and look at what is going on in the world around us all in terms of how solutions today are built and delivered.

“Suite in a Box” or Best of Breed? Yes

First, we need to re-examine a debate that has been waged throughout the world of enterprise applications for decades: choosing an integrated suite or “Best of Breed” approach. Many ERP vendors have been preaching the benefits of a complete, end-to-end solution and arguing against the proliferation of disparate applications for almost as many decades.

This is exactly what Plex has been delivering and it would certainly appear to be what Plex customers want. Plex customers have participated actively in Mint Jutras surveys for many years now. They tend to have more complete solutions than manufacturers running other solutions, and strongly favor a single vendor, single solution.

We asked the survey participants in our 2019 Enterprise Solution Study to choose between a “Suite in a Box” – a complete end-to-end solution that is pre-integrated and ready right “out of the box,” or a more “Best of Breed” approach with a strong core, coupled with the ability to purchase or develop additional functionality and easily (we use the term loosely) connect it back to the core. We recognize the choice is not always so cut and dried, and therefore added some options that are more of a mix but leaning in one direction or the other. The results (Figure 1) surprised us a little. We expected a higher percentage would prefer the Suite in a Box approach.

Figure 1: Which approach is most appealing to you?

Source: Mint Jutras 2019 Enterprise Solution Study

Since collecting this data, Mint Jutras actively sought out discussions with companies, posing the same question, and got very similar results. But then we asked, “Why?” The short answer: most are interested in a fully integrated, fully functional solution, but they want the freedom and flexibility to implement incrementally, in their own determined sequence. In other words, they want both.

Many are also in the midst of a transition to cloud solutions. This may mean a complete shift, starting with the migration or replacement of an on-premise ERP solution. Or it may mean a more gradual shift, often leaving in place on-premise ERP solutions and surrounding them with cloud-based added apps.

The core points of any debate between suite and Best of Breed center around the trade-offs between ease of integration and depth and breadth of solution. With a suite approach, all modules share a common database and are developed using the same tools and technology. This eliminates data redundancy and any need for separate integration efforts.

In the past specialty functionality built into ERP was lighter and less feature-rich and definitely not “best of breed.” While that may have been the case early on, over the years, ERP solution providers added more robust features and functions through a combination of their own development efforts and sometimes through acquisition. Today they are often (not always) able to compete head to head against stand-alone “best of breed” applications.

With the exception of two acquisitions (DemandCaster for supply chain planning and DATTUS for Industrial Internet of Things connectivity) Plex’s functionality has been internally developed and therefore intrinsically built into the suite. This includes rich functionality connecting the shop floor to the top floor. The Plex Manufacturing Cloud can certainly hold its own against so-called best of breed applications in several categories, including quality management (QMS) and manufacturing execution (MES).

So, if companies can get best of breed functionality in a suite, without the need to manage separate integrations, what drives the desire for the “Best of Breed” approach as we articulated it in our question?

We find many articulate their desire as a “Best of Breed” approach because they equate the suite to a monolithic architecture and an “all or nothing” kind of decision. In some ways that is true, but not entirely so. Most any ERP solution is comprised of modules (e.g. general ledger, accounts payable, inventory management, purchasing, order management, shop floor control, etc.) and certainly some are optional. There is always a preferred logical sequence to implementation because of dependencies in the data. Foundational data like charts of accounts, customers and part or product masters must be established early. But once the foundation is built each company is free to decide what comes next and how far to go. This is certainly the case with Plex customers. Most go live when they have the basics established, but then have further steps planned.

But with a monolithic architecture few, if any of the modules are designed to stand alone. Sure, you can just implement general ledger, or inventory management perhaps, but you can’t just implement the manufacturing execution system (MES) that is built into ERP. Or the Quality Management System (QMS). Which is one of the primary reasons why Plex Systems is actively engaged in decomposing its monolithic solution and reconstructing it as loosely coupled components. This is at least one of the curves Plex is navigating.

What, if any, significance does this have on existing Plex customers and prospects? For those customers looking for a complete end-to-end solution, it allows Plex to once again speed the delivery of added features and aids them in providing last mile functionality without adding complexity. Instead of building customer-driven enhancements into the base, it can assemble a unique set of components to deliver industry-specific functionality for each of the segments of manufacturing on which Plex focuses.

For prospects looking to start their own cloud journey or digital transformation, it provides an option to start small, perhaps with MES instead of a full ERP solution. And of course, that provides Plex with added growth opportunity.

But “decomposing the solution” is not the only way Plex is navigating this curve and transforming the company and its solution. It is actually hitting on all of the different aspects listed back in table one. The most obvious is the transition to cloud and SaaS. While not exactly a “technology,” it is the only entry in the table that is even close to mainstream. But this requires no transition for Plex. PMC was born in the cloud and has always been offered as a multi-tenant SaaS solution. Enough said.

However, let’s hit on a few of the others listed.

Platforms and Architecture

Development platforms and microservices architectures are key to this decomposition. For the reader with a technical background, a microservices architecture is defined as an architectural style that structures an application as a collection of loosely coupled services. This is the process of decomposition to which Plex refers in its roadmap. For those nontechnical readers, think of it as constructing a solution from a set of Lego building blocks. Purists hate this analogy, and yes, it is an over-simplification. But it is an effective analogy that resonates with most business users that don’t have the interest or inclination to dive deep in technical jargon.

Think about how you build a structure from Legos. Each Lego block is made of the same kind of material and is attached (connected) to the other Lego blocks the same way. In many ways they are interchangeable. But by choosing different colors and sizes, and connecting them with a different design, you can make a structure that is very unique. And once constructed, if you want to change it, decoupling some of the blocks and replacing them doesn’t destroy the parts that are not affected. There is far less disruption introduced than if you had constructed it with a hammer, timber and nails.

Plex is actively engaged in developing this type of platform and is probably about a year away from completion. But in the meantime, it is delivering value through other associated technologies, starting with the Industrial Internet of Things (IIoT).

Industrial Internet of Things (IoT)

While sensors, machines and equipment on the shop floor have been collecting vast volumes of operational data for decades now, that data has not always been “connected” or accessible for decision making. Indeed the very fact that this data collection has been happening for decades contributes to the problem. Many of the machines and software put in place decades ago pre-date the Internet and therefore have no ability to connect to a network. Retrofitting equipment, or replacing it, is expensive and most of these machines were designed to last a lifetime. Expensive custom integration projects are beyond the expertise and budgets of all but the largest manufacturers. So what’s the alternative?

This is where Plex’s acquisition of DATTUS comes in. Providing an alternative is what DATTUS is all about. Think of it as the bridge between you and your machines. The platform is a hardware/software combination, which collects data from PLCs, VFDs, industry protocols like MTConnect, and popular enterprise applications including Salesforce, SAP and (of course) Plex. The goal: making this data available for analysis and decision-making.

The majority of the original DATTUS customers are not sophisticated and therefore beyond the physical connection Plex is concentrating on developing applications to be used right out of the box, rather than just providing a tool set and leaving it up to customers to connect manufacturing equipment and sensors to the cloud and to PMC. DATTUS is now Plex Industrial IoT and the first applications are centered around visualization of the sensor data, combining it with data from PMC, adding thresholds for alerting production supervisors when a process is about to go out of spec. But the team is already working on connecting data to MES and QMS to complete the genealogy and traceability and for anomaly detection to prevent machine failure. But this anomaly detection will require some artificial intelligence.

Artificial Intelligence

Technologies like machine learning, natural language processing and other forms of artificial intelligence have become quite prevalent in consumer technology (think Siri and Alexa, or GPS that learns your favorite route). Now is the time to bring them into the enterprise, much like they were insinuated into our personal lives – by adding value and embedding them.

The concept of machine learning in an industrial setting employs computer algorithms that learn and improve over time with use, often drawing on data, not only from enterprise applications, but also from equipment on the shop floor or even from smart products in the field. Between the data already being collected in PMC and the data that can be potentially collected through Plex IIoT, Plex is sitting on a potential gold mine of data to use in machine learning. The team is laying the ground work for future initiatives.

In the meantime, the development team is already experimenting within PMC by analyzing settings to discover combinations that produce great (implementation) results and those that can spell disaster, in order to guide new customers and even warn them of pending disaster. Delivering this kind of artificial intelligence provides value, not only to those looking to connect to the IIoT, but to all Plex customers. And therefore, Plex is following the same path Apple took in delivering a voice-activated virtual assistant (Siri). Nobody asked Apple to deliver this and Apple didn’t make it a separate option (with a separate price tag). Once customers started using it, they saw the value and it became a prerequisite for any smart phone. Will Plex set the standard in terms of performance evaluation of a SaaS solution for manufacturing?

Accelerating Out of the Curve

Like any good business competing effectively in the today’s global, digital economy, Plex Systems has been undergoing a transformation. Unlike other SaaS-only solution providers that operate in the red, Plex is cash flow positive and spending more in R&D than ever before in order to fund and fuel this transformation.

For more than a decade and a half, the development team worked swiftly to build out robust functionality that connected the shop floor to the top floor, through practical (often customer-funded) innovation. But today we live in a different world. Both the pace of business and the pace of change are accelerating. The road to success is not necessarily a straight path. Disruption throws us some curves.

And therefore, Plex must find new ways of listening and new ways of solving problems – problems its customers might not even know they have. Apple (think Siri) and Steve Jobs provides some inspiration.

“Get closer than ever to your customers. So close, in fact, that you tell them what they need well before they realize it themselves.” Steve Jobs

Plex’s customers aren’t asking Plex to “decompose” its full suite, but customers like Accuride that operates Plex in some of its divisions, while also running SAP and Workday, see the benefit of being able to insert (Plex’s) MES in other divisions currently running SAP.

Customers transitioning from legacy, on-premise solutions face new challenges and have all sorts of different priorities. The shortest path to their goals may not be the traditional road, but rather a road less travelled. Customers (and prospects) that think artificial intelligence is still the stuff of science fiction aren’t asking Plex to predict machine failures on the shop floor, but they will most definitely benefit.

All this potential for change and disruption, shifting priorities and technology innovation makes the foundational work Plex is doing invaluable. And so are the new technologies it is introducing to its solution. There is nothing more exhilarating than accelerating out of a curve. If you are a Plex customer or prospect, buckle up… it’s about to get very exciting!