partners

Acumatica and the Power of Three

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

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

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

3 Types of Partners

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

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

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

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

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

3 Cloud Models

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

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

Acumatica offers 3 different models through its partners:

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

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

Figure 1: How do you prefer your cloud?

Acumatica Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

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

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

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

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

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

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

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

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

There is Power in Those 3’s

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

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

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

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

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Impressions from SAP Americas Partner Summit: Partners Make it Real

Tis the season for partner summits. SAP Americas Partner Summit was the 3rd of these I attended in a week and a half. This was the first of this type of event for SAP since it recently merged North America and Latin America into a single unit under the direction of Rodolpho Cardenuto, President SAP Americas. This merging of the Americas bucks the trend in the industry. As Latin American economies, most particularly Brazil, continue to emerge, it is more likely for Latin America to be spun off from a previously combined unit.

And the combination of the two Americas has a further bit of a unique twist. Typically North America will be the dominant player, and therefore you might expect it to bring its southern neighbors into the fold. Yet at the Summit, it really felt more like Latin America was taking North America under its wing. Presumably this is largely based on the recent successful growth of Latin America under Mr. Cardenuto’s direction.

Over the course of two days we heard lots from SAP executives on the main stage, in smaller groups and one-on-one meetings. Some of what we heard simply reinforced the four pillars we have been hearing about quite consistently at various events over the past year or more, namely how SAP intends to:

  • Leverage the core business applications
  • Deliver in mobile
  • Lead in the cloud
  • Capitalize on big data (read: HANA, HANA, HANA)

But how do these key elements of SAP’s strategy pertain to the partners and the customers they serve?

Leveraging the core business applications

The key message here: industries are important and partners are critical to building out solutions. There will be common processes across all companies. These common processes are easily handled by basic functionality that has become quite commoditized today, making it hard for any software company to differentiate itself solely on the basics. It is equally hard for any customer running “just the basics” to gain a competitive edge.

SAP’s approach to delivering that source of differentiation is to co-innovate with partners and customers. First of all, SAP constructs specific “value maps” for each of 25 different industries, identifying market trends and specific business capabilities required to compete in these markets. It then creates very unique blocks of solutions for each industry.  The goal is to not just deliver technology, but to create more value for its customers, and therefore SAP is taking a design thinking approach. This has been music to my ears, which are tuned more to business issues than pure technology. I spend much of my time and efforts translating techno-speak to business-speak.

Design thinking is becoming more and more popular these days, but in case you are not familiar with the concept, it is a repeatable process for solving problems and discovering new opportunities. It consists of 4 key elements:

  1. 1.    Define the problem
  2. Create and consider many different options
  3. Refine selected directions
    Repeat steps 2 and 3 until you reach…
  4. Pick the winner; execute

As the pace of change accelerates, as technology allows us to solve problems previously deemed unsolvable, SAP understands it can’t possibly deliver all this value itself, and therefore turns to partners. As Chakib Bouhdary, EVP Industry Solutions and Customer Value stated on stage, “We all have to change our tolerance to IP sharing.” This is an important concept and one critical to encouraging partners to develop complementary solutions, along with a go to market plan that includes revenue sharing.

At first glance this “sharing” of IP and revenue might seem to pertain only to the traditional Value Added Reseller (VAR) or the larger service providers/system integrators. But during the Summit SAP also introduced the SAP PartnerEdge program for Application Development, “a simple and comprehensive program designed to empower partners to build, market and sell software applications on top of market-leading technology platforms from SAP.

How is this new and different? Essentially it lowers the cost of entry for small partners, while also simplifying the process of signing up. Partners can choose from a set of “innovation packs” based on the latest platform technologies from SAP, including the SAP HANA platform, SAP HANA Cloud Platform, SAP Mobile Platform, SAP databases and the SAP NetWeaver platform. The innovation packs contain technology-specific license rights, resources and services to help partners rapidly get enabled to develop applications on SAP platforms. The packs are also designed to support custom development for co-innovation with customers, which often is the first step to developing a more commercial, standard application. All for an entry fee of around 2500 euros.

These small partners pay a low annual fee (500 to 1500 euros per year) for each of these innovation packs. In turn they can also offer their wares through the SAP online app store and potentially reach a much broader market and therefore better monetize their efforts. This encourages a larger volume of smaller partners in a very real “win-win” scenario.

Deliver in Mobile

Notice the SAP Mobile Platform is included above as one of the innovation packs. The consumerization of IT has changed expectations of connectivity and accessibility of data. But nobody (in their right mind) really wants to lift and shift the traditional ERP user interface to a mobile device. Mobile executives today want answers to specific questions, hence the increase in demand for more purpose-built mobile apps. Lots of questions potentially generate the need for lots of mobile apps. And the SAP online app store is the perfect place for partners to showcase those they build on SAP’s mobile platform.

Lead in the Cloud

It seems everyone today wants to claim “leadership” in the cloud and SAP is no exception. With all the “mine is bigger than yours” rhetoric in the market today, determining who is on top is difficult and probably a bit subjective. However, after developing its own “born in the cloud” (SaaS only) business management suite (Business ByDesign), two major “cloud only” acquisitions (SuccessFactors and Ariba), 30 million users in the public cloud and the world’s largest business network supporting $460 billion in transactions, SAP has to be right up there on the leader board.

While there is still a lot of confusion over cloud and SaaS, the interest in both has taken a quantum leap over the past couple of years. I’ve written a lot about the benefits of moving to the cloud, but while others predict that very soon the vast majority of applications will be running in the cloud, my research indicates only 33% will be SaaS in 5 to 10 years. I attribute this to the fact that there are so many solutions running on-premise today and many companies are reluctant to rip and replace only to convert to a SaaS deployment model. So does that limit the number of companies that can effectively leverage the benefit of the cloud to those willing to abandon their current software licenses? SAP says, “No.”

Many of the companies running on-premise solutions would love to relinquish the responsibility of managing and maintaining those solutions and reap the benefits of the cloud. SAP’s answer to this is to offer Managed Cloud as a Service (MCaaS). This isn’t a brand new concept. Back in May, SAP announced its SAP HANA Enterprise Cloud. As I wrote back in May…

On May 7, 2013 SAP announced SAP HANA Enterprise Cloud. As the name implies, it is a cloud-based service that allows an organization to move existing (or new) implementations of the SAP Business Suite and SAP NetWeaver Business Warehouse, powered by HANA, off their own servers and into SAP’s massive data centers. Why would an enterprise want to do this? The short answer: Speed, power and the benefits of cloud computing without the disruption of replacing existing on-premise solutions. Speed and power come from HANA, adding visibility and agility to the business by enabling decisions to be made in real-time with volumes of data that were inconceivable just a short time ago. Cloud computing lowers cost and adds elasticity, allowing capacity to stretch as your business and your need for data grows.

This is not SaaS and is not a public cloud. It is really a private cloud for the customer managed by SAP. This was a purposeful decision on SAP’s part since the objective is to make the solution truly “elastic.” While this term may be common in technology circles, it is less so in the business community. Essentially, it means the customer is never constrained by hardware limitations. Data center configurations expand (transparently to the customer) as more computing power is required. And if there are any lingering concerns about applications running in a public cloud, those go away with this model.

So what does this mean for partners and how is MCaaS different? It means they can bring the benefits of the cloud to those not quite ready for a SaaS solution. Partners can purchase product licenses and offer them, along with other services on a subscription basis. While this is the same concept introduced with the HANA Enterprise Cloud, HANA is not a requirement, nor is the Business Suite. SAP may be hosting the software, but partners may also sign up to do the same. SAP Business One and Business All-in-One are already offered in this kind of hosting model by several of the larger partners.

Capitalize on Big Data (HANA, HANA, HANA)

This was the first SAP event I have attended in a long while where HANA was not the primary focus. Yet its presence was certainly implied, if not directly referenced. Steve Lucas, President, SAP Platform Solutions talked a lot about “the real time connected enterprise:”

  • Real time business applications
  • With real time integrated analytics
  • Delivered on any device in real time (securely anywhere in the world)

Of course you need HANA for this. But I think the real message for the partners here is that SAP needs them to deliver applications that leverage HANA. This makes Dr. Bhoudary’s comment about SAP’s tolerance to IP sharing even more relevant beyond the concept of building out industry solutions. I’ve said it before and I’ll say it again (and again and again if necessary)…Without this way of thinking, without the development of applications leveraging its technology, HANA is simply an elegant technical solution in search of a problem. And as Steve Lucas said, “No one wakes up in the morning and says, ‘I really want to install HANA.’ They wake up with problems to solve…. Partners make it real.”

 

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