Reflections From PowerPlex 2013
I’ve just returned from Plex Systems’ 12th Annual PowerPlex Conference. While in beautiful downtown Columbus, Ohio, I spoke with Plex execs and staff, customers and other industry analysts. At the conference, Plex introduced its new CEO, and made several announcements including:
- New analytics capabilities that add real-time visibility into profitability
- A brand new website to support “The Plex Community,” a virtual, collaborative ecosystem that allows Plex employees, partners and customers to contribute to addressing issues, solving problems and sharing best practices
- The rollout of a new education services program that includes classroom training and live online instruction and Plex TV, which will offer courses so customers can learn at their own pace
- Introduction of the next generation Plex Manufacturing Cloud user interface, which features an intuitive look and feel for an optimized customer experience
This is all great stuff, but throughout the event, first and foremost I was struck by how different this company is. I’ve been in this business almost 40 years and while others might share some of the characteristics, I have yet to find another quite like it. So what’s different? In short, it is its culture of engagement and sharing. The conference theme was “Get Connected,” which was appropriate but nothing new at Plex.
This culture of sharing has deep roots that reach back to when and why Plex first became a “SaaS only” company in 2001. It wasn’t because SaaS and cloud were the hottest topics back then. It wasn’t because the company wanted to be on the bleeding edge of new deployment options. It 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 Cloud because it was SaaS. They bought it because of the broad and deep functionality, in spite of the fact that it was deployed and delivered through the cloud.
So the frequency of updates is obviously one way Plex is unique. The company could be updating the software as often as every day. Does that mean the system appears to the user to be in a constant state of flux? Of course not. Most users don’t see anything different from day to day. All innovation is delivered in what Plex likes to call “opt-in” enhancements. You have to make a conscious decision to turn them on.
This spirit of sharing also created very close relationships between Plex and its customers. Of course back in 2001, ERP systems were not as full-featured as today and this naturally led to gaps. When you have a development team excited about new rapid application development tools and anxious to please customers, those gaps get filled quickly. 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. Remember, because the Plex Cloud is 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 of those “opt-in” enhancements.
As a result, the lion’s share of innovation came from customer-driven enhancements. In the world of the Plex Cloud, customer-driven also means customer funded. So a customer would pay Plex Systems to enhance the product and other customers would benefit. In other cultures 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 view this as making a contribution to the community. And they expect others to do the same. Each gives a little, and everyone gets 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.
In other ERP “cultures,” particularly those that grew up around traditional on-premise solutions, if an enhancement is put in the standard product, customers expect to get it for free, figuring they are already paying for it with their maintenance dollars. The mindset of a Plex customer is different. The customer has already chosen the Plex Cloud as the system of choice, which means that customer is willing to fork over the cash to subscribe to the software. But it is also willing to pay to make it just that much closer a fit. Of course having to pay also keeps customers from asking for something that doesn’t really add value. So there are built in checks and balances.
This is part of the “cloud DNA” that other companies that are new to SaaS are seeking, largely through acquisition. SAP admitted openly that the acquisition of SuccessFactors was more about acquiring the company’s “cloud DNA” than it was about expanding its human capital management (HCM) offering. I suspect Oracle was attracted to Taleo for much the same reason, although it failed to embrace that DNA and Taleo customer satisfaction was rumored to have plummeted.
Of course there is more to cloud DNA than customer community. There is also the struggle to get employees, particularly sales people, to buy in. When a sales person is accustomed to getting that big commission up front from initial software licenses associated with on-premises solutions, it is hard to get them to make the shift. Cloud DNA requires a new way of thinking. But that’s the natural way of thinking at Plex.
At Plex, nobody takes a customer for granted. They can’t afford to. All contracts are signed for one year. Admittedly, it isn’t easy for a customer to walk away from an ERP system, but if a contract has to be renegotiated every year, the smart service provider will do whatever it can during the year to make sure the renewal goes smoothly. Pricing, combined with this “year at a time” approach is also unique at Plex Systems.
Most ERP vendors price their software on a per user basis. Plex negotiates a fixed price for the enterprise, each year. Of course this is based on usage, which is closely related to number of users, but even if usage expands more than predicted during the course of the year, the price remains fixed until renewal time. When paying strictly on a per user basis, as usage grows with the adoption of a new module or the addition of new employees, companies are tempted to pull back so as not to incur additional cost, limiting usage and (in turn) limiting value.
Plex operates on the assumption that the more the ERP is used, the more value will be derived. Therefore it encourages companies to continue to grow and expand. Of course if usage has simply been allowed to expand with no added value, the customer has a chance to reconsider and scale back as part of the renewal process. This seems to be working. Our 2013 Mint Jutras ERP Solution study finds about 50% of employees at manufacturing companies use the ERP system, but that percentage grows to 73% at companies using the Plex Cloud. And I heard more than one conversation between customers indicating PowerPlex had energized them to do even more with the system.
Those Plex customers also help to make the company different. At conferences like PowerPlex, if you listen carefully in sessions or over lunch, you often detect an undercurrent of dissatisfaction. Customers come primarily to “network” with other customers and sometimes “networking” means hanging out, venting and complaining. Not only did I not hear this kind of muttering, I didn’t even see a lot of “hanging out.” When sessions were underway the hallways were empty except for a few Plex employees guarding the doors of those rooms that were already stuffed to capacity with eager and engaged Plex customers.
Many of these differentiators can be attributed to Plex being run as a small company. Yet with the infusion of capital from new investors (Francisco Partners and Accel Partners), a new CEO, to be followed by a new CMO and VP of Sales, I don’t expect Plex to stay small much longer. While it has grown quite steadily over the past decade, I also expect future growth to be both accelerated and more focused and planned. Growth means change. Can the company preserve this culture of sharing and engagement as it grows in this way?
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. In the beginning, Michigan-based Plex focused exclusively on the automotive market. It then saw similarities in the requirements of automotive to those of aerospace and defense, and then food and beverage (think traceability). It leveraged its strengths and used customer-driven enhancements to push deeper into those markets. But 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. Will that change the culture?
Although only time will tell, I don’t believe that it will. But that doesn’t mean there won’t be some change. First of all, I expect to see less customization required. Plex will likely be more selective than it has in the past in taking on major customization efforts. This is partly because of the maturity of the product. There are just that many fewer gaps in functionality today. Significant gaps means the product isn’t a good fit for the prospect and Plex seems willing to walk away from that business. Furthermore, the ability to custom-configure the product without programming has advanced significantly, particularly with its VisionPlex (for customizing look and feel) and IntelliPlex (business intelligence) products.
To help make this transition, Plex has assured customers that customer-driven enhancements are not going away entirely. It has empowered both customers and partners with an SDK (software development kit) and made it easier for both to create their own enhancements. How does this work in a multi-tenant environment? Think of it as developing the enhancement in a separate compartment and registering the change with Plex.
But more importantly, it is also publishing its own road map, which shows active and planned projects, as well as those that are under consideration. Industry veteran Jim Shepherd, VP of Product Strategy, and his team own these roadmaps and will be updating them periodically and sharing them through the new Plex Community portal (also announced at the conference). This will allow customers to keep tabs on what other customers are requesting and is an important element in keeping the customers engaged while Plex holds a tighter rein on directing the product’s future.
The other announcements made at the conference, beyond this new community portal, are all important in helping Plex Systems scale its business without losing sight of trends in the market such as mobilization, the consumerization of IT, the demand for more and better data for decision-making and increased executive engagement with ERP. But most importantly, they help Plex Systems to preserve its differentiation and its culture of engagement and sharing through this transition of high growth. It’s really about Plex being Plex.