Acumatica (a circa 2007 application software firm founded by a number of ex-Solomon executives) recently announced version 4.1 of its cloud ERP solution. One of the pleasant surprises I and others learned about it was that the product was now multi-tenant.
Most cloud software falls into a couple of familiar camps:
- Hosted, single-tenant solutions;
- SaaS-querades: the hosted version of an on-premises product; or,
- Multi-tenant cloud software
In the last category, a multi-tenant solution would usually have these characteristics:
- All users share one copy of the application simultaneously much like millions of us do every day with Google’s search engine web application.
- This single version of the software is patched, maintained and enhanced by the vendor – not the customer.
- Data may be logically separated in a shared physical data base.
Over time, new options have emerged that address emerging needs of some cloud software customers. Unit4 Agresso and NorthGateArinso allow customers to select the timing of when they upgrade including the ability to delay a major release/upgrade. This elasticity is very important to businesses that may have very real business conflicts with the vendor’s upgrade or release schedule. Larger, multiple business unit firms find this flexibility quite valuable.
Recently, I spoke with Stijn Hendrikse, CMO of Acumatica, about their different cloud offerings. I wanted to get more detail on these since their recent channel partner conference in Washington. I have attempted to relay this understanding in the following paragraphs.
Acumatica appears to have a number of deployment options it gives its customers (and channel partners). Interestingly, they see different kinds of businesses choosing different deployment options. My (not Acumatica’s) descriptions of these options follow.
- On-Premises – This deployment style is for Acumatica customers that want to control every aspect of their ERP experience. This control may be expensive as the company will have to acquire, support and periodically refresh its computer hardware, systems software, database technology and more. This customer is also committing to doing all of their own maintenance on the applications. Who will buy this solution? It will probably resonate with firms with large IT departments, firms that want to make a number of modifications to the core ERP functionality, and, firms with trust issues.
- Hosted, single-tenant version of the Acumatica products – In this scenario, a third party (not the customer) owns the computing environment (i.e., the hardware, database, etc.). The Acumatica ERP software is running on a cloud service like Microsoft Azure. This Azure cloud service is the predominant choice used currently by Acumatica and its partners; however, it just as easily could be Amazon’s AWS, too. In this environment, the customer has their own copy of the software and their data is physically and logically separated from other customers. In essence, this environment is similar to what a customer could have in-house/on-premises with one exception: the third party hosting centers have the ability to instantly and painlessly expand or contract capacity and power based on actual customer needs. On-premises solutions generally don’t handle scale changes as well. Who will buy this? Buyers will probably include firms looking to transition to the cloud especially as their older on-premises hardware ages out or buyers with lumpy growth. Like the prior category, this deployment method will likely appeal to larger firms with complex and/or geographically dispersed operations.
- Hosted Acumatica solution from Acumatica – This solution is where things get really interesting. When a new customer goes this route, the default deployment option is set for single-tenant although Acumatica can outfit them with a multi-tenant version as well. In the single-tenant environment, Acumatica gives each customer their own instance of the Acumatica code but all customers co-exist on one Azure SQL Server database. Each customer can test and upgrade their software independent of other customers. Acumatica, though, does the actual upgrades. Acumatica reports that the cost to do this for any one customer is actually quite low for them with most upgrades taking just a few hours (to at most a day). An Acumatica executive said these upgrade costs are way less than the fees Acumatica collects from customers. Acumatica allows these customers to be on the current version or up to 2 versions back to remain supported. Who will buy this? This deployment strategy will likely appeal to the mid-to-large Acumatica prospects who want many of the multi-tenancy benefits but need the flexibility to determine when upgrades should occur.
- Multi-tenant via Acumatica directly – Customers can now get a multi-tenant solution from Acumatica. What they get is a solution where different web URLs point to the same shared software code base yet each customer has unique data space on the Azure SQL Server database. Acumatica upgrades all of these customers en masse as new releases occur. Who will buy this? An Acumatica executive believes many of their smaller customers will like this full multi-tenant deployment method as it offers the greatest peace of mind and convenience especially for firms with more straightforward or simpler needs.
So far, Acumatica has had some interesting uptake of these different deployment models. For example, one of their partners is a CPA firm that offers a cloud accounting service to its clients. In their deployments, all of their customers are in one full multi-tenant instance. The accountancy needs only to go to a single drop-down list to pull up a specific client’s books. In another case, a restaurant chain has all of its units in a single multi-tenant instance where the accountants can access the books of all locations. The books are all independent from one another yet the accountants can easily move between them.
What’s actually happening here is a layering of single and multi-tenancy in one technology environment. In these examples, an entity (e.g., the CPA firm) is essentially creating one single-tenant version of Acumatica with hundreds of multi-tenant, similar, books beneath this. This would be great for multi-division conglomerates, too.
Acumatica has two major partners that have taken the multi-tenancy further. One of these, Visma, has apparently taken apart the product and made it more multi-tenant by increasing the scale and number of companies running on one instance of the software. They are targeting small businesses who want a very efficient and low maintenance solution. Visma’s version of multi-tenant Acumatica runs on Visma’s own data center. All customers use a single version of the software. Upgrades are automatic and pricing is on a subscription basis.
I believe choice is a good thing for consumers. The newer cloud solutions are showing software buyers a growing range of deployment options that open up different ways to control upgrade cycles, data location, service levels and more. Also, some customer groups (e.g., large, complex conglomerates) will likely find some solutions just too limiting or will find the controls these solutions impose on their firm unworkable. Choice is needed.
What we’re seeing are the beginnings of customer segmentation in the cloud ERP space. Some buyers will want trouble-free solutions where the vendor does it all for them. Others want and need a lot of control. Different buyers therefore need different solutions or options.
The evolution of software, thankfully, never stops. And the options Acumatica now offers probably won’t be the last we’ve heard of new cloud deployment options for a software buying market that is continuing to refine its wants and needs.
Software vendors that are still trying to get out one version of their products in a multi-tenant cloud world are falling further behind. These are the vendors that have to re-discover how to put speed and innovation into the same sentence.
Disclosure: Acumatica provided travel and lodging for me at their partner event.