'No one has done cloud ERP' - Not so fast!

Summary:Recent remarks by a Microsoft executive about cloud ERP didn't ring true. A little digging brings clarity around his claims.

Recently, Diginomica’s Stuart Lauchlan published an interview with Kirill Tatarinov, EVP for Microsoft Business Solutions. Mr. Tatarinov made some statements that were intended to position Microsoft’s Dynamics AX product as a public cloud ERP solution in 2015. But were his claims correct?

Claim #1 “No-one has done cloud ERP!”

I didn’t think this position was correct so I decided to reach out to a number of software industry executives, software users, etc., to verify or refute it. 

Here’s what I found out:

I spoke with Director of IT at Accuride, Paul Wright. Accuride is a NYSE-traded manufacturer of commercial vehicle components. Net sales in 2012 were over $929 million. They have 14 operations in three countries. 

In turns out that Accuride is using Plex Software. They made the decision to go with Plex two years ago. They currently have one plant and their headquarters running Plex and will have the whole company (including non-US operations) running on Plex by 2015. Accuride is using most every module in Plex’s multi-tenant, cloud ERP solution. And, should Mr. Tatarinov have any doubts about what that ERP suite contains, here is the Plex product functionality in brief:

plex 1
Image from Plex website

 

plex 2
Image from Plex.com

 

Paul also shared with me that the decision to go with cloud ERP was not controversial. He did add that Finance and IT personnel did want more information regarding security, backups, etc., before doing the deal. When I asked Paul what sort of advice or counsel he would offer others contemplating a cloud ERP move, he said that he had used “cloud ERP in automotive, tools, and prototype worlds" and he saw no reason not to do it.  He added, “If you’re willing to do your own banking online, why not ERP?”

Just based on that one call, I’d say Mr. Tatarinov’s point has been refuted.  But I kept looking.

A couple of weeks ago, I spoke with Sandy Kurtzig, CEO/Founder of cloud ERP vendor Kenandy. One of the things we discussed was their customer deal flow. Kenandy is a cloud ERP solution built on the Salesforce.com architecture.  

Kenandy, one of the newest cloud ERP entrants out there, is definitely targeting ever larger enterprises as customers. For example, one of their reference sites is Yokohama Tire Company.  Sandy added that Kenandy is seeing “lots of Workday/Kenandy deals” – combinations that only make sense if a prospective customer were a large enterprise. One Kenandy prospect, an $8 billion manufacturer, was pursuing a traditional on-premises ERP solution until they discovered Kenandy. Sandy indicated that this firm was surprised to learn that cloud ERP is indeed ready for primetime.

Kenandy is focused primarily on large enterprises as larger entities possess, in Sandy’s words, "the internal people to do big process (reengineering) work".  But the other reason that Kenandy is focusing on this customer segment is that Kenandy didn’t start with a small business solution and then grow it into a large enterprise product.

Claim #2 “Point me at a serious organisation that runs end-to-end ERP in the cloud. NetSuite is not at scale, none of these guys are at scale.”

I’d say that Accuride is a "serious organization" that is running end-to-end ERP in the cloud. And, even if you’d like to quibble with this particular customer’s bona fides, I should point out that Plex has over 300 other cloud ERP customers.  Over three hundred manufacturers running cloud ERP is at scale, in my opinion. It’s multi-tenant cloud ERP, too.

NetSuite has a whole section of their website dedicated to customer references. I think Schaeffer Manufacturing's reference is a pretty good example of a serious organization running ERP in the cloud. Schaeffer is running a large number of NetSuite apps, has revenues over $100 million, and rejected solutions from SAP and Microsoft to do a deal with NetSuite.

Consider NetSuite customer Roku. Here’s a high-growth electronics firm competing with Apple, Google, and others. They chose NetSuite over competing products. Roku has operations in several countries, is experiencing rapid growth, and uses a significant number of NetSuite applications.

Dutch-based Unit4 has been providing a cloud ERP solution, Agresso, for a number of years. One of their customers is ATG. ATG is a $1.84 billion company with 58 legal entities that recently replaced its on-premises ERP solution with the Agresso cloud ERP product line. I’d say that’s a serious organization. 

According to Unit4, that software deal, valued at over $1.1 million included competition from Deltek, Microsoft, and others. Unit4 said: “UNIT4 has completed the onboarding of all ATG sites with a full spectrum of Agresso modules that include: General Ledger, Accounts Payable, Accounts Receivable, Asset Management, Workflow, Time & Project, Planner, Reporting and Analysis Suite and Logistics.”

SAP has a number of companies, like MolsonCoors, running its Business ByDesign ERP solution in the cloud. Their enterprise suite can now be run (single tenant) on the SAP cloud environment, too. There’s even a video about one organization, Schaidt, that just went up in this environment.

And then, there’s the matter of vendors like Workday, Salesforce, FinancialForce, and many more that are building out their solution suites to represent a more complete offering. Workday’s "serious" customers — that is customers using both HCM and Financial modules — include: Brown University, Lifetime Fitness, TripAdvisor, and Service Source.

Salesforce’s customer list  reads like a veritable who’s who of the Fortune 500. They count airlines like Delta and Virgin America as customers. They have Coca-Cola, Burberry and Chipotle, too.

FinancialForce, built on the same Salesforce.com platform that Kenandy and other vendors use, now has a financial, supply chain and Human Capital set of products within in its suite. This makes them a fairly complete ERP solution set in the cloud.

Claim #3: “What we announced a couple of years ago was that the next major release of AX will be available from the public cloud running on Azure. So in 2015 the next major release of Dynamics AX will be available as an end-to-end public cloud ERP. We are going to be the first.”

Microsoft might want to check with cloud ERP vendors like Acumatica and SYSPRO and other solution providers that are also long-time Microsoft partners. These firms built their cloud ERP solutions using Microsoft tools years ago and have had a lot of success selling cloud ERP for years.

Microsoft even put out this web page on its site in 2009 extolling Acumatica’s use of Azure and other Microsoft technologies. Acumatica has more current info on its website where it also discusses its use of Microsoft .Net and other Microsoft platform components.

SYSPRO has been a big Microsoft fan using Azure Cloud, workflow, and a number of other Microsoft tools for years. They’ve even been a Microsoft ISV award winner a few times along with a lot of other awards.

Bottom line: I’m not convinced that Microsoft is going to be the “first” to have an end-to-end public cloud ERP. They might be the latest — but not the first. 

Topics: Enterprise Software

About

Brian is in a unique position to diagnosis the winners and the losers in technology and services. He was the longest running (10 years) and most senior director of Andersen Consulting's (now Accenture's) global Software Intelligence unit - a position that required him to pick the best possible software solutions for hundreds of clients gl... Full Bio

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