Acumatica , ERP, Cloud and "A" Students

Acumatica , ERP, Cloud and "A" Students

Summary: It's getting a lot clearer to pick the winners and losers in ERP today. The cloud is the main cutting tool to identify the forward movers. A review of Acumatica is instructive in this regard.

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The Cloud computing concept keeps marching on and it's making ever deeper progress in the ERP space. Firms like SYSPRO, Epicor, Unit4/Agresso and others offer multiple deployment options for customers and prospects. Software customers can choose traditional licensed, on-premise solutions to hosted cloud solutions to full multi-tenant SaaS solutions. Choice is good.

Today, I did a call with Doug Johnson, VP of Marketing at Acumatica. Acumatica is an ERP software provider that targets the same customer base as Microsoft Business Solutions, Sage and others. Our conversation was interesting on several levels:

1)       Acumatica permits users to license the product outright, have the product hosted on a private cloud (via Amazon or Azure) or run on the Acumatica cloud (which is a Windows Azure Cloud). The product line has no client footprint. Customers can switch delivery mode at any time (provided they are on a relatively current release).

2)      Acumatica has a relationship with one channel partner that caught my eye. Acumatica has Finance, Distribution and CRM applications but a channel partner built a MRP manufacturing extension using the Acumatica SDK (solution development kit). This is quite reminiscent of what occurred between NetSuite and their channel partner RootStock. Salesforce.com has literally thousands of partners that have built complementary applications (e.g., FinancialForce.com) using their PaaS (platform as a service). Channel partners want PaaS solutions as they want to get the royalties that come from thousands of firms licensing their intellectual property. It's an additional income stream for channel partners and integrators.

3)      Acumatica is a very Microsoft (MSFT) centric solution. The product line is built with C# and Visual Studio technology. The company has its own proprietary SDK but I didn't have time to fully evaluate it.

4)      Multi-tenancy is sort of supported at this time. Acumatica permits users to schedule the timing of their upgrades to new releases. Unlike most multi-tenant solutions (where users get a grace period (of say 30 days) to evaluate and sandbox test the new release and then get upgraded, Acumatica permits a customer to stay on one release forever. While this has advantages for those customers who heavily modify applications, it is a tax on the vendor as they must upgrade each customer individually (not en masse).  Doug said that the products running on the Azure cloud platform are designed as multi-tenant applications but implemented in a single-tenant fashion. We had a good discussion on the merits of this approach and while this approach has its pluses, it does have its costs.

Acumatica has over 100 customers now. While their fastest implementation took only 3 days, their average deal takes 2-3 months to full implementation.

I want to come back to the first sentence of this post: The growing presence of cloud options for ERP buyers today.

What's amazing to me is the breadth of some of the new cloud ERP solutions and the slow speed of some old, established ERP players to get to the cloud. Plex Online (their user conference is next week) has one of the biggest solution sets to serve manufacturers. Their deal size and market successes continue to grow. NetSuite (whose user conference was this week) has attracted the attention of major integrators (Accenture, RSM McGladrey, Baker Tilly) and has the RootStock solution mentioned above. The market is definitely moving and so, too, are vendors and integrators.

Even vendors who could only port an on-premise solution to a cloud environment are now talking about other delivery options, platforms and more. There's definitely movement in ERP today but the movement is predominately coming from the newer or more nimble players.  Software buyers would do well to evaluate the cloud progress of short listed vendors they are considering as this is a clue as to how well the products will continue to evolve over your useful life with their software. For example, if a vendor is continuing to hawk an old client/server solution and has no cloud-variant of any kind to sell, then run from this vendor. Something could be really wrong in their R&D group. They either:

-          Forgot how to innovate

-          Don't watch the market for emerging trends

-          Can't innovate (due to lack of funds, people, brainpower, etc.)

-          Or, lazy

None of those are ‘assets' in my book.

Vendors who can only cobble together a bolt-on application or two that run on cloud platforms may get some credit for trying but they remind me of the "C" or "D" student in the back of the classroom that only does the bare minimum to pass the course. I like to run with the "A" students. They seem to always know what's going on.  It's those students I always want on my group or team projects because they help ensure we'll all get great grades. It's not much different in business when it comes to picking technology providers.

(Disclosure: I was with Accenture for 18 years and have a few shares in the company's stock. Some of the companies mentioned have been clients or have licensed reports from my firm.)

Topics: Software, Enterprise Software

About

Brian is currently CEO of TechVentive, a strategy consultancy serving technology providers and other firms. He is also a research analyst with Vital Analysis.

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  • ERP prices

    It's nice to see ERP companies moving to the cloud, even if it only helps the local IT department save time/money with deployment/maintenance. Considering that these ERP companies still charge hefty fees to access their software, I think smaller and cheaper single-feature solutions are going to start taking market share if the big guys don't reduce their prices.
    dansen
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