Acumatica Summit 2020 - with great growth comes great responsibility

Profile picture for user brianssommer By Brian Sommer January 29, 2020
Summary:
The headline takeaways from the Acumatica Summit 2020 prompt reflections on new responsibilities.

Acumatica

Acumatica’s Summit 2020 kicked off this week in Las Vegas. The firm’s growth has been impressive the last few years and they’ve clearly outgrown many hotel/conference facilities to house their show. Last year, Acumatica had 1500 attendees at its Houston event. This week’s event has approximately 2500 attendees (a 65+% one-year increase), a jammed expo hall and, probably the most important ingredient: a lot of happy customers from what I could glean.

As an aside, some of the earliest Acumatica events I attended had maybe 100 attendees and most of those were new or potential implementation partners. The growth has been breathtaking.

Acumatica started off a few years ago as a scrappy financial accounting software firm that hoped to take market share from the old Solomon SMB accounting software install base. Over the years, the product has matured functionally and can now serve a number of mid-market firms (not just the SMB segment). The product line is almost always sold via distributors, VARs and others. Acumatica has a big marketplace with over 150+ integrated solutions available to customers. Besides financial modules, the firm now has Payroll, e-commerce, MRP and more.

Here are some of the headline takeaways from the event. 

Acquisition of JAAS

JAAS is a Midwest-USA MRP solution built with Acumatica platform components. The two firms have worked closely together for years and have had a number of joint market successes. This week, JAAS agreed to become part of Acumatica. Financing for the deal came from Acumatica’s owner, the private equity firm EQT Partners.

Colleagues Jon Reed and others weren’t too surprised at this deal as the firms have been getting closer and closer over the years. It has been a slow courtship that many of us have seen coming for a while. I felt like I had a ticket to the movie: Sleepless in Seattle/Bellevue that starred Tom Hanks as JAAS and Meg Ryan as Acumatica.

I suspect the deal will trigger a short-term surge in deal flow for JAAS. While I chatted with JAAS’s COO John Schlemmer at the show, numerous Acumatica customers stopped to offer their congratulations on the deal. However, there is a subtext to these congratulations that’s worth noting: now that JAAS is permanently part of Acumatica, it makes JAAS MRP a far more attractive solution especially to those firms that have been on the fence. While I don’t know the deal economics, I suspect this one could be accretive in a short timeframe.

Acumatica already has people in the Ohio area where JAAS is based. In my conversation with Acumatica CEO Jon Roskill, he said they don’t intend to move people or otherwise disrupt things with JAAS.

The deal also has a number of benefits beyond the cross-sell opportunity to existing Acumatica customers. These include:

  • JAAS gets to leverage Acumatica’s larger and intense R&D group. This should trigger ever more rapid development of the MRP solution set and, over time, keep it market current/relevant.
  • JAAS can more fully tap into Acumatica’s global network of distributors and VARs.
  • If JAAS had any prior capital constraints pre-deal, Acumatica’s access to capital could be quite beneficial in product or other expansion plans.

New Payroll module

I was pleasantly surprised to see Acumatica announce the release of a new payroll module. This solution was designed with complex (think union and trades-based industries like construction) businesses in mind. I look forward to a more detailed review of this solution in the near future. I believe I heard the solution will initially be available for the US and Canadian markets (but please verify that on your own).

New Process Manufacturing & Quality Management solutions for 2020

One of Acumatica’s ISV partners, BatchMaster Software, will develop quality management and process management solutions on the Acumatica platform. The Quality Management product goes into Beta testing in March this year. The Process Manufacturing solution moves to Beta in August 2020.

While many discrete manufacturers have adopted multi-tenant cloud solutions (e.g., all of Plex Systems customers run in multi-tenant mode), process manufacturers have been slower to adopt it. However, Acumatica management believes that large numbers of food manufacturers, just to pick a sub-vertical, will be ready for this. 

What rapid growth can trigger

While growth is almost always a good thing to see (and to celebrate), it will bring new challenges and stresses to a tech company. Modest growth is something many of us can accommodate as we often have the luxury of time to train, acquire new skills/capabilities and to test these in a safe environment all while remaining productive assets of the firm.

But hockey stick growth mode is far more challenging and time-sensitive. For example, if you are a development manager that has clearly demonstrated an ability to manage teams of up to 20 persons, could you run a development group 10X as big in the next six months? Managing hyper-growth requires constant awareness and assessment of the organization and its willingness to scale effectively. Acumatica’s CEO tells me he has this conversation with the board almost every board meeting (and I believe him). He also tells me that he continues to bring in ever more experienced talent all the time to bolster his existing team. That’s not going to stop.

The other growth story

What got a lot less coverage/discussion at the show was how Acumatica got to grow so fast. The lessons here would serve a number of other vendors (if they only paid attention). Here are my thoughts on Acumatica’s growing success:

  • Acumatica doesn’t compete with partner firms in sales and services. Yes, Acumatica will help a partner sell a deal if requested but it rarely interferes with or takes revenue away from its channel.
  • Most of Acumatica’s headcount is in R&D (not Sales and Marketing). It’s amazing how much more code/functionality developers can create while Sales pros seldom create any. Acumatica’s Roskill indicated that 74% of Acumatica’s headcount is in R&D.
  • Take friction, complexity and uncertainty out of contracts and the contracting process. CEO Roskill has been adamant that treating customers well (in contrast to so many of his competitors) makes for happy customers.
  • Happy customers drive more word of mouth referrals and that drives more sales. Can you imagine how many deals Acumatica competitors lose (or never get invited to) because the competition excessively audits their installed base, sues their own customers, hits up customers with surprise fees, crams deals with bogus add-ons, creates unfavorable contracts, etc.?

Acumatica would do well to ensure its brand (continues to) reflect on its good guy image and that its business practices (and those of its channel partners) reinforce that. The brand challenge will require diligence as customers & prospects may incorrectly assume that with growing size, enhanced product functionality, vertical solution growth, wider geographic coverage, etc., that Acumatica will become more difficult and complicated to deal with. If Acumatica keeps its business practices simple, responsive and transparent, its brand should be fine. Acumatica can’t let prospects assume that with Acumatica’s growth, that it will become like its less-customer-focused competitors. The brand must reinforce the difference Acumatica possesses in spite of the continued anti-customer failings of others in this market.

My take

I actually like positive events where many new products and capabilities get showcased. Those events write their own narrative (In contrast, I hate events with no news, marching bands and sponsor infomercial keynotes as I struggle to find anything newsworthy to report).  I also like events where customers, resellers, etc. are positive/upbeat, too. Believe it not, it brings me no joy to pile on the misery with a vendor that has truly screwed up. (I did that last year with one vendor and I’m still in their doghouse!).

Acumatica can take a (short) victory lap now. They accomplished a lot in the last few years and received piles of accolades in 2019.

But with success and growth will come new responsibilities for Acumatica’s leaders. Specifically, they will need to protect the essence of what has triggered this past growth and ensure new team members and partner firms understand those values, too. Further, the brand of Acumatica will need to remain relevant and get reinforced as future growth tries to alter the firm. Competitors will surely take notice of Acumatica’s growth now and the company can expect them to cast FUD wherever possible and/or denigrate the Acumatica brand.

Acumatica’s no longer a small firm that competitors could ignore. It is now racing through its adolescent years and looking to play more and more with the big boys and girls in the ERP space. Time to buy some Kevlar Acumatica!