Acumatica Summit 2024 - customers sound off on sustainability, AI, and why ERP user licensing matters

Jon Reed Profile picture for user jreed January 30, 2024
Summary:
Acumatica Summit showcased a confident cloud ERP vendor doubling down on its vertical ERP strategy. But the era of AI and ESG brings a whole new set of disruptions. Here's my first take on Acumatica's response - and what I learned from customers in Las Vegas.

Acumatica customer Polywood onstage at Acumatica Summit 2024
(Acumatica customer Polywood at Acumatica Summit '24)

When it comes to cloud ERP for SMBs and midmarket, Acumatica does a lot of things right.

Acumatica's user licensing, customer bill of rights, and rigor with industry ERP "editions" have checked my boxes (though historically, Acumatica hasn't made as much noise about their user licensing as I thought they should). At this year's Acumatica Summit, that last criticism changed, in a big way.

But Acumatica can't get comfortable. Suddenly, it's a different ERP market. Buyers are asking tough questions about AI and data security. New approaches to ESG bring the possibility of real-time tracking inside ERP, rather than static reporting after the fact. But do customers buy into Acumatica's own sustainability emphasis? And how do you balance talk of scaling businesses, when plenty of companies have their hands full in a sluggish and volatile market?

Acumatica Summit news - behind the headlines

Day one brought me in contact with a flurry of Acumatica customers - and we got some answers. But first, the day one news. Acumatica summarized the keynote announcements here: Acumatica Launches New Era of Business Growth and Product Expansion at Summit 2024. Notably:

  • Acumatica formally announced its Professional Services Edition, which will be publicly available later in 2024. The Professional Services Edition doesn't come out of nowhere. Acumatica has been building up to this formal industry solution, via its focus on project accounting, billing, and scheduling.

Acumatica already has a customer bill of rights. Will Acumatica issue something similar for AI development? Yes, though with a twist. On day one, Acumatica CPO Ali Jani laid out a three part framework for Acumatica's soon-to-be-released principles of innovation - for any new technology, not just AI: 

  • "responsible," with guardrails to protect customer data
  • "practical," to address real-world needs
  • "valuable," driven by customer input

Jani told the media/analyst group the same thing he told me in The principles of customer-centric ERP - how does AI fit in?. Acumatica has an experimental approach for new tech such as AI; only about 1 in 20 of these limited AI pilots ever become part of the broader product offering. Compared to vendors that imply every AI offering that customers touch automagically turns into gold, that is a refreshing position. Much of the AI that solves enterprise problems will come out of co-innovation, but out-of-the-box versus co-innovation is an AI debate for another time.

During our group media/analyst discussion with John Case, some additional news nuggets surfaced:

  • Acumatica's OEM strategy (where vendors like MYOB sell Acumatica exclusively in certain global regions like Australia-New Zealand) is stable, but Acumatica plans to focus on deepening existing OEM relationships rather than adding new geographies, e.g. Acumatica moved into the UK on its own, without an OEM.
  • Acumatica's Retail Edition isn't going anywhere - at last year's Summit, there was some impression that the Retail Edition might shift, and simply become a more fluid part of how customers open up consumer channels, as in "everyone is a retailer now." But Case said that Acumatica will continue to bring on new e-commerce and retail customers via the Retail Edition. The combination of industry editions working together, including retail, is also becoming more popular for Acumatica customers in manufacturing, distribution and so on. These companies are not traditional retailers, but they want direct-to-consumer capabilities via Acumatica, and in some cases, partners like Shopify.
  • Industry editions are paying off - Case confirmed that the industry editions have been the key to Acumatica's "best-ever" year in 2023: "The work we've done over the last three years to create native industry editions of our product has been an incredibly valuable exercise. All of our growth is coming from the big industries like manufacturing, distribution, and construction, particularly this year, construction and manufacturing."

Acumatica brings consumption licensing to the forefront - customers chime in too

This year, I can't give Acumatica a hard time for burying the lead on consumption pricing. During the day one keynote, John Case put it front and center. He boiled down feedback on how Acumatica helps customers compete:

What are the key elements of the Acumatica solution that make this happen? There are three things. First, it's built-in scalability. Second, it's growth-friendly licensing. The third is our multi-national capabilities.

Several customers I spoke with brought up the user licensing as well. During the opening keynote, Renee Schafer, Director of Operations with Acumatica customer Telesis, said:

We love the licensing model. What you have to understand is our previous ERP was a user-based licensing model. It was so difficult and expensive to add users that instead we arm-wrestled between the companies about who got to use the system, you know, manufacturing versus the restaurants. In our previous ERP, [our data security company] had only two users. Now 62% of our employees use Acumatica. Limiting our users slowed us down, and we didn't even know it. Well. Acumatica makes it easy. We can easily add any user at any time, across any of our companies.

Modern ERP must support business model changes

In an unsparing economy, ERP must help companies be more efficient. But now, more is needed. Modern ERP must support better decision making with trusted, real-time data. On day one, I talked with several customers who have achieved operational gains with Acumatica. The decision making aspect is the next phase in getting value out of cloud ERP, but customers do need to push for it - it doesn't just happen because the capabilities are there. Putting dashboards in the hands of field managers is the next initiative of Acumatica customer Alpha Insulation (I'll share more details in a future piece).

But business model change is crucial also. In this economy, we can't just do expenses whack-a-mole. Historically, ERP applications were often more of an impediment to a new business launch than a help. This seems to be changing. We heard a good example from Telesis. After the keynote, I asked the Telesis team about how easily they were able to launch their hydroponics business, given that their other businesses on Acumatica, including data security and a brewery, are pretty different. They told me:

For us, it was an easy transition. We have a corporate entity that oversees all the operating units, if you will, so we're able to wear a lot of different hats. That's where we get a lot of our synergy is... With all of our businesses, we were able to implement it inside of one of the tenants that already had a manufacturing structure, so to speak. So we were able to kind of build up that as we put it into the different tenant.

As far as how it flows, the brewery is similar in a lot of ways to the hydroponic business. So we felt like we had a pretty good infrastructure that we could build off of, as far as setting up the inventory, the chart of accounts - then we just had to determine how the flow of the product was going to go through the system, the steps needed and the information that we needed to gather. 

Information such as? "The pH balances and the fertilizer - how do we measure that? How do we get that into our system? So, for us, we felt like we had a pretty good infrastructure already built with the brewery."

Acumatica customers on AI - build it for us, and manage the risk as well

A full review of Acumatica's AI strategy will have to wait, though my last interview with Ali Jani is a pretty deep dive. But it's worth noting - no surprise - that customers expect Acumatica to deliver AI where it's useful, and minimize their own risks. Whether it's the AI skills gap, data privacy, or IP concerns, Acumatica customers want to move ahead, without taking on all of that AI risk profile. And yet, customers have employees who are using consumer GPT tools in their work - not the best situation. In that case, any productivity gains come with a big risk tradeoff. As Polywood, Acumatica's "Impact customer of the year," told us during a media/analyst session:

What makes the headlines with AI is how tech companies are using AI and kind of bleeding edge, but we're manufacturing something there. Tech is adjacent to what we're doing... So to hear something like what Ali said today, that Acumatica is going to be leveraging AI and Large Language Models, is what we like to hear, because we are trying to get on the bleeding edge of AI and figure it out ourselves.

What we're looking for is partners who are going to do that and figure out how to bring the value to normal companies like Polywood. There's way more way more companies like us than there are multi-billion dollar technology companies. We use AI a little bit with some of our customer service software, but we're really interested to hear where Acumatica is going to go with this.

Acumatica is pressing on ESG - but how can customers benefit?

Acumatica has made its position on sustainability clear, but now we're in a new phase of ESG: move beyond reporting, and help your own customers track ESG related processes/metrics in real-time. I asked Polywood's leadership team about whether they need more from Acumatica in order to live up to their own core sustainability concerns. Their answer surprised me.

When Polywood says they take sustainability seriously, they aren't messing about: they were the first company to make outdoor furniture from recycled plastics. As they told the media/analyst group:

We've got the whole concept of zero waste... Every plastic is going to become converted into a piece of furniture that leaves our door, but it goes so much further - it's just embedded throughout the culture. As a technology leader, we're looking at zero waste as: where's the waste in our processes? Obviously, everyone needs to be cost-conscious, but just how can we bring it out of automations in place to help that goal of zero waste?

As for the what-do-you-need-from-Acumatica question, the Polywood teams says they already have the ESG functionality in Acumatica to get the job done:

From a bill of material standpoint, we can identify our sources of plastic. We can have different versions of bills of materials. So we can track everything, all the way through to the finished product. Acumatica is a very adaptable, customizable system, so you can kind of configure it any way you want. We've been able to ingest various sources, and we can adjust things on the fly as needed.

Polywood also sees sustainability advantages in their Acumatica cloud deployment:

Being in cloud-based software, we don't have to over-provision servers and utilize electricity that we don't need. We are a seasonal-based company and we can bring that server size down when we're not in our peak season, and then turn it right back up when we're in our peak season.

My take

It's encouraging to hear how a company as knee deep in sustainability as Polywood can get what they need from Acumatica, simply by configuring to their tracking needs. However, when I asked about supplier management, and screening/monitoring supplier's ESG behaviors, Polywood said they have been focused on other core issues for now, and turning to supply and logistics issues in Acumatica would be a next step. I believe Acumatica will have much more to say on embedded ESG functionality in the future.

Acumatica seems to be executing very well, but this is not a too-good-to-be-true story. During today's product keynote, Acumatica said they would be bearing down on reporting and dashboarding, probably the biggest criticism of Acumatica's core offerings I hear from some customers currently (though there are a wide range of strong third party solutions in this area, and some customers swear by the native dashboarding, particularly the side panels).

While Acumatica is hitting the right notes in its practical/ethical approach to AI, when it comes to delivering AI that actually helps customers, all ERP vendors have a lot to prove. It's a plus when you have the kind of customer trust - and deep workflow automations - Acumatica already has, but we'll need to see how this plays out. As I write this, the Summit isn't over yet; let's see what else we can learn.

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