Building cloud verticals - Acumatica video review

In my Acumatica partner event wrap, I hit on a big topic for any cloud ERP firm with midmarket aspirations - rolling out vertical functionality. I listed Acumatica's vertical approach as a strength, but also noted that a small percentage of existing partners are ISVs, so the goal is to enable more partners to fill out needed industry functionality.

At the show, I filmed a chat with JAAS Systems, one of Acumatica's most established ISVs. JAAS has built out a manufacturing component that is fully integrated with Acumatica's ERP solution - meaning it has the same look and feel as the core Acumatica product. JAAS Systems' John Schlemmer and Fred Szumlic told me their story and also chimed in on the question of adoption for manufacturing in the cloud.

I'll embed the video, then add some highlights from this and other shoots:

Show Notes
1:17 Moving from client-server to web-based Acumatica browser
2:25 Cloud versus on-premise manufacturing
4:21 Why vertical solutions matter
5:54 Acumatica customer stories
7:38 How to measure a successful go-live
8:43 Advice on developing verticals

In 2010, JAAS Systems knew they had to respond to shifts in the market. The end result was the selection of Acumatica as their cloud ERP partner. Schlemmer and Szumlic talk about the work entailed moving their product from client-server to Acumatica's web-based browser. They also shared a major reason for selecting Acumatica: the ability to offer both cloud and on-premise versions of the software, giving their customers' deployment choices and giving JAAS some protection as cloud manufacturing adoption increases.

Szumlic emphasized cloud is more than a deployment option:

To us, cloud technology is more than just where [the software] resides. Cloud technology affords mobility. It affords access to data files and information from anywhere in the world back to your company, be it the shop floor or at a conference or convention.

It also has some excellent price performance advantages that obviously a manufacturer's always looking for...Cloud technology is still something that I think manufacturers will evolve to because of the advantages it gives them to maintain a competitive advantage.

Needless to say, Schlemmer and Szumlic agree with the importance of vertical solutions:

Acumatica basically has the building blocks - the financials, the distribution, the project accounting piece. They're looking for best of breed partners like manufacturing and a couple other vertical markets, which that gives you the expertise in those verticals in order to round out their product.

JAAS built their Acumatica vertical with a superior user experience firmly in mind:

We were probably the first ISV that actually wrote in their SDK toolset. Again, that was a design philosophy we've always had - we want our product to blend and be an integral part in the user's mind, that the same product that they're dealing with.

Szumlic closed with some words of advice to partners that have yet to take on the challenge of productizing their industry knowledge:

If you truly verticalize, you really have to stay on it. There are times when you want to get off, or you want to deviate because business pressures or the economy are moving something. But once you decide 'This is where I'm going,'  if you build that knowledge base and you build that level of expertise, it pays off, as we've seen that with our Acumatica transition.

The challenge of enabling vertical functionality is not an easy one. Analyst Brian Sommer believes that cloud ERP vendors will need to build out a good portion of a vertical first to reduce partner risk (here's my Acumatica partner event 'wrap' shoot with Brian). During our wrap shoot, Brian had this to say on Acumatica's vertical approach to date:

[Acumatica] wants the partners to move to a vertical orientation. Intellectually, I'm all behind that. Partners will have the lowest friction in selling when they create case studies of vertical solutions. They have customer references, have their own subject matter experts who know a particular vertical very well and they promote the daylights out of it. It'll just make their partners so much more successful that they sell that as opposed to a generic financial accounting system.

Brian went on to note that 'going vertical' is not a cakewalk:

Now, that said, wanting to do that and getting that result are two very different things. For these partners to build that out, they need to make sure that Acumatica's functionality is fairly complete, that they don't have to do too much more extension work to make that happen. And a benefit to Acumatica is because they're using predominately a lot of standard Microsoft tools.

Pretty much any of these partners here can extend these products out. They can't, interestingly enough, with some of the competing products who have proprietary platforms and the like around them that maybe don't even open them to let a partner get in there and mess with it. There is opportunity here for the right, smart reseller who sees it and knows how to stake out the right vertical.

Final thoughts

In a suddenly crowded cloud ERP midmarket, generic solutions are not going to cut it. Solutions with well-conceived verticals and micro-verticals are going to have the edge. Acumatica's partner-centric approach plays well to vertical markets, since no cloud ERP vendor will be able to build out these solutions going it alone.

The open question for midmarket vendors remains: how much functionality are partners willing to build out on their own dime, and is there a middle ground where the vendor can support partners with a good toolset and content to build on? Acumatica seems to think it's found that middle ground - we'll make a point of getting a progress report down the road.

Image credit: Engineering automation building designing.Energy © red150770 - Fotolia.com

Disclosure: Acumatica is a diginomica partner as of this writing, and paid for Jon's travel and accommodations to the Acumatica Partner Summit.