I've long argued that an underrated key to cloud ERP vendor success is an applications platform - one that enables the creation of micro-verticals by partners - and even full-fledged verticals.
For ERP platform advocates, September 2017 was something of a milestone. That was when cloud ERP vendor Acumatica announced that the manufacturing vertical built by ISV partner JAAS Systems was officially part of the Acumatica product line, as the Acumatica Manufacturing Edition.
At the time, analyst and diginomica contributor Brian Sommer wrote:
The JAAS Systems JAMS (JAAS Advanced Manufacturing System) manufacturing application suite is now officially within Acumatica’s ERP solution. This brings a lot of discrete manufacturing functionality (and potential customers) to Acumatica. The Jams solution was already built on the Acumatica platform so customers will already see a consistent look and feel, data model, reporting tools, etc. The deal also opens up Acumatica for more aggressive marketing into Food manufacturing, medical device firms, job shops, make-to-order manufacturing shops and much more. This is not a loosely-connected integration and should be highly accretive to both JAAS and Acumatica. It should also trigger a lot of net-new channel partner signups, too.
Since then, the debate on cloud ERP platforms has heated up - with vendors paying lip service to their ISV growth plans, but not necessarily delivering. I've talked with JAAS Systems for years about the opportunities/challenges of building a full-fledged vertical, but what does that decision look like today? What advice does JAAS have for other ISVs with vertical ambitions?
Discovering the Acumatica platform
I asked John Schlemmer, Chief Operating Officer at JAAS Systems, to take us back to when it all began in 2010. Did they intentionally set out to build a full manufacturing vertical for Acumatica? Not exactly. Schlemmer:
Basically, we had Dynamics SL, and we had written a similar product for them. We were actually at a Microsoft Convergence event. One of our partners, a VAR out of Asia, said, "hey, you guys really need to go talk to Acumatica."
When a software market slows, shake things up. Time to think cloud:
At the time, SL was pretty much flat. We basically said, "We're going to go cloud." And so we asked, "Who needs a manufacturing application?" So we investigated. We got introduced to Acumatica, and went through the due diligence with them, and ultimately said, "This is what we're going to do." And we were actually the very first ISV that they ever had.
Things moved quickly. JAAS released their first edition of JAMS manufacturing for Acumatica in November of 2011; they landed their first customer that same year. One big key for JAAS? The speed of development on Acumatica. Rewriting their Bill of Materials and MRP functionality onto Acumatica took just ten months:
The speed at which we could develop was just incredible. And so that just made it that much easier.
Expansion and growing pains
That doesn't mean things always went smoothly: "Obviously, and Acumatica knows I talk like this, but there were some bumps as they grew." No surprises - when I dig into these stories, there are always times of adversity. What dictates the outcome? The caliber of the relationships. Schlemmer:
The good news is that they would step up, and they would help us solve those issues. So we bet the company on Acumatica. We've always been an integrated solution. We wrote on the framework just like they do. Over the course of a few years, we got closer and closer and closer and closer to Acumatica.
Today, JAAS supports Acumatica's VARs on a global level with the manufacturing edition:
We basically mirror Acumatica's programs. So we do the implementation assist on manufacturing and we support Acumatica. If there's any issue, we're there. Their people are trained, they're doing demonstrations, we've helped train them, but we're there in the background if they need us. And I'd do it again in a heartbeat.
One deal breaker - especially with a tightly integrated vertical like manufacturing - is the look and feel. If your add-on looks like an add-on, it's a much tougher sell. Schlemmer says even before they became part of Acumatica, they had that look and feel nailed down:
About two or three years ago, we had a VAR that kept saying, "Well, this is a third party product." And they were having a major issue with it. And so about 30 minutes into the overall presentation, it was time for us to show manufacturing. We started the presentation, showed two screens and some lady went, "Nevermind." If people don't know that it was developed by a third party company, they would never see the difference.
Schlemmer doesn't like to place too many market limits on their vertical, but he cites strengths in electronics, capital equipment, industrial equipment, building, trucks, and transportation.
I typically talk about environments, so make-to-stock, make-to-order, configure-to-order. We've got people in repetitive; we've got people in job shops. The one that people get confused on is batch. So we do process. It's batch process, but you know, we probably have forty customers that do batch processing, from beer to cosmetics, health products, shampoo, some chemicals, herbal remedies, so we have a lot of customers in the batch environment. But if it's continual, that's not a market we play well in. So Coke-type products we don't do today. We will, but we don't do it today.
Rolling the dice on cloud manfucturing
JAAS Systems didn't just roll the dice on Acumatica - they also rolled the dice on cloud manufacturing. Though cloud manufacturing is still gaining momentum, Schlemmer has seen enough adoption to be confident in that bet also. Particularly the shift to a subscription model:
It goes along with what we were talking about earlier, which is manufacturers moving to the cloud, and Acumatica vertical editions, and adding things on like that. The manufacturing edition was, in essence, one of the first ones, because we've always been there. I think that from manufacturers moving to the cloud, finally - manufacturers were on the forefront with MRP back in the 60s and 70s. They've been the laggards on the cloud side, which is interesting.
We've seen that mix. Acumatica's seen that entire mix flip to where 70% to 80% is now SaaS, or subscription, I should say. If they're not, then there's specific reasons. It could be a market. It could be a country. It could be they're out in the middle of nowhere and have no Internet connection. But other than that, most everybody seems to be doing some type of subscription right now.
Schlemmer believes the biggest barrier to cloud manufacturing adoption was/is security objections. Those concerns are finally receding:
Probably five, six years ago, you'd walk in to a customer, and they're not going to let their bill of materials on the cloud, because of security. That perception finally starting changing... At the end of the day, they're safer in the cloud than they are on-premise, because AWS and Azure are better at security than anybody on-premise. I think that's starting to be realized by a lot of these companies.
The wrap - customer impact is the benchmark
In the end, it comes down to customer impact. Schlemmer is especially encouraged by the trend of multi-national manufacturers signing onto Acumatica. One example? Surfboard manufacturer Firewire (see my piece, Building high-performance surfboards to catch the global wave - Firewire's cloud ERP journey).
The stories are stacking up; Schlemmer says their Acumatica manufacturing license sales have tripled since 2017. Schlemmer's formula for future growth? Keep expanding the VAR relationships, the global footprint, and the functionality.
I think that it's a combination of the product getting additional enhancements and functionality, as well as a broader Acumatica VAR involvement. We have monthly meetings with Asia, the UK, the people in South Africa.
JAMS was doing well with VARs before, but now that things are official with the Acumatica Manufacturing Edition, it's at another level:
A lot of VARs, they had no problem selling our product. However, as soon as we made this announcement, they told us, "Everything's great. It just makes it that much easier." Like I said, we're just kind of a development center for the manufacturing.