The future of cloud ERP is vertical - Acumatica customers share proof points

Jon Reed Profile picture for user jreed November 9, 2021 Audio mode
Summary:
I've been carrying on about the micro-vertical future of cloud ERP - time to flesh this out. Enter Acumatica, with stats and customer stories that bring industry ERP to the forefront.

Clive Coffee - Acumatica
(Clive Coffee in action)

We've done plenty of pontificating - and projecting - on the future of ERP lately. We've asked whether ERP even has a future.

When it comes to the future of ERP, talk bells and whistles if you want. Pitch autonomous ERP, or "intelligent ERP." I say the future of ERP is (micro) vertical.

The traditional separation of industry systems and ERP is no longer viable. Yes, companies still toil to integrate the two.

But if you are serious about workflow automation, modern UIs, and embedded AI, you can't have green screens and operational data silos. I don't care if it's MES or restaurant management or construction - proprietary systems running alongside ERP make even the newest ERP systems look like clunky, back office dinosaurs.

If I'm going to stake my claim on this, I need proof points. Acumatica has provided good ones over the years, from being the first multi-tenant/SaaS ERP in the construction industry (Sage Intacct has now joined them), to empowering partners to build entire verticals on their platform (JAAS Systems, now owned by Acumatica, did this in discrete manufacturing).

This bolsters my argument, but I need more proof points. This year, I got them. It started at the Acumatica Summit in Vegas, where customers shared industry stories with me. It continued this fall at the recent (virtual) Acumatica analyst day. During his "state of Acumatica" address, CEO Jon Roskill rolled out the stats: best 3rd quarter in Acumatica history, 8000+ customers, 10,000+ Acumatica Community members, 4.8 billion transactions.

"The industry editions now make up 78% of the Acumatica SKU mix"

But it was Roskill's data on the rise of Acumatica's Industry Editions that sat me up in the virtual chair. Roskill told us that Acumatica's Construction, Distribution, Manufacturing, and Retail-Commerce Editions were driving the bulk of the SKUs:

The industry editions now make up 78% of the Acumatica SKU mix. That's from 20% four years ago. This shows you the growth and the reception we're seeing from our customers.

Most cloud ERP vendors call a modest product extension a victory. But Acumatica continues to enable partners to build out big chunks of functionality, via their xRP platform. A couple partners have now built out Acumatica-for-process industries. eWorkplace Apps offers an Acumatica process industries suite (PDF), as well as an Acumatica Quality Management solution, fulfilled by Acumatica.

"I want to know at any point in time how much inventory we have"

At the Acumatica Summit, I got a first-hand view of industry ERP from customers, including Jessica Yutrzenka, Supply Chain and Operations Manager at Clive Coffee (she is pictured above). As you might imagine, Clive Coffee faced off against challenging supply chain conditions while getting espresso makers and coffee machines - perhaps the most important quality-of-life equipment the last two years - into as many hands as possible. As Yutrzenka said in this Clive Coffee video with Acumatica, having all the operational processes on the same platform, including tight integration with Shopify, is crucial:

Acumatica has helped me in my role with instant and accurate reporting. I want to know, at any point in time, how much inventory we have, particularly now that we have two warehouse locations.

I think the most exciting part about Acumatica is the fact that our shipping and our inventory is the same system. We have our finance and our operation system directly talking to, and related to, our Shopify site. So any quick changes we need to make  - they happen in real-time. And we're able to solve problems really quickly.

During our sit-down, Yutrzenka told me that several of Acumatica's industry editions factored into their ERP selection criteria, including business model expansion into field service:

Our CEO did a lot of the research on which ERP system would work for us  We also are looking at potentially doing a lot of service opportunities for our customers. So if you have any questions with an espresso machine or whatnot, how can you service the customer. So we were interested in the field service, and also the manufacturing and distribution enhancements. We just liked all the different opportunities that Acumatica had.

As supply chains buckled, this was all put to the real-world test. Yutrzenka:

We're still being tested right now, because of all the transportation challenges at the moment... This whole past year has been really interesting. We had to stock everything that we could, to the best of our ability, but our manufacturers were shut down for two months, because they were in Italy. Milan was really the hotspot, even before New York was almost a hotspot, back in early 2020.

Talk about a trial-by-fire: "I was brand new to the company," recalls Yutrzenka. So how did she pull it off? Close communication with the sales team was a must. Pulling data from integrated systems made that happen: 

It was about being able to get the inventory we had, but at the end of the day, I just had to really work closely with our sales team to communicate, 'This is what we're going to have; This is what we're not going to have.'

Inventory accuracy sparked the right improvisation:

We said, 'Let's open up and do something a little bit different. Let's open up pr- orders, have customers buy units and give the best estimate to our ability when it's coming.' Then we basically air freighted everything. Now, come 2021, we have the supply. We don't need to air freight anymore, so we're sea freighting everything, and that has been really interesting because of all the delays.

Expanding warehouses was also key:

The Nashville warehouse is a huge advantage to our supply chain, because it cuts our transportation times in half. Originally, we were importing it all to Portland, Oregon. So that helps with stock and inventory replenishment strategies.

Spohn Associates - an early adopter of cloud ERP for the construction industry

Sean Barnett, CFO at Spohn Associates, had a vertical tale as well, but from a different industry: construction. How does Spohn Associates specialize? By "installing all the pretty things you see on buildings," explains Barnett in this Acumatica.com post on Spohn Associates.

If you're wondering why modern ERP-for-industry matters, consider the state of Spohn Associates prior to Acumatica. As Barnett told me, they were scrambling to manage operations between an older on-premise ERP system from Sage, and an Access database that he built:

That was kind of our project management database. I pulled all the data over from Sage, so we could actually view it in a way that made sense. I probably built over 450 reports in there, for all kinds of different things. And then we were using Excel sheets - all the normal stuff.

Knowing you need a change is one thing. Finding the right solution is another:

We looked for about two years, trying to find a solution that would fit both accounting and operations. We have multiple companies with multiple year-ends that all need to actually talk to each other... And: we're kind of a specialty contractor. We have some special requirements that no software will do; we're one of about two companies in the country that do what we do. So we needed something that had that customization ability, which Acumatica definitely does.

The wrap - change is a constant. Industry ERP doesn't solve everything

Modern ERP software, geared for a micro-vertical, and implemented by a partner that knows the vertical inside and out - that's a big improvement over the generalized ERP back office of old.

But that doesn't take away from the push for change, and the challenges it brings. That goes both ways: to the customer and the vendor. On the customer side, cloud ERP does a much better job of engaging casual users, who were likely intimidated by the green-screen-style system (if they even had licensed access to it). But for super-users of the old system, they might not welcome the learning curve a new system brings - even if the end result will be better.

Barnett talked about his "passionate users," and how they might think the new system requires them to do "more clicking," when it's actually the same or less - once they get a handle on the changes. "It's always the user adoption," says Barnett. What are his adoption tips and tricks? Start small - don't roll out everything at once. For his team, Barnett started with costing and core reporting, and built from there. At some point, the corner turned:

Once they start asking questions and they're already bought in, that's, that's kind of my tickler. [When they say] 'Okay, I really like it, but can we see this; can we see that?'

Which brings us to the vendor side. Choosing a new vertical package means growing with the software. Barnett understood this. The advantage to SaaS ERP? Much quicker/easier updates, with customer requests included. Ideation in the Acumatica Community allows customers to upvote on what they need next. Barnett saw that dynamic at work at  Acumatica events, sharing ideas with other Acumatica Construction Edition customers.

The results are coming: Barnett told me he's seen more functionality improvements in the last year and a half with Acumatica than he saw in the last fifteen years with his prior system. That's typical, I find, for SaaS ERP customers, whatever the vendor or vertical. You might start with less overall functionality, but the gap closes pretty fast, and in targeted ways you have input on. Obviously, this has big implications for ERP software selection, which used to boil down to elaborate functionality comparisons. As Barnett puts it:

I'm always happy with every release. Every release has at least one or two things where I'm like, 'Oh, awesome. Yeah, that fixed something we kind of had an issue with - or really wish we had.'

Verticalized ERP is not a cure-all, but I hope this supports my case - before customers install more siloed "cloud" systems.

Updated, November 10, 2021, 6am UK time, with a number of smaller updates for reading clarity.

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