Kenandy broadens cloud ERP with CPQ, subscription billing

Profile picture for user pwainewright By Phil Wainewright December 14, 2015
Summary:
Salesforce-native Kenandy has broadened its cloud ERP with CPQ and subscription billing to help customers avoid a SKU explosion in the connected economy

Elephant carrying city on back with clouds © HaywireMedia - Fotolia.com
Cloud ERP provider Kenandy today broadens out the scope of its offering with the addition of configure, price, quote (CPQ) and subscription billing capabilities to provide complete quote-to-cash functionality.

The venture-funded startup, which has customers across a variety of manufacturing and packaged goods sectors, says the new capabilities make it the only vendor to combine quote-to-cash and ERP in a single cloud solution, and the only full-function ERP vendor to run native on the Salesforce App Cloud.

The new capabilities will help prevent customers having to deal with a "SKU explosion," Kenandy's president and COO Rod Butters told me in a phone briefing yesterday. In today's connected economy, the choices customers demand are expanding rapidly, he explained:

In ecommerce we have got used to having lots of product choice and attributes. The other element is the subscription economy. Increasingly you buy more and more things with a subscription and not just the product.

Kenandy's customers range from shopping bag maker ChicoBag, which has to offer a wide range of different options and colors for its products, through to medical equipment maker Philips, which often has to deliver a specific kit consisting of the core product along with one of various different starter packs of consumables such as reagents for use with medical testing equipment, or may deliver a connected product under a subscription contract. Other customers include solar panel suppliers who have complex configuration requirements and sell their products under finance plans that are repaid out of energy buybacks.

SKU explosion

A traditional solution consisting of separate CPQ and ERP applications typically requires the ERP system to hold a separate item code or SKU (stock keeping unit) for each potential combination, said Butters.

If you try to do that in a traditional solution you end up with a SKU explosion and that quickly becomes unwieldy.

Kenandy's integrated approach allows the configurator to send different selections as attributes to the core product instead of requiring separate SKUs for each variation. Similarly, the salesperson can add the relevant billing attributes to the quote. Because of the increasing frequency of subscription-based offerings, the vendor felt it was important to offer this alongside the CPQ capability, Butters told me.

We felt that it was something that had to go hand in hand with the configurator to have the really complete offering.

Increasingly as people move more to subscription based models for their products, they tend to have products that are combinations of the product with the services that go around it. You don't want to have to create a brand new SKU for every configuration that comes up.

Connected products

This trend to subscription-based billing will only accelerate as more and more products become connected with the advent of the Internet of Things, he added.

Ultimately the big news on Internet of Things is the change to the business model and the change to the customer relationship.

For a very long time improving customer relations was something you welded on after-the-fact to the transaction that had occurred. What's so great as you move to a subscription economy and model is that you have an ongoing economic basis for maintaining the customer relationship.

In a subscription world you're monetizing right in line with where your customer's creating value. That really embeds the relationship into the business model ...

Every industry is moving to more choice, more of a product that directly meets the needs of the end user and monetizing what the business produces.

At some point in the next 10-20 years, if you don't have a product that somehow is connected, your product's going to look weird.

Extending usage

The full list of features in the Kenandy Quote-to-Cash product, per the company's press release today, includes:

  • Configure, price, quote (CPQ) capabilities for optimal pricing and quoting
  • Order management for the receipt and tracking of orders
  • Inventory and product visibility
  • Fulfillment and delivery via integrated logistics
  • Consolidated invoicing for products, subscriptions and services with multiple invoicing options
  • Returns management and installed base tracking
  • Payment receipt and bank reconciliation
  • Credit and collections management
  • Full accounting and financials
  • Full visibility through dashboards and reporting

Rather than charging extra for the new capabilities, Kenandy makes them available to every user as its business model is baseed on extending usage across an organization, said Butters.

Our product doesn't have modules. You sign up by users, everyone gets access. Our upsell is that we engage more of the business.

A "better ERP"

Kenandy believes that its integrated approach, built native on the Salesforce platform, has created a distinctive ERP offering that goes beyond previous generations. Butters concluded:

Really our mission is to create a better ERP. We truly think cloud technology allows us to do things fundamentally different than has been done in ERP before.

If you try to port existing technology to cloud infrastructure that's not a recipe for success. We have very carefully thought through how this has to run on a multi-tenant architecture.

Having every aspect of functionality based on the same object table means that features such as traceability are built-in, and all events run across a real-time GL. This delivers tangible business benefits, he argued:

It's simpler to report on, it's more agile to adapt to change, it's easier for a broader group of poeple to utilize. All of these things make it quite different from a traditional ERP.

Butters also contrasted Kenandy's approach to that of best-of-breed cloud vendors, who require customers to connect different applications together using APIs and messaging. He said the company's largest customer is former Del Monte spinoff Big Heart Pet Brands, a $2.4bn run rate CPG company that eliminated 90 different applications when it implemented Kenandy.

We've seen this a number of times where even very small companies are not resorting to best of breed applications but are using the platform to do what they need to run their business.

My take

This latest announcement does a good job of differentiating Kenandy against competitors in the cloud ERP space. There are three distinct groups of competitors: alternatives on the Salesforce platform, other cloud-native enterprise application vendors, and finally incumbent enterprise software vendors.

Against the Salesforce-native crowd, Kenandy is pushing an integrated solution message that will play well in some quarters versus specialist CPQ players such as Apttus (which also plays on an integrated solution but without financials) and Steelbrick. It also goes up against emerging vertical industry players such as the Salesforce-native consumer packaged goods offering that Accenture is developing. Its trump card in all these cases is the inclusion of financials, where its primary competitors in the Salesforce ecosystem are FinancialForce.com and Rootstock, and against whom it can now play its CPQ capabilities.

Against other cloud vendors, its case is one that I alluded to last week when writing about Workday's competitive positioning in the cloud platform space. Best-of-breed vendors will argue, often with some merit, that their solutions offer deeper or more specialized functionality. Whether customers will be persuaded compared to the 'one-throat-to-choke' argument of an integrated underlying platform is yet to be tested in the cloud-native market.

Finally there's the positioning against incumbent vendors, where the argument from Kenandy and other cloud-natives is that getting it right in the cloud means starting with a clean sheet. I heard the same positioning advanced by Workday's Mark Nittler the other week. But as one commenter said:

If only the future would be as linear as the narrative we’ve created of the past. I'd put a big caveat on any vendor-invented inevitability of them perfectly surfing the disruption-du-jour while their short-witted competitors just sit their celebrating past successes. As always everybody just wants to get the big budgets, telling whatever story required to get them.

In other words, this positioning has a different story depending on which vendor you're talking to, because each of them tailors their definition of next-generation ERP to what they offer.

Image credit: Elephant carrying city on back with clouds © HaywireMedia - Fotolia.com.

Disclosure: FinancialForce.com, Salesforce and Workday are diginomica premier partners.