I usually don't hold back on diginomica, but I did last week. In my last Acumatica piece, I snuck in commentary on the CEO change (Acumatica changes CEOs - will supply chain planning become a focal point?)
But I also kept a few things back, in anticipation of my pending interview with Acumatica's new CEO, John Case.
When it comes to CEO changes, "anticipation" is not always the word people use. Let's face it, the word "trepidation" comes up also - especially with a company like Acumatica.
Why? Because a big part of Acumatica's success is its customer/partner community. Not to mention Acumatica's determination to shake up cloud ERP, by reducing pricing/license friction, and other sources of ERP customer angst. These commitments are more fragile than one might think.
On the backchannel, Brian Sommer nailed this down:
CEO/leadership changes are one kind of ‘material change of control’ event that gets my spidey-sense tingling. When a CEO change occurs, often other changes follow. Will Acumatica's new CEO bring in other executives into leadership roles? I usually pray that doesn't happen, as I've seen so many firms shove out lots of great people, just to replace them with politically connected, not productive or innovative, colleagues from other firms.
This creates a stagnant firm, and fast. A CEO change is also tough on the workforce as they won't know exactly where they stand with the regime change. With the Great Resignation in full swing these days, Acumatica's new CEO would do well to manage the internal culture and other aspects of the firm's key asset: its hard-to-replace workforce.
Acumatica's new CEO - what changes can we expect?
I don't cover executive movement often. The proof is in the results, not the sound bites. But Acumatica's leadership has always been candid with me, so I'll give it a go. Starting with: what are your goals going in? Case responded:
I think Acumatica has a chance to really accelerate in this space, and take on more and more of this midmarket ERP challenge, starting in North America, but not just in North America. We're growing extremely quickly. We think that the other vendors in the market either are behind us on the products, or are not there in terms of how we look at verticals.
We have a chance to really grab market share over the next couple years. That's our primary goal, to accelerate growth in the current business model. We're not looking at dramatic business model changes at all. We're looking at: can we take what we currently have, and double it, and double it again in the next few years?
Let's face it: every CEO makes changes. What kind of changes can we expect here? For Case, it's about taking Acumatica to a different level of growth. The processes to support that must be in place:
We went from a few dozen employees to a few 100 employees very quickly. We're going to go from a few hundred employees to maybe 1,000 employees next. The processes that you run, in some cases, are manual. In some cases, you're the bottleneck as a team. It sometimes takes different eyes, and different people, to think through the next phase of growth. So my real goal here is to say, ''What is the company going to look like in 2024, 2025? How many customers is that? How many partners is that? Therefore, what sales process do we need? Therefore, what marketing process do we need?'
Obstacles to cloud ERP growth
Case steps into a company with many unusual ERP strengths, from platform to partner morale to community. But there are always obstacles in the way of growth plans. Obviously, Case will encounter the geopolitical/global economy headwinds all companies must now grapple with. But what about the Acumatica-specific challenges? Case:
Brand is an increasingly interesting challenge. One of the things I hear from customers and partners directly is: 'We're excited about you; we just don't know much about you yet. I do think we'll do more things on the brand front to support our demand gen, because I think we're still relatively unknown.
International growth is another challenge:
We think a lot about geographic dispersion. We're still very North America-centric. We use an OEM model outside of North America, except for a few countries like the UK, where we're building a standalone business.
Then there is the acquisition question:
We've done a couple of interesting acquisitions, we could probably do many more if we had the right engine to do that.
Case is right to focus on branding as a core Acumatica challenge. Sometimes branding can be splashy, but without lasting impact. Acumatica can cut through the insufferable "we have cloud ERP too!" market noise by refining their "good guys/gals of ERP" image. They should push the pricing model, which is much closer to consumption-based, isn't tied to user seats, and is very difficult for competitors to even think about emulating.
Industry-based marketing via Acumatica's vertical markets (and partners in those markets) might also raise the profile - but in a narrow-casted way, one that reinforces what Acumatica is good at. Acumatica CMO Todd Wells is one of the sharpest CMOs I've met; it will be interesting to see how he and Case tackle this.
In terms of growth models, Case has two main options: overseas expansion, and/or doubling down on verticals (and sub-verticals). The vertical aspect is clearly a no-brainer, with Acumatica's growth directly tied to vertical plays. One thing Case revealed: he's planning to take Acumatica's customer success program further, with more dedicated resources.
Here, he has a good head start. When I wrote this piece to challenge vendors' overhyping of customer success, Attention vendors - please stop the customer success hype train, unless you have these six proof points, I raised the bar intentionally high. Acumatica has made more strides on that checklist than most, though embedded benchmarking needs work.
Customer success, however, has a boomerang effect. The more you talk about it, the more the pressure is on to deliver it. As my colleague Phil Wainewright wrote, the only meaningful customer success definition is outcomes. Here, Case will have to prove it out. As I've noted, I also think Acumatica has a big (underutilized) opportunity to bear down on AI-enabled demand planning, fed by their customer-facing apps.
As the war in Ukraine progresses, every software vendor will be expected to clarify their Russian ties and investments. This is certainly true of Acumatica, which has Russian funding (and development) history - though as Brian Sommer and I reported in 2019, when Acumatica went under the EQT Partners funding umbrella, "This deal also removes Acumatica's remaining Russian investors from the equation." Case brought up conversations their leadership team is having:
We obviously are a very global company. We have people in North America, Asia and Europe. We have a very loved and respected set of employees - people that we want to keep - that are currently in Russia, and a few in the Ukraine. We're trying to figure out how to help them through this crisis. You may have seen some of the blogs we've written about that recently, and things we've said.
Many of them have already moved out, to other places like Sri Lanka and Canada, and we'll do more of that. It's unique to every company, but we're certainly thinking about that here.
Alas, this war is far from over, and neither are these geopolitical conversations. That's life as a modern CEO. Let's see how Case fares.