PowerPlex 2019 marked the keynote stage debut of Plex Systems CEO Bill Berutti. We're almost a half year beyond my piece on Berutti's Plex appointment (Plex Systems appoints new CEO Bill Berutti - here's a first look at his plans).
But if you expected a big change in tone and style, that wasn't in the cards. As usual, Plex had a literal parade of customers on stage - six total - who spoke to the keynote themes:
Finally, after a whole year of shows, a vendor (@PlexSystems) (and CPO Richard Murray) has the moxie to ask THE onstage question to a customer:
— Jon Reed (@jonerp) May 14, 2019
Plex is wary of overhyping tech like AI and IoT. So when Berutti spoke enthusiastically about the huge manufacturing opportunity ("$12 trillion global manufacturing output"), he countered that with the challenges ahead:
And - these challenges manufacturers must face: pic.twitter.com/si0ubfjH8l
— Jon Reed (@jonerp) May 14, 2019
But what about Berutti's own report card? Plex is coming off its best quarter ever, continuing its pace of double-digit growth. This PowerPlex broke the record for number of prospects on site. But is that growth enough for Plex's investors? And where will Plex find its next phase of growth?
Can Plex be to manufacturing what Salesforce is to CRM and Workday to HCM?
After the keynote, during a sit down with Berutti, diginomica contributor and pesky questions specialist Brian Sommer pressed Berutti on investor expectations. Berutti echoed his point from my prior piece that Francisco Partners is in it for the long haul. Then he added:
They believe in the transformational opportunity that's in front for manufacturing. They say, "Listen, what Workday did for HCRM? What Salesforce did for CRM? There's something like that in manufacturing." They believe that Plex is in that kind of unique position, given the fact that we're in the cloud, and given that we have all the domain expertise on the manufacturing shop floor - so they've decided to be long holders of this business.
Hold on: becoming a Workday or Salesforce type presence in cloud manufacturing requires a different pace of growth than Plex has enjoyed to date. So where will that growth come from? Berutti says it boils down to two things: a change in mindset and a change in strategy. On mindset, Berutti told Sommer and I:
Plex has had incredible success, but I don't think it's realized its full potential. Some of that is because Plex has been a bit of a conservative company. It hasn't moved as fast as it could to realize its potential.
As for that change in strategy? It's a combination of two things: doubling down on Plex's cloud ERP strengths for midmarket manufacturers, while moving upmarket through a modular, cloud manufacturing pitch that avoids pushing Plex as a full ERP suite to companies that are either in a best-of-breed mentality, or wary of a full ERP rip and replace. Of course, a modular Plex means a modernized architecture. When Berutti came on board, I was wary of any changes to CPO Richard Murray's Plex platform push. Berutti:
Platform means something different now. It doesn't mean this big rigid thing you have to use 100% of. Platform means it's flexible. You can integrate Plex with five other things and get a unique set of value out of it, because the services are exposed in a modern way. So I'm totally on board with what Richard's doing.
Large/sophisticated IT shops will mix and match the apps and cloud services they need. Berutti sees a place for Plex there:
I don't care if they use a single piece or the whole thing. I don't care if they use the API and never even touch our user experience. They're using the data to create transformational value in their company.
Plex growth plans - Berutti reveals specifics
In response to a question from Cindy Jutras in our analyst session, Berutti broke out the growth plan further:
1. Run your entire company on Plex - expand the cloud ERP/manufacturing footprint in Plex's sweet spot, where 650+ customers are now. Berutti calls this the "shop floor to top floor" model, which can range from smaller innovators like Seven Marine to big shops like Toyotetsu. During a later meeting with Plex's Anurag Garg, VP Product, Analytics & IoT, Garg said that 90 percent of manufacturing facilities are less than 500 employees - with plenty of white space. Berutti: "Quite frankly, that's probably the easiest market opportunity for us to access. The competition is weaker and our fit is spot on. So we'll continue to grow there."
2. Moving upmarket - as above, fitting a "componentized" Plex into large enterprise, best-of-breed landscapes. Berutti pointed to another keynote guest, customer American Axle:
They made the decision that they're going to implement Workday. Quite frankly, in certain situations where you're willing to pick best in class, it has some advantages over our HR solution, right? We think this market that is ripe for opportunity, whether it's us running a whole plant, or as Richard pointed out on stage, a standalone MES strategy.
That plays to Plex's "restful API" platform push:
American Axle plans to roll us out into plants where they may integrate with Workday and Oracle Financials and run us for the shop floor exclusively, because of the competitive advantage they get out of our process control and connected shop floor capabilities.
Berutti sees that move upmarket as another $10 billion market opportunity, with the chance to displace legacy or homegrown MES solutions. Eventually, as GVP of Strategy Jim Shepherd said to me later, Plex could sell standalones like quality or plant maintenance, and spread from plant to plant, or branch into more modules. Bottom line: Plex wants to narrow its positioning to "the cloud for manufacturing." That messaging challenge falls squarely to Plex's new CMO, Robin Saitz.
Growth plan - check. But what's next?
I asked Berutti what he wants to get done this year.
- Material progress on the platform modernization. Including: the restful API push.
- Get a handful of customers that are in production on Plex IIoT and getting an ROI. (Garg told me today that of the initial dozen or so in Plex's IIoT initial "fast track" program, eight are now live).
- Relaunch the message of Plex and the value proposition.
- Upgrade service, support and customer success management - Sales Chief Officer Fred Hehl has been tasked with modernizing Plex's customer success program. Meanwhile, Chief Customer Officer Todd Kisaberth has taken over Plex partner management.
Whether Plex can become the Workday or Salesforce of manufacturing is off hours fodder for analysts on barstools. But I do understand Sommer's position that unless Plex can demonstrate "hockey stick" growth in the next few years, investors might look to make a big move. However, executives I spoke with at Plex who are close with Francisco Partners believe that Francisco understands that the dynamics of cloud manufacturing are different than CRM and HCM, including the reality of significantly longer sales cycles.
Plex continues to excel with its ability to engage analysts with customers. They make sure that PowerPlex is focused on peer networking, not on pyrotechnics and DJs blaring loud jams all over the place. Ergo, I'll have customer stories to follow.
At last year's PowerPlex I felt two things were hanging over Plex. The big one was the protracted search for a new CEO, which mercifully ended last year. The second was the push to get customers moving forward onto the newest Plex, Plex UX. To a person, Plex leadership has acknowledged they stumbled on this important migration at first. However, once Plex put CTO and founding member Jerry Foster in charge of Plex UX, momentum picked up. Though only twenty percent of customers are on Plex UX yet, all new customers are Plex UX. I had lunch with a table of customers talking about the move to Plex UX. They spoke to the value of "hybrid mode" (running Plex Classic and Plex UX at once) to help Plex Classic die-hards transition. They cited hard work around security role configuration, but they also said Plex's latest tooling was helping with that.
A minority of customers who invested in the early days in "customer-funded development" may have a tougher road if a custom program they funded isn't a part of Plex UX, but I'm told that's a fringe situation currently. Last year I would have cited Plex UX adoption as an impediment to Plex's growth plans. Now I'll downgrade that to a fairly minor issue, though Plex executives disagree with me, insisting that the development resources required to maintain Plex Classic going forward into Plex Classic 2021 maintenance mode are minimal. Therefore, these two growth obstacles seem to be largely behind Plex now, clearing the way for a new momentum.
Not all manufacturers are convinced of the cloud value prop. They also worry about downtime more than they would for cloud HR or CRM, though Plex is down so rarely they can overcome that objection (as in 99.998%). To boost the impact of SaaS manufacturing, Plex needs to build on that combo of apps, platform, industrial IoT and analytics across all that data. Currently, analytics is the weak point in that strategy. IntelliPlex, Plex's traditional reporting solution, has had its day, but it's not a next-gen analytics product, nor is it able to handle IoT/machine data.
So, look for Plex to have a lot more to stay about analytics roadmaps at next year's PowerPlex. Garg is looking hard at this issue; I expect a solid plan to emerge. Overall, Plex's platform play has made laudable strides under CPO Richard Murray, but partners extending on that platform remains a work in progress. For Plex to help customers with an alternative to custom code, and to eventually build out/expand verticals, Plex will need a robust apps marketplace, and many partners building apps. Two years after I wrote about Cumulus Consulting (they won Partner of the Year this year), Cumulus remains the leading partner building out apps, along with Kors. Hopefully Plex's MPaaS announcements this week (manufacturing platform as a service) will help spark that.
Finally, I agree with Berutti: Plex will need to have more customers demonstrate ROI with next-gen projects to inspire more conservative manufacturers to follow suit - and buy into the not-easy transformation needed. He points out that some Plex customers are already making that case:
As the technology becomes more pragmatically available to deliver real ROI, you see people then begin to adopt it and realize that. So think about what you heard from Toyotetsu. They got up and running in a matter of months with full PLC integration, full shop floor to top floor integration.They pulled significant savings out of their supply chain costs by having full visibility into every activity that was happening on the shop floor. And they did it in months. Without Plex, they wouldn't have had that level of visibility. Without moving to full shop floor integration, they wouldn't have been able to achieve that.
Berutti - who received strong reviews from other Plex employees I talked with - sounds ready for the push ahead:
I've never worked anywhere less than five years, and I was at PTC for 17 years. So I'm a builder. I don't come in to do something quickly.
End note: Brian Sommer joined me for several of the interviews quoted from in this piece. Also, while I didn't have space in this piece for Plex's global plans, they did announce the opening of new office in Prague, which was selected for several reasons, including a central location to serve European customers. Updated, 7pm PT May 15, with a couple of clarifications to the "My take" section.