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The Connected Web

Phil Wainewright

Middle America's Manufacturers Adopt SaaS ERP

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Listen to my conversation with Mark Symonds, CEO of Plex Systems, which delivers ERP software-as-a-service to mid-market manufacturing companies.

In this podcast, learn why middle America's manufacturing companies are turning to SaaS to operate their business systems, and find out what sort of business is most likely to adopt a SaaS solution as the logical delivery mechanism for ERP.

Listen to or download the 7:36 minute podcast below:



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---Transcript---

PW: Mark, people say that ERP is the last application that people will ever move to the cloud. And yet you started selling Plex Online to the manufacturing industry back in 2002. So what on earth convinced you back then that there actually was going to be a market for a SaaS offering in your field?

MS: That's a great question. I joined the company in 2001, and I was a bit skeptical at the time, because the Internet and cloud computing has come a long way since 2001. But as I began to interact with manufacturing CEOs, and VPs of quality and of operations, and CFOs, it was evident that they had been through the nightmares of on-premise solutions and welcomed the approach of SaaS computing for ERP.

So what is it about the online ERP option that appeals to them?

Well, as a manufacturer, especially in the small and mid-size space, it's difficult to attract and retain IT talent and also to have those folks continually trained on new technology and to keep the infrastructure up-to-date. And a lot of manufacturers just don't know how to manage IT people, it's not a core competence for them. So the idea of — they've all had horror stories of a server crashing and not having a good backup; having a key programmer leave and then nobody knows how to run or operate the system; having a failed backup and losing data.

There's just so many issues that they've seen that the idea of outsourcing it to people who live it and breathe it every day has been real popular. Now, it's also important to note that people don't seek us out necessarily because we're on-demand, but rather because we have the best feature set for their business, and that's an important distinction.

Right. Yes, to some extent I guess that the on-demand conversation, if it comes up, is later on when they've said, 'Okay, we want this solution,' and then suddenly it's, 'Oh, but hey, the data's actually going to be somewhere else.' Now Mark, do you have a multi-tenant architecture? Is it all on a shared infrastructure?

It is. We strongly believe in multi-tenancy as the only way to get the true value from software-as-a-service. Otherwise, you're just adding cost and complexity to the relationship between the customer and the software vendor.

That I would go along with, Mark. But therefore the data is co-mingled in a sense, because it's all on the same architecture. So: people tell me that CFOs don't like that. They don't like their precious financial data being mixed up there on servers with other people's.

That's a good point. We've heard that objection early on, but have not in the last five years, perhaps. Once people are educated, once they've learned about the technology, they overcome those issues — that their bits are next to their neighbor's bits. Once they understand that the architecture prevents other companies from seeing their data, then they're more comfortable with a multi-tenant solution.

And what about security? Is that an objection that comes up a lot?

It is a question, I would say, not an objection. But once again, folks learn about it and see the electronic controls and the physical controls that we have in place, as well as the redundancy. They realize that the data is much more secure here than it would be at their facility. Also, we ask them to think about their banking, their online banking, and the information that banks have on them that is exposed to the Web; payroll services; even their audits. Their auditors put process data about them on their intranet so that their auditors can get access to it. So security really becomes just a matter of education.

Right. Right, okay. So you were talking about multi-tenancy and some vendors say that, well, customers want to have the on-premise option. Obviously, with multi-tenancy that becomes less possible. Have you made the deliberate choice of being multi-tenant, being exclusively in the cloud, because you feel it gives you a better position as a vendor?

Absolutely. We do not offer an on-premise solution. Since day one in 2001, we never looked back. Occasionally, customers would ask us, but when we explain the benefits of multi-tenancy and SaaS, they understand. If we did an on-premise solution, then they would be cut off from all of the constant innovation that is happening with the software.

Right, absolutely, that's quite a strong argument, isn't it?

So you're out there, you're spearheading the SaaS and the cloud computing message into the mid-market manufacturing companies of Middle America. Is there a particular profile of company or business that you find is more likely to go — than others — to go SaaS?

That's a great question. As you said, most people think that manufacturers would be the last people to migrate to SaaS. But actually we're finding that the innovators in manufacturing, the people who invest in their business and value information, are way more likely to choose a SaaS solution. They're also more likely to upgrade their ERP from something that was written in the 80s.

But there's the distinction also with the IT leadership. I see two types. There are those that are aligned with the business and really understand the needs of the business and what goes on, on the shop floor. And then there are those who are still aligned with technology and feel that, boy, the kind of server they're running, or the kind of database, or development tools they're using, outweigh the needs of the business. So the IT leaders who are aligned with the business are much more likely to choose a SaaS solution.

And do you think, from where you sit dealing with the types of companies that you deal with, do you see any long term obstacles to people adopting ERP on a SaaS platform? Do you think it's going to be a mainstream choice eventually?

I really do. We're seeing larger and larger customers choose, for instance, our solution for their global operations. One and two billion-dollar companies running the system of record as Plex Online in the cloud. So I think it's the next logical step. The security issues, the connectivity issues, performance and scalability have all been really resolved. It just makes sense as far as a delivery mechanism for ERP.

Phil Wainewright blogs about how businesses are using the Web to get better plugged into today's fast-moving, digital economy.

Phil Wainewright

Phil Wainewright specializes in on-demand services View more

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