Doug Johnson from Acumatica, a cloud based ERP provider, talks about the advantages of web apps, SaaS, and the “cloud”. Doug explains how Accumatica distinguishes between these terms that are often used relatively interchangeably.
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The music in the show, Have Mercy — Big Walter Horton, was provided by Mevio’s Music Alley.
Transcription
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Doug 00:00:22 Hi. My name’s Doug Johnson. I’m the VP of marketing at Acumatica. We are a cloud based ERP provider. And I’m here to discuss a little bit today what our application is, what we’ve done as a company, and also to describe some of the technologies, and my opinions of them, on cloud web technologies and software as a service.
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There sure are a lot of opinions about what all those words mean, right?
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Doug 00:00:50
Absolutely. So let me get started with the cloud. So everybody’s talking about the cloud these days and they’re expanding that definition to include any piece of software that’s ever been written now has some “cloud” story. So let me see if I can home in a little bit on, you know, what my thinking there is. I see it as, you know, a way to allow companies and users to really be able to scale their applications up and down and in order for them also to pay for only resources that they want to use. So when I think of the cloud, I think of virtualization technologies and load balancers and everything in a sophisticated data center that allows you to deploy software so that it can be used easily, scaled, and made available on-demand whenever you want. Now that type of a cloud, so there’s many ways you can get software into the cloud. One way is you can take a piece of software and deploy it on a particular cloud service, such as Amazon EC2 or we use at Acumatica Windows Azure as our cloud provider. There’s another way that people have been putting things on the cloud, which is they’ve been simply taking their application and hosting it on a virtual server. And then they’ve been hosting their clients on virtual clients and they’ve called that a “cloud and SaaS” solution. So now there’s a lot of differences that come about from the way that the cloud is actually used. And what I’ll do is I’ll get into some of those and discuss, you know, why one might be better than the other and some of the benefits for end users, if that’s all right.
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Ryan 00:02:35
Yeah. Yeah. It’s funny because I think a lot of times, you know, some people say the cloud is, well, anything that’s off-premise, right?
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That’s right.
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But, yeah. It doesn’t really seem to be a full serving term. And then you’re saying; when you say “cloud” you’re definitely talking about, you know, cloud computing specifically. Not necessarily this idea of, you know, “as a service”. Because you separate “as a service” business models as sort of this whole third fork of the conversation.
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Doug 00:03:02
That’s right. And one more quick point: the cloud can be deployed internally or externally. A lot of people think of cloud as something that they have to push off, but if you’re a very large enterprise then you might actually think of having a cloud in your internal data center. And that way you can help scale your resources and share hardware across multiple applications if you have them. So the cloud, think of it as a big hardware-type benefit: you get to save on hardware. Now going beyond that, doing all the external software as a service, the cloud actually enables software as a service to a certain extent because using the cloud; you can deploy your applications easily and scale them. So, if an external provider wants to offer an ERP application, such as Acumatica’s doing, we can use a cloud provider. And we don’t have to buy hardware, we didn’t have to buy software, and deploy an operating system, and do all that thing. All we had to do was sign up for Windows Azure. And then once we had signed up with Azure, we were able to offer our customers the ability to get to our application using only a Web browser. And that’s what SaaS is. So the cloud enabled SaaS, but the cloud was not SaaS. And some of our customers don’t even like SaaS, to be honest with you. Our customers are split about 50% for on-premise and 50% on SaaS. So in other words, 50% of our customers enjoy getting rid of the need to manage servers and to manage their applications and worry about purchasing Windows and SQL Server licenses. Whereas the other half tend to like to actually control it, see the blinking lights sitting in their data center, they might have spare hardware sitting around that they could use for our application, and they might have a lot of IT expertise which they could easily use to go deploy our application. So SaaS is enabled by cloud, but as I said, not all of our customers actually like that. Some enjoy keeping it on their premise. Some of them may have other reasons than just IT expertise and spare Windows servers. For example, some may have some compliance issues or security issues. Although in general, I would say that an externally deployed application in a, you know, Tier 1 data center is just as secure and just as in compliance with most regulations as anything done inside an organization. So that’s a little bit of a discussion about cloud and how it enabled SaaS. Is it all right if I get into the Web technologies a bit?
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Yeah. Go for it.
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Okay. So now there’s a differentiator with how cloud and SaaS work with Web and non-Web technologies. So a Web-based technology means you can access all the work you need to do and all your application attributes 100% through the browser on your computer, your handheld device, or whatever it is. So that means you can use a Macintosh at home and a PC at work if you want and your application will look and feel the same whether you’re working in home or whether you’re at the office. Now that’s one big advantage of Web applications. And Web applications, Acumatica’s a Web application and it’s run in the cloud and it’s run in SaaS. So all the benefits I’ve already talked about with cloud (hardware savings), with SaaS (the ability to outsource everything), and now with Web (remote access, cross-platform compatibility, access from anywhere, real-time data), all that goes along with our application. There’s some other ways to do cloud and SaaS, which do not involve Web applications. That would be just taking a regular client-server application and deploying it on a hosted server using remote terminal software or remote access software to get to that particular server that’s running on the cloud. Now that may benefit you in terms of your server hardware savings. And you might be able to get some of the benefits of not having to deal with the server environment, but many of the real advantages, such as not having to install upgrades on all your client’s computers every time a new release comes out, are completely lost unless you’re using a Web-based application in the cloud. That’s just one example but there’s numerous others on why a Web application’s very well-suited for cloud.
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Ryan 00:07:36
Cool. Yeah. And I think as far as the big differences about, you know, having your app running in the browser, I think that’s a discussion people are more likely to just agree with. I think a lot of people are turning that way. As long as you don’t need a really rich interface then there’s no reason not to at this point, right? It’s just good for business models.
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Doug 00:07:52
Yeah. One of the cool things we’ve seen that’s happened over the past couple of years. So for people looking for accounting solutions, you know, we use a number of lead generation services. And none of them used to ask the question, you know, “What type of, do you want a Web-based environment or not?” But now, I’d say in the past year or so, that’s become a standard question that they ask to anybody who’s saying, “Put me in touch with vendors who offer ERP software”. So it’s very interesting to see how the world’s changed so much just in the past couple of years.
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Ryan 00:08:28
Yeah. It almost seems instead of starting the conversation with, “I wonder what are the pros and cons of each”, it would be, “Well, why wouldn’t you want it to be a Web-based solution?” At least, well I’m biased though, of course.
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Doug 00:08:42
Yeah. And so am I, of course. I’ll push for a Web-based solution every time because it makes more sense. It’s the architecture of the future in my personal opinion. And the only reason that you wouldn’t go with that, that you would use some legacy software with a thick client, would be in a situation, you know, where you’ve got particular customizations or other processes that are built into your application that you’re unwilling to get rid of or it’s too expensive to move them or something along those lines. The one thing that’s been often levied against Web and cloud applications is they’re not customizable. But that’s not true either. What we’ve, almost all of our customers require some sort of customization. And we’re 100% sold through partners and our partners actually do those customizations on behalf of our clients even though our software is Web, cloud, and SaaS. They can use our API, they can use Web-based integration tools to import and export data, they can use our SDK, APIs, they can build, you know, new applications that are ready for the cloud, or they can actually go ahead and just integrate other existing legacy applications that might deal with the clients might be using with their ERP solution. So, once again, everything’s integrated and all in one bundle.
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Ryan 00:10:04
Cool. Cool. So Acumatica, it’s an ERP. You mentioned that. Now for anybody that’s not familiar, as I wasn’t very familiar with the term, Enterprise Resource Planning. What kind of problems do you solve with that?
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Doug 00:10:17
So Enterprise Resource Planning is a way to get a single view of your business from, you know, one centralized database that matches, in our case customized, to the particular way that the business wants to operate. So it helps you with everything from accounting to inventory management to how you, you know, process your raw materials and turn that into finished goods to how you get the reports out to the shareholders or just stakeholders. If you’re not even a public company it’s certainly useful as well. So the typical evolution of a company is they start off trying to, you know, invoice customers and get revenues in and manage their bank accounts. A typical accounting application. As the company grows and expands, it quickly realizes that, you know, it’s great that we can send invoices to customers and, you know, collect money, but we need to do more than that. We need to see which customers are profitable, we need to figure out, you know, why customers are buying from us, we need to figure out how many leads we’re getting, how many deals we’re closing based on the leads we’re getting, whether the deals we’re closing that sell a particular product is profitable or not. So all that helps get managed and determined by ERP software. It gets to the point, you know, where when we integrate our application it contains a Customer Relationship Management module (CRM) so that when a customer comes to a client’s Website, enters their username, and gives them an e-mail address, and says, “Contact me about your product”, from that point all the way through the final sale, every transaction, every contract, every document that’s exchanged with that customer is all held in a nice, nice customer record. And you can see with a quick glance of a couple reports whether or not that customer was a profitable one or whether their orders were delayed or what their sense of malcontent might be or whether they were a happy customer. So it essentially brings all of your business operations (purchasing, sales, invoicing, finance, and everything) under one single system.
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Ryan 00:12:37
So it sort of, you know, for a sale cycle, the workflow would be, you know, you got your lead management flows into your CRM kind of flows into the ERP at that point. Is that a fair assumption?
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Doug 00:12:51
Yeah. Although every workflow’s a little bit different depending on the business. So let’s say you’re, we specialize in distribution as one of our areas. And some of the distributors would do their processing much differently than others. So for example, one person may say a customer comes in and asks for a bid. Then he goes out to all his suppliers and gets bids. When the suppliers come back with bids, then he sends that quote back to the customer. Then when the customer says, “Great, I’ll take that”, he sends the purchase order out to all the suppliers, the suppliers send him all the goods, when all the goods arrive (they may arrive at his warehouse or they may go dropship them directly to the customer) then the company sends the invoice to the customer, and packages it up and bundles the entire order within one delivery and sends the delivery to the customer. So there’s, that’s just one example of a process. And all those steps I just went through that you can get very confused if you have thousands of customers, thousands of SKUs, and thousands of suppliers, and hundreds of customers. So managing all of that is something that an ERP system would do very well.
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Ryan 00:14:02
Okay. Now this seems like it’s not the kind of problem solving because it really gets into business logic of the companies. So when you said earlier it had to be customizable I think I’m starting to see what degree at this point. It would almost have to be extremely, like, almost a very different looking solution for each customer of yours. So is that a lot of effort that Acumatica spends or is this a point where you reach out to vendors or partners or something like that?
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Doug 00:14:31
Yeah, that’s a good question. We do that exclusively through partners. We’re 100% sold through value-added resellers who understand their client’s needs and how to configure our software for their business.
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Okay.
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Ryan 00:16:23
So how, if someone’s listening and they think this is really interesting or it’s close to the space that they’re in and they’d like to get involved in some way, more on the partner level, what would they do for that?
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Doug 00:16:36
So for partners, we’re an extremely partner-friendly organization. So if you’re interested in reselling the Acumatica solution, you just simply go to our Website, www.acumatica(A-C-U-M-A-T-I-C-A).com, and you go and fill out the form and you’ll go right into our CRM solution and we’ll follow up with you. We use our own solution, of course. The other way is if you’re an independent software vendor. Let’s say you produce some sort of software that’s on a client-server architecture right now. And all these things like around Windows Azure, the cloud, it sounds exciting to you, we have a software development kit that we can give to you so that you can deploy your application very easily onto the cloud. And we run webinars from time to time on our Website that you can always register for a developer webinar. Where you can go figure out and see firsthand how different companies have done that. Just yesterday we did a webinar where one of our providers of an e-commerce solution showed how he integrated his e-commerce solution with us. So we’re always interested in partnering with other organizations to build the ecosystem, the cloud ERP ecosystem, even larger.
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Ryan 00:17:55
Cool. And if somebody was doing something like, for instance, this, you know, this e-commerce solution integration, somebody else has another one they want to also tie into your system in the same way. You had mentioned Azure, but you mentioned lots of different kinds of offering. Like, is that basically at that point they would just see what their business model, what makes sense to them? And they can, you know, deploy to Azure, deploy to their own servers, you know, go to Rackspace, Amazon, whatever at that point?
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Doug 00:18:21
That’s right. And we leave that up to the customer. Now certain partners of ours, now we can partner with a number of different firms. So if we have a partner that would say, “I want to run my own infrastructure. I just want to connect to you through an API”, then we could work out a business arrangement so that customers would essentially, they would pay for one piece of software but behind the scenes there would be, our application could be running on Azure and our partner’s application could be running on a different cloud somewhere. So we’re not necessarily, our partners aren’t necessarily, you know, restricted to the Azure cloud. They can run their applications anywhere. And they can even do it on-premise. They can just sell a regular software license if they would like to do that. But the key is, the Web-based technology is key because then the customer only needs a browser. It’s not very advantageous for us to partner with folks who, you know, don’t have Web architectures because then, all of a sudden, our main value proposition, which is you can get to your application from anywhere and do anything you want kind of how you want to do it, goes out the door a little bit because you have to start deploying client software.
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Ryan 00:19:38
One of the things that seems pretty compelling for a developer to kind of build against this platform is the fact that you’ve built this community that’s all about selling it. So that means I make a module for your ERP. All I really want to do is solve this one tight focus area that’s kind of my passion. I don’t actually want to deal with selling it; I just want to keep making my product better. It seems like this is sort of conducive to that kind of environment because then they can just kind of pass it off as long, you know, your community is aware of it, there’s other channels to sell it. And, you know, the developers kind of just keep their heads down and work on the product that they’re interested in.
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Doug 00:20:18
Yeah, that will work too because one of the things that everybody’s always looking for specific applications in specific verticals. And then we have different partners that address different vertical markets. So if you come up with something that’s, you know, very well-based for a property management company. And you know what a property management company would need, they obviously need a strong set of Web-based financials because they have, in many cases, properties located all over the place. But, you know, what would be nice is if they would have a nice simple little service order application that would say every time, you know, somebody in apartment 3G calls I want to make a note of it and make a note that I sent a plumber to go fix their problem. So things like that that are very specific to particular industries are fantastic. And, you know, we can help them once the solution’s built and integrated, we can help market that through our partner channels.
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Ryan 00:21:17
Cool. So basically, you know, anybody who’s interested in building against something like this, this resource management platform, already has a thriving community to kind of sink their teeth into, they should definitely go check out the SDK.
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Doug 00:21:31
Yeah. Absolutely. They should do that. They can, you know, it’s very easy to partner, you know. We’ll help them through the process. We will, you know, have tutorials that show them how to get it done. And then, as I say, once the integrations are done, we can definitely introduce them to our community of value-added resellers. If there’s value-added resellers out there listening, we are always, you know, interested in talking to you to learn, you know, about your particular areas of expertise and specialty and geographic regions and customers you know, so that we can go out and partner with you to get this, you know, the brand new technology in the hands of the customers that need it.
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Ryan 00:22:10
Yeah. And it also seems like a nice way for somebody to dip their toe if they’ve been interested in, you know, developing in the Azure cloud but maybe they got frustrated by the newness of it, you know. Sort of the documentation gaps that just come with a more cutting edge offering. It’s nice to have a partner, right?
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Doug 00:22:29
That’s right. And we’ve been developing on Azure since, you know, as I said, November of 2009. So we’re very familiar with the platform. Right now we’re in the middle of producing a video, which shows how to deploy Acumatica onto Azure, how to go get a nice, how to go sign up for an account, and then how to deploy your application without too much difficulty. It’ll probably end up being a three to four minute video so that’ll kind of teach you, you know, it’ll take some of the scariness away from the cloud and things like that. And then it’s just a matter of once you’ve kind of gotten over that initial fear, you’ll find out that it’s just another great way to deploy your application.
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Ryan
Well thanks a lot, Doug. This has been great. It seems like a really interesting product that you’re working on there. And yeah. Thank you.
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Thanks, Ryan. Appreciate the time.
Now the software will in many cases adapt to different workflows fairly easily. So, for example, let’s say, remember in my distribution example, maybe the customer already has a bunch of, or the, I’m sorry, maybe the business already has a bunch of items in inventory and maybe it orders items before going out and getting quotes for them. So that can all be managed using the same screens. You would just have to have a different dashboard for your customers so that the folks in the sales department wouldn’t have to go get a quote first, that they would just say, “Well, I can quote based on my last price or cost-plus”, or whatever type of pricing strategy they would like to use. But, yes. So it’s up to the partners that we have to go sell that solution. Now let’s say the existing company/distributor has a bunch of barcode scanners in their inventory warehouse and they want to integrate those particular brand of scanners they have with our application so that everything’s automatic. Our partners would be able to go in and use our application tools that we provide to go make that integration fairly simply. So that would be another example of there’s, you know, partners that can do configuration, which is simply tweaking the existing process flows and everything that are enabled by the system, and then there’s partners that really can get down more into the code itself to go do the customizations, such as integrating barcode scanners, point-of-sale solutions, and other things that the customers would want everything to flow smoothly between.