Announcer 1: This is the ERP advisor.
Announcer 2: The ERP Advisors' overview of Acumatica.
Juliette: Good afternoon, everyone. Thank you for joining us for today's webinar and all-out breakdown of Acumatica. Shawn Windle is our speaker for today, Shawn is the founder and managing principal of ERP Advisors Group based in Denver, Colorado. Shawn has over 20 years of experience in the enterprise software industry, helping hundreds of clients across many industries with selecting and implementing a wide variety of enterprise solutions.
His podcast, the ERP Advisor, has dozens of episodes with thousands of downloads and is featured on prominent podcast platforms such as Apple and Spotify. On today's call, Shawn will discuss Acumatica, one of the fastest growing cloud ERP companies, over the last several years and all the features this maturing company has to offer. Shawn, thank you for joining me today.
Shawn: Alright, you bet. Thank you for being our amazing ERP Advisor. I'm trying to think of all the things you do for us, but thank you for hosting, as always, Juliette.
Juliette: Yes, I'm happy to do it and I'm happy that you are my partner in crime in this for sure. Well, Acumatica is a fairly young company considering a few of the other software companies we've covered in our vendor series, but it is one of the fastest-growing cloud ERP companies over the last several years. So, with that, Shawn, can you give us a high level and talk to us about what Acumatica is?
Shawn: Yeah, you bet. So relatively speaking, I always have to give credit where credit is due. Rebekah, whose image you see there--I don't know if she can come on camera and say hi because she's probably producing things behind the scenes--has put together a lot of work on this vendor series and it's really helpful. I actually have a cheat sheet that shows some of the vendors side by side which I'm looking at right now, and it is interesting that Acumatica was founded in 2008. So you know that was still like 14 years ago, which is a long time ago, especially if you have teenagers that are 14 now instead of even 18 and 20.
But in terms of an ERP company that's relatively new, there's some other vendors that we're looking at and watching that are newer, but they haven't amassed the amount of customers that Acumatica has, despite them being a relatively new entrance to the market. They specify over 8000 customers, mostly small to mid-sized companies, but throughout the world really to a lot in North America for sure. But they've really grown a lot and I think I remember in 2019 we did our kind of end of year ERP report, I mean we will go back and I'll check this, but I could swear that we said 2020 will be the year of ERP for SMBs or maybe we said that for 2019. And that, of course, was before all the Covid stuff, right? Nobody knew, well, somebody probably knew, but that's another story.
Anyway, that was going to happen, but the key point here is that that we saw that ERP was continuing to permeate into mid-sized organizations, smaller sized businesses, especially for those that either had super old legacy systems or just had just an accounting app or whatever. And so that macro change was happening and then it just got fueled, like literally lighter fuel was poured on the fire with COVID. Where organizations, again even small, mid-size organizations that didn't have software that was accessible over the Internet, or didn't automate all their processes were like “oh my god, we need new software,” right?
And Acumatica was, boom, right there especially, and I think we'll talk about this a little bit later, with their pricing structure. For the right kind of company, it's really, really good. It's a very aggressive pricing and it sort of grows as you use it more; we'll get into that, like I said, a little bit more later. But they've done a really good job and they've got a good channel strategy with partners, they've got people out there selling, they've got even, though they're new this is interesting, even though they're a relatively new ERP system, their partners aren't. Some of them are, some of them are newer partners, but a lot of what's happened is partners that worked on other apps over the last twenty, thirty, forty years have decided to pick up Acumatica. So, you get partners that have a lot of business experience working with many businesses, different industries, and that for say 20 years. Now they pick up Acumatica, they're certified on the product of course, so they know the product.
But then they implement Acumatica with all these best practices just across business processes that we've worked with for decades. So, it's a good blend of good partner experience with a newer product. But see the other thing too I'll say...
Stop talking you know. I guess that’s what these things were for. I mean, that's the secret to all of this, right? I'm just trying to get all this out to help people, and you're gracious enough to listen to me, Juliette.
Juliette: That's right.
Shawn: Plus, I like to show off my Star Wars toys in the back, but a different story for another time.
But the really interesting thing with Acumatica is they are, as one of the newer ERPs, sort of born in the cloud platform, they've learned from the apps that came before them on what to do, and what not to do. So, it's this nice blend, Acumatica has this nice blend of being sort of the new kid on the block where it's like, wait a minute are you really viable or not? Well, they've answered that question with 8000 customers: there's no question about them. Their ownership is strong. They're owned by a really solid private equity firm. They've got a lot of folks from Microsoft that were on the enterprise software side. They got a lot of experienced people. They've really done a nice job in the short term of building a really nice solution for our customers. And our customers have selected and implemented Acumatica like it.
All good things for sure.
Juliette: So, do you think, let me ask you, regarding what they've learned from their experience is that from just the clients that have been with them for the last few years? Or is it from the experienced people that are working with Acumatica?
Shawn: Yeah, I mean, it's both for sure, right? Well, probably even a couple, three, four, or five ways that they've kind of learned, which is pretty interesting, right? One is definitely just being in business for 14 years, it does give you a lot of time to make things better and better and better, and the beautiful thing about the platform is they can implement changes and they do propagate out to others, kind of. If you have that deployment, I’ll just say that. But you do have a really strong executive team that knows what works and what doesn't in enterprise software, so they've learned from that experience. The partners, like I said, have learned from their experiences with other software because you see a lot of Sage partners or Mass partners that have become Acumatica partners.
You don't seem to think about this, I mean, sometimes the NetSuite partner may pick up Acumatica too, but rarely Microsoft, not a lot of crossover. I'm sure there are some Microsoft partners that now have Acumatica, I'm sure of that. But it's a lot of Sage, a lot of Sage, but those and those Sage partners have been doing SMB, small medium-sized business, ERP for twenty to thirty years, so that's a benefit.
But I also think the architects and technical development, they worked in other ERPs, Microsoft, and other solutions before so it could take those best practices, but also new practices on how to build apps, which is great. And then I think that the last piece is right now, especially in ERP, there is a lot happening. I mean Epicor is buying a ton of best-of-breed apps. You know, NetSuite's continuing to grow like mad, I mean 20-25% growth on a lot of sales, that's big growth.
But there are companies like us, that are learning and able to communicate back to vendors like Acumatica, “hey, here's how the demo went. Here’s what went well, here's what didn't.” I just think they're in a position where they’re, we used to say this phrase at JD Edwards, eat your own dog food. It's kind of a strange phrase, right? Or drink your own champagne. Like a dog manufacturer, somebody manufacturers dog food would they personally eat the dog food? No, it's for dogs. But why wouldn't you? Well, because it's unsafe, right?
What I'm trying to say is, I think Acumatica is really looking at the ecosystem and watching all these trends and things and they're trying to adjust.
Shawn: For instance, they are one of the few vendors that you can buy the software on-premise in a private cloud, or in a public cloud, if you want to know more about those deployments you should check out our CPE video. But they give you those options and a lot of vendors don't, they just say “no, this is the way it is.” So, there are some challenges with that for sure, but there's also, for example, we had a client or prospect we were talking to that makes robots for the Department of Defense, and they have very specific security requirements. It's called ITAR, and the way that they were able to meet the ITAR requirements Acumatica could do that. Whereas some of the other vendors couldn’t because they could put their instance in a specific data center that met the ITAR requirements.
Anyway, I just feel like they're hungry and they're doing things, they're taking risks that maybe some of the other vendors aren't because they don't have to. Acumatica will because they do want to continue to grow and move things upwards.
Juliette: And be attractive to other industries and other businesses, right?
Shawn: Exactly. Yep.
Juliette: So speaking of that, what major industries does Acumatica cover, and are they a better fit for one industry over another?
Shawn: You know, they're interesting. They definitely have solutions for specific industries like, certainly accounting, construction is an area they've put a lot of time into. Certainly distribution, and manufacturing. There are some partners that have built manufacturing execution software that you can plug in. But there are also services as well. We had a client that's a professional services firm that implemented Acumatica with their projects. So, they're good because they are, I mean frankly, I think this is fair to say, and if it's not, the Acumatica people listening to this better tell me; I'm sure they will. But as a relatively newer app, how much time have you had to develop a lot of functionality?
Right, like if I look at Oracle e-business suite, that thing has gobs and gobs and gobs and gobs of software in it of feature functions in it, because it's been being developed, I mean since the 90s if not earlier, probably even 80s. Whereas you got Acumatica started in 2008, how deep has it gone? Not as deep. We know that unequivocally. But there are partners out there in the Acumatica channel that are building, I think they call them, independent software vendors or ISVs, yeah, they referred them. Those ISVs build out modules or functionality on what's called the XRP platform, which is Acumatica's development platform. So, you can go deeper in an industry is what I’m trying to say.
But the key point here is it's probably similar to NetSuite, in that it can you know work across services businesses, manufacturing businesses, distributor businesses, construction businesses, and then financials generally. Like we have an insurance company that selected Acumatica to run their financials. So, it's a little bit less focused on industry as say maybe Epicor; it's a little more able to meet the needs across those different industries, which makes it actually very interesting. This is because a lot of companies that we work with, they're doing all kinds of stuff. They might be like “Oh, we distribute, well, we're actually manufacturing too, and we actually have some services.” OK, well then, a platform like Acumatica makes a lot of sense.
Juliette: Right, and is Acumatica pretty customizable for a business’ needs regardless of industry?
Shawn: It is. They've got this XRP platform that's very flexible so you can go in, you can extend, build-out, etc. There's, I can't remember the right nomenclature for what Acumatica calls it, but you basically have a configuration, right? Or you're clicking switches basically on and off, turning things off; you're not changing anything. Then there's extending maybe we got a form that for a sales order and we need to add a special field to track the region or something; so, then we can extend the form, easy to do in Acumatica. Then there are also workflows, business process automation, and stuff that the XRP platform provides for like PO or AP approval on an invoice.
But then there's also the ability to build out your own apps and that's what some of these XRP partners have done is they've built out industry-specific solutions and that kind of thing.
Juliette: Yeah, any other prominent features that you can think of that make Acumatica attractive?
Shawn: You know it has good multi-company functionality, so if you have legal entities on the financial side, it's good. There are capabilities across like I said, distribution, manufacturing that are strong, kind of core works in progress, routing for manufacturing work orders. Distribution, the purchasing side, inventory management, the sales side, good stuff; its CRM is pretty good also. So that's why I say, "hey it’s a pretty good app,” it's like when you go
“Hey honey, what should we have for dinner tonight?”
“Oh my God, I don't know what to do. We should go to Acumatica.”
Oh my God, what functionality do I need? I'm not really sure but I could go to Acumatica and probably be just fine.
Juliette: It covers all the bases.
Shawn: It covers all the bases.
Shawn: It's like going to the mall and going to the food court, I don't know. But it does cover a lot of the bases and it can go deep in certain areas because of some of the partner solutions too. But will it go as deep as JD Edwards and manufacturing? It won't. It won't do that yet. But here's the thing, most clients don't need that, so that's the little dirty secret of ERP is how much functionality do you actually use?
Juliette: Right because some of these software packages and platforms are just so gigantic that you don't touch all of the facets of it and they just sit there. You end up paying for them, but you don't end up using them, right?
Shawn: Yeah, that's it, and I think that's why Acumatica has done really well because the platform is simple to use; it's easy to understand, and the functionality that you need is there; even that next level is there. The next level maybe they're looking at partners to develop, or they themselves have a really strong product road map as well and they have more functionality coming out.
Juliette: Yeah, so you touched on this a little bit about their pricing structure. They have a little bit of a unique pricing structure. Can you talk to us a little bit about that?
Shawn: Yeah, I won't get into the specific pricing, the render NDA for that, but the structure is important to understand, I think it's helpful. So, most of the software solutions, not Acumatica, most of them the pricing structure says, “well what modules do you want, and how many users do you want?” That's how NetSuite, Microsoft, Infor, Epicor, a lot of these core Tier 2 ERPs, we'd call them, are that way, even SAP’s that way; the Oracle cloud fusion ERP is similar too.
What Acumatica has done is a little bit different. They've said you should pay for only the software, the capability that you're using. So, what they kind of do is, say they have a tiered model that says, “depending on how many transactions you do, that's going to drive your price.” And there are multiple ways, there are types of transactions, there are two kinds; there’s a monthly commercial transaction and I think ERP transactions. So it's very specific on how it's done, but the basic model is “look, when you start using this app, you don't have a lot in it and you're not,” and let's say you're a smaller organization especially “you're not going to use a lot of it, so we're only going to Bill you for the little bit of the transactions that you're going to create.”
So, then you go along, go along, great, great now woah. We may have a lot of growth in the business vooop the monthly transactions go up. Ok, we're going to charge you more because you're using more of the software. You're running your business more on the software. You're getting more value from the software because you're running more transactions, right? And then you grow, voop it goes up. Every company finds a way to get more money from you over time. So, I can hear some other software vendors saying “it's impossible to forecast what your future expenditures going to be,” and I would say to them, “ok, so what happens after the contract with you?”
Juliette: That's right.
Shawn: Right, like there's rate caps and stuff you can put in. But there is still some ambiguity with any SAS solution, and you don't know what they're going to do in the future. But the bottom line is I kind of like this model because it helps a client that's growing to get into a solution that, again, is like going to the mall to the food court. You have every option, but you can get into this software, a really nice solution, and then grow into it and pay more sort of as you get bigger. And they're really good about also locking in rates and stuff like that; so, they know people are concerned about what the future cost is going to be, so they'll do some mitigations in there, just kind of control that.
Juliette: Yeah, well, to get a software platform that fits your needs, but is affordable is kind of so rare in the market sometimes. And so, with that said, if someone needs to graduate to the next tier, is it easily done, and is it really just based on transactions, or do you get different features and functionalities as you go up the different tiers?
Shawn: Literally based on transactions.
Juliette: That's interesting.
Shawn: Yeah, again, if anybody is listening to this, I'll look in the camera, tell us if we're wrong. That's my understanding from reviewing 5 Acumatica contracts recently. So, it's literally based on your using more of the system, more hardware, more of the environmental software, more performance, you know? So, you're taking up more and more, you're going to pay more; it's sort of their concept.
We had a client recently that was a smaller business, but they had a ton of transactions the way they were with some of their training partners. And the pricing for the Acumatica solution versus some of the other solutions was actually much higher. I tracked it, and it was much higher because there were a ton like I can't remember what the number was, but hundreds of thousands of transactions per month.
In the way this particular business worked, every time one of the big box stores bought one of their products, it was a transaction. That's not usually how it goes. Usually the big box store buys 10,000 units from us, right?
Juliette: And that's one transaction.
Shawn: Right, whereas this other company was each of those 10,000 was a transaction, transaction, transaction.
Juliette: Oh boy.
Shawn: Except there were hundreds of thousands of transactions, so that was a little wonky that it went that way. The functionality and everything else was good, but that's where that pricing model was a little bit like ehh. So, but what it really has done though, like I said, is it's made Acumatica very approachable and the software looks good from a usability perspective. They always score really high on our mini demos we call them, where we look at usability, they always score well. And then the pricing is low for a smaller organization to get into and then they can grow with it over time, so I think overall it's a good model.
Juliette: Well, let me ask you this, based on your experience of working with Acumatica and with a variety of clients and industries, why, in your experience, why does Acumatica win over its competitors in different scenarios?
Shawn: That's a great question and I think it's a trifecta that comes together. Like I said, I think, a midsize organization likes the usability of Acumatica. It's just approachable software, it's easy. It just looks easy to use and it is, it’s pretty straightforward. I think the developers have written it in a way that it's like “wow, I really like that,” from the end user's perspective.
So, it demos well. I think the other thing is about the implementation partners. We work closely with somebody who just texted us here about the pricing model, which we'll talk about in a minute, we work really closely with Acumatica to figure out like “hey, who is the right implementation partner for our client based on the experience?” And they've got great implementation partners. They have people that are really committed to their customers and doing the right thing. They know their industries, so I love that, I mean if you want to make me happy, just give me a partner that knows my clients’ industry and I’ll love you forever.
So, that's the second thing, but I do think the third thing is that Acumatica Inc and the corporation is really willing to work with customers like we've had a couple of wonky things; we actually have one even right now that we're sort of hoping to finish by the end of the month. But I see that the people involved on the sales side, even support too, that they really want to do the right thing for clients. I worry about that sometimes with some of the other vendors, especially as they've gotten bigger, and they start bringing in people that are a little more transaction oriented. I won't name any names even though I want to, but I'm not going to.
I don't see that with Acumatica. I do see a lot of care and I see people at that organization that say, “we know you're running your business on our software and there's probably not a more important investment you're going to make.” The bottom line is software is a big deal for these enterprises, and so it's important that you have not just the implementation partner but also the software vendor behind you. And I know I can make a call any second like “please help,” and I know they're going to do something with it, not just because we're ERP Advisors, but because I think they want to do the right thing.
Juliette: And regardless of whether it's during implementation or after go-live just to have that support system behind you when you need it--you may not need it a month after go-live you may need it six months after--and to be able to have that.
Shawn: And I think to your point, Juliet, every packaged application, packaged software, it's on the shelf, commercial off the shelf COTS we used to call it right? Or packaged applications, whatever you want to call this stuff, say Acumatica. As soon as you buy packaged apps, whatever it is, you're compromising on your own needs because it's not specifically built for you. It's just like buying a prebuilt house or prefabricated house versus one that's custom. Hey, we love custom, right? But we can't afford it, don't need it, and it's good enough, right? So, with Acumatica, again, like I'm saying I just feel like the organization does a really good job of just making you feel like you as an individual, my clients are really important.
I don't think it's just because we're ERP Advisors. I've talked to other companies out there that do a good job with that and partly because they have to because they're smaller.
Juliette: That's right. That's right.
Shawn: And that's good, don't forget this Acumatica; don't ever change that. A lot of big companies do, again, I won't name any names. Don't do that.
Shawn: It is good to be hungry and to really provide that great customer service. Again, when I look out into the future, I just see that they've got good things going there.
Juliette: So just, again, from your experience, are there any offerings that you hope to see from Acumatica in the future? Anything you can think of that would be of benefit that you've seen from our clients and from just working with Acumatica?
Shawn: I don't know if there's anything specific. I would say that the continued R&D cycle with the ERP vendor, of going into more and more and more functionality by vertical and sub-vertical or micro-vertical is helpful. For instance, on construction, I think we looked at them recently, and there was something on the job cost and, progress billing, that's where it gets pretty tricky. I think the team is probably better suited for that question than me anymore because I've been able to get out of the demo which has taken me--you know, I've been doing this for 25 years, I realize we say over 20 and now it's 25, so it's only taken me like 24 1/2 years to not be in all the demos.
But I think that's the thing is that just continuing to go to look at that functionality, we call it the minimum viable product, I think they have the minimum viable product or functionality that's required by these verticals that they focus in. But what's that next level of functionality and how do you work with a partner versus you do it internally. And again, I think they're in a unique position in that they've got a really strong partner channel that wants the recurring revenue for writing their own apps, that's a good thing for them. And it's good for Acumatica because they don't have to put all their time into every vertical.
So, I think they've just got a good strategy in place to be able to find out where the market's going to give them that feedback, I think, and they'll be able to do it. So, I don't think there's, I mean I like the platform play, I like the cloud play, I like what they're doing with their integrations. We've worked with a partner recently that does a ton of integrations and e-commerce and that's huge.
So, you know, I think it's probably just going deeper in all the key areas and continuing to evolve. Because, I mean Rebekah will tell you how I get on a soapbox about this, but these software vendors, their recurring revenue is gargantuan, and their profit margins are pretty high. So put that money back into R&D and continue to develop, and I think I see Acumatica doing that when we covered their releases and we'll put notes on it in our ERP Minute when they come up with a release. They're doing good stuff. They're doing good feature functions.
Right, well, Shawn, thank you so much for your time today and helping me learn more about Acumatica, I appreciate it.
Shawn: You bet. I do think we did get a reminder too that they do have the ability to do user-based pricing.
Juliette: That's right, thank you for acknowledging that.
Shawn: There we go.
Juliette: Not just consumption but user-based licensing as well. Well, if anyone has any questions, please reach out, let us know, we're happy to help in any way we can. Thank you again for joining us today, we appreciate your time.
Be sure to join us for our next webinar scheduled for Thursday, July 14th. A no holds barred summary of NetSuite and Oracle will continue our summer vendor series when Shawn will discuss his insights on working with NetSuite and Oracle and discuss the extensive portfolio of ERP functions and features this software platform has to offer. Please go to our website erpadvisorsgroup.com for more details and to register.
ERP Advisors Group is one of the country's top independent enterprise software advisory firms. ERP Advisors Group advises mid to large-sized businesses on selecting and implementing business applications from enterprise resource planning, customer relationship management, human capital management, business intelligence, and other enterprise applications, which equates to millions of dollars in software deals each year across many users.
This has been the ERP Advisor. Thank you again for joining us.
Announcer 3: This summer, ERP Advisors Group will be reviewing the most prominent ERP software vendors in the market. For more information about these vendors, please visit our website at erpadvisorsgroup.com. You can also find more EAG content by following us on social media or by subscribing to our podcast the ERP Advisor.