PriceWaterhouseCoopers (PwC) predicts that investment in cloud ERP systems will more than double this year, reaching $78B in global software and services revenue while traditional ERP systems will decline by more than 30% to less than $15B. Cloud ERP systems are now over 20% of all ERP systems sold and deployed based on the consensus estimates from industry analysis firms including Apps Run The World, IDC, Forrester, Gartner, and others.
What’s Driving Cloud ERP System Adoption
Faster deployment times compared to on-premise ERP systems, and greater flexibility in integrating with cloud platforms at the Application program Interface (API) levels including Salesforce are two of several factors driving cloud ERP adoption today. Another is being able to support the more complex information needs of new businesses that companies are launching today. Many legacy ERP systems were designed to support the production needs of volume-based business models. With the proliferation of new business models that provide both enterprises and individuals more choices than ever in what they want to be produced, it’s clear that a new era of ERP systems is needed to meet the needs of growing businesses across all industries.
Companies have invested millions of dollars and hours in legacy ERP systems and can’t just replace them. They have to find a path for making them more productive. Two-tier ERP system strategies are growing exponentially in response to the needs of enterprises to find a path to productivity and profitable growth. By integrating cloud ERP solutions to legacy ERP instances, enterprises can scale faster in response to new business information needs and requirements. Two-tier ERP is the Trojan Horse of Cloud ERP. The best cloud ERP providers have customer references that prove they can support and excel at two-tier ERP strategies. By doing this, these forward-thinking cloud ERP providers deliver entirely new compliance, data and reporting information and intelligence that legacy ERP systems can’t provide.
Benchmarking Cloud ERP Providers
The following is a vendor-independent analysis of the top cloud ERP software providers who are delivering customer-proven solutions to their customers today. Each is evaluated on their strengths, weaknesses, and the potential for growth:
Designed primarily for small and medium businesses, Acumatica’s cloud-based ERP system scales well for companies who primarily operate out of a single location and have less than 1,000 employees. Acumatica’s cloud applications run on the Microsoft Azure operating system and rely on SQL Azure. The depth of Azure expertise inside Acumatica is impressive given the size of the total company, and it is evident this is an area of high priority strategically for the company. Additional strengths include the availability of a financial, customer management, project accounting, distribution management and manufacturing management suites tailored to the needs of small and mid-sized businesses. Acumatica has also significantly improved its user interface and streamlined the user experience. Weaknesses include their CRM application that is not as feature-rich as many that are available stand-alone today. Also, producing reports from the CRM system can be time-consuming. Further, to work with Salesforce, Acumatica’s systems require field and object mapping. Acumatica’s future is going to be defined by how well they can accelerate new apps on the Azure platform and solve the CRM challenges they have today.
Epicor ERP 10
Epicor has a proven record of accomplishment delivering global deployments using a two-tier ERP strategy and has extensive vertical market expertise. Also, the platform and technology stack Epicor relies on for building out its ERP cloud application is scalable enough to support legacy ERP integration and has API support, which is critical in large-scale deployments where legacy systems dominate. Further, Epicor has improved application performance over time, which had been a weakness in the past. Weaknesses include the tendency of their sales and professional services teams to create demos that commit to functionality beyond the scope of projects to upsell customization and additional services. Lack of features depth in Manufacturing Express Edition and its limited functionality is another weakness. Despite these weaknesses, Epicor has deep vertical expertise gained from a series of acquisitions and commitment to key verticals. If your business competes in one of the verticals they address, consider them on your list.
Built on the Salesforce1 platform, Kenandy Cloud ERP has done a very good job of building out solutions for Procure-to-Pay, Global Financials, and Trade Promotion Management. The engineering team has done an excellent job of making the most of the Salesforce1 platform, enabling mobile support for all Kenandy applications while ensuring API-level integration and Salesforce Object support for each application. Kenandy does well with retail and distribution-oriented businesses that are also on the Salesforce platform. Weaknesses include a weak Quote-to-Cash solution and little if any support for advanced product configuration workflows for manufacturing. The architecture is entirely dependent on Salesforce, which can become a constraint for any company not using this specific CRM platform today. For retailers, distribution and manufacturing companies running Salesforce CRM today, Kenandy Cloud ERP is an excellent fit given its native platform support.
Microsoft Dynamics AX
Microsoft continues to invest heavily in Dynamics AX, and it shows at the user interface, financials, projects module, global support and cloud performance running on Microsoft Azure. Microsoft has had its ups and downs with it global partners organization and has turned this into a strength that is now delivering solutions across its core verticals of including distribution, manufacturing, retailing and professional services. Microsoft’s AX development team has made Accounts Receivable (AR) agile in managing multi-site focused, which has long been a request from larger customers. Also, the tight integration with other Microsoft products is a core strength of the AX architecture and supported workflows. Weaknesses include report writing tools that could be more intuitive and better bank reconciliation workflows. Additionally, AX doesn’t have a robust product configurator but relies on a world-class series of partners for this functionality. The bottom line is the Microsoft Dynamics AX is one of the best cloud ERP applications available today for companies competing in the industries they serve.
One of the original Cloud ERP suites, NetSuite helped create the category by using agile development methodologies to release new updates quickly and compete successfully against legacy ERP vendors. To their credit, NetSuite continues to win deals, replace legacy ERP systems, and at a minimum integrate to them using a two-tier ERP strategy. Strengths include easy of customization, availability for any Web-enabled device, anywhere, search, and e-commerce. Weaknesses include how slow the app and interface can be at times according to frequent users of the system, document workflows, multisite manufacturing support, lack of product configuration options, and lack of reporting flexibility. The bottom line is that NetSuite is aiming at 14 vertical markets and excels in a core set that includes retail, fashion & apparel, internet & software companies and wholesale distribution.
Originally founded to meet the needs of automotive suppliers in the upper Midwest, Plex Systems is quickly becoming a global force in cloud ERP systems. Their depth of expertise in automotive manufacturing, food & beverage, aerospace & defense and other lean manufacturing industries is impressive. The company’s deep expertise in core manufacturing-based areas of ERP is reflected in the high renewals rate attained each year with their customers. Core expertise areas include Consolidate to Report, Design to Make, Order to Cash, Plan to Produce, Procure to Pay, and Reconcile to Report. The latest new products introduced include new supply chain planning solutions that include Plex Master Scheduling, Plex Sales & Operations Planning, and Plex Distribution Planning. Plex is also leaders in delivering two-tier ERP systems to many of the leading industrial manufacturers globally who integrate Plex applications to their legacy ERP systems. The weaknesses Plex faces include scaling out their engineering team to manage the exponential growth of customer requests for new functionality, global scale-out to support new countries they are just moving into, and the need to also scale out professional services to manage new accounts and their unique customization needs. The bottom line is that if you are a manufacturer that competes in their core verticals, be sure to consider them.