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The Midmarket Manufacturing Pursuit: Will SaaS Upstarts Unseat The Big Guys?

Posted by Andrew Dailey
Andrew Dailey
Andrew Dailey is a Managing Director of MGI Research
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on Tuesday, 01 November 2011 in SaaS

In a recent “20 Questions with the CEO of Plex Systems” MGI Research’s C-level interview series with leading technology industry innovators, investors and executives – MGI’s Andrew Daily talked with Mark Symonds, CEO of SaaS ERP vendor Plex Systems, Inc. SaaS upstarts are a real threat to the established revenue streams of major enterprise applications vendors.

Even with recent activity in the space – Infor buying Lawson, Apax’s acquisition of Epicor (and subsequent merger with Activant Solutions), Microsoft’s efforts with Azure and Dynamics, and SAP’s re-launch of Business ByDesign – it may be too little, too late for these entrenched leaders to make the cultural, technology and financial shift to push the SaaS delivery model into SMB manufacturing. Plus, customers remember the pain and disruption with their last ERP implementations; are they really ready to rip and replace? Symonds shares his perspective on whether the platform can handle the demands of complex manufacturing platforms, how the iPad is transforming manufacturing, and why SaaS vendors struggle when selling into medical device companies.

Here’s what Mark had to say when asked where he sees business spending and technology budgets going first in 2012

“First, we are at the beginning of a big refresh cycle for ERP. You mentioned people are loath to take them out to do rip and replace. Many of those systems were installed in the run-up to Y2K to try to avoid the bug and they are quite old. Also, that generation of ERP was focused on central office, finance and accounting. Today, manufacturers need to automate their shop-floor functions and have the information flow automatically to everyone who needs it in the enterprise.

Like I said, in the 90s the focus was on accounting, purchasing, inventory shipping and so on. Now the focus is on shop floor, or what’s often called MES [manufacturing execution systems], combined with quality management, product traceability, etc. A lot of money is going to be spent there because there are enormous savings to be had. The focus is on vertical ERPs.

In the last recession, SaaS was a perfect fit, allowing companies to improve and streamline their operations without a big cash outlay, so as we ponder another recession or double-dip, I think businesses are going to continue to be focused on cash conservation. Manufacturers are going to focus on shop floor and they are going to look for SaaS and cloud solutions to reduce the cash sting and keep that cash available for operations, the plant and equipment.”

Mark Symonds, CEO, Plex Systems, Inc.

© 2011 MGI Research, LLC