Cloud ERP Wars Intensifying in Full Force(.com)




The first of week of May marked a flurry of news by up-and-coming cloud enterprise applications vendors. During salesforce.com’s Cloudforce event in Chicago, Kenandy, Inc. announced release 2.0 of Kenandy Social ERP, the first cloud-based enterprise resource planning (ERP) system built entirely on Force.com, salesforce.com's social enterprise cloud computing platform. The new release adds financials and order management to Kenandy's manufacturing management core, specifically for product companies.

The first time I heard about Kenandy was at Dreamforce 2011 last summer, when the company presented its initial release on the expo floor. Sandra (Sandy) Kurtzig, who as CEO of ASK Computer Systems first pioneered the enterprise software market with famous MANMAN manufacturing management system on minicomputers, came out of her ERP retirement of sorts to found Kenandy (the name is apparently a combination of her two sons' names) in the new social ERP era. The investment apparently came from Kleiner, Perkins, Calufield & Byers (KPCB), and Ray Lane of KPCB (formerly president at Oracle) was at Dreamforce 2011 as well. For more on Kenandy at Dreamforce 2011, see Frank Scavo's blog post.

Some Cloud ERP Soap Operas?

Also at Cloudforce Chicago, Rootstock Software and FinancialForce.com (a joint venture between UNIT4 and salesforce.com) announced a partnership to deliver a comprehensive manufacturing and accounting solution on Force.com. While this alliance can be seen as a direct response to Kenandy’s emergence, it might even have more ramifications for NetSuite, whose SuiteWorld 2012 conference is just a week or so away.

Namely, Rootstock is the software behind NetSuite Manufacturing Edition. In fact, Rootstock was written on NetSuite’s SuiteCloud platform, which is more seamless with NetSuite’s OneWorld offering than OpenAir (which NetSuite acquired a while back for its professional services customers). For Rootstock to now have a Force.com version as well must be sending some shockwaves through the offices around NetSuite’s CEO Zach Nelson, as the competition between him and salesforce.com’s CEO Marc Benioff is legendary (although they are both Oracle alumni).

Last but not least, two weeks ago at Inforum 2012, Infor announced that its very first customer for Inforce Everywhere, C.H. Briggs Company, was live. Inforce is a product line developed between salesforce.com and Infor, whereby Infor ERP objects are added to selected Salesforce CRM objects on Force.com. Integration to Infor ERP systems will go via the Infor ION middleware. Inforce Everywhere is the first generally available (GA) joint product, with many more to follow suit soon. Coincidentally or not, Charles Phillips, Infor’s CEO, is yet another ex-Oracle executive.

What Does All This Mean? Validation, For Sure

My reaction to Kenandy is: welcome to the game! Building a full-featured ERP system from the ground up is incredibly time-consuming and resource-intensive, even if you're doing it on a platform with good development tools. If anyone can do it, though, it should be Sandy Kurtzig—although I haven't met her in person yet (I am not a spring chicken, but I am glad to say that she is from an era slightly before my time as an ERP consultant and industry analyst), by all accounts she is a force to be reckoned with.

Kenandy, Rootstock, and Inforce are certainly validating the cloud ERP space. I don't think they are anywhere as functional and industry-specific as Plex Online, Epicor Express, and SAP Business ByDesign, but, for the Salesforce CRM users that need business-to-business (B2B) commerce with basic manufacturing and assemble-to-order (ATO) functionality with inherent mobility (Salesforce Touch) and social (embedded Salesforce Chatter) capabilities, I can see how they can be attractive, especially with transparent subscription pricing and no-hassle setups.

Some Caveats to Watch For

However, the jury is still out whether the Force.com platform is a true mission-critical environment, which is an absolute requirement for full-blown manufacturing. An outage of a few hours with a CRM package is painful, but an outage of a few hours with a manufacturing system will shut down a plant and can cost a company millions of dollars. To that end, in order to guarantee uptime, Plex had to design and build out a "warm standby" data center in a co-location facility down in North Carolina. Even in the case of a total disaster in Michigan, where the Plex HQ is, the vendor could be up and running with current data within two hours.

While the focus on social functions is a clear differentiator for Kenandy and Rootstock-FinancialForce.com, I am not sure how that's going to resonate among core manufacturers. It might be indicative to see Kenandy's positioning for "product companies" instead of manufacturers. These solutions seem aimed at the lowest end of the market, taking on GlobalShop, ProfitKey, ShopTech E2, and that tier of competitors. But, while that market is enormous in terms of companies, it's difficult to make money, as these companies are incredibly price sensitive (and might still require some industry depth). Over time, the cost of SaaS might even rise and more companies will want truly differentiated solutions.

As a side note, the whole NetSuite-Rootstock relationship baffles me. Not long ago, I thought for sure that NetSuite buying Rootstock was a foregone conclusion. We might never know the real reason why that has not happened yet. Is it that the traction (a few dozen customers) has been much less than hoped for (and especially compared to NetSuite's success in distribution, e-commerce, and service businesses, measured in several thousands customers)? Is it that the asking price was too high (or too little, depending on whose point of view it is), and perhaps the Force.com relationship can only bolster the price for Rootstock? Rootstock’s founder, president, CEO, and board member, Pat Garrehy, was previously the founder and CEO (for over twenty years) of Relevant Business Systems (now part of Consona Corporation).

Dear readers, what is your take and reaction to the aforementioned events? Are you ready to get your feet wet in the cloud ERP space and available solutions?
 
comments powered by Disqus