Consona’s CEO Clearing the Air (about Compiere) - Part 1

In early June Consona Corporation’s analyst relationship (AR) contact forewarned me about the company’s upcoming acquisition of a “leading open-source and cloud computing enterprise resource planning (ERP) vendor” and asked about my availability for a briefing once the acquisition was closed. After consultation with TEC’s free and open source software (FOSS) buff Josh Chalifour, we quickly identified Compiere [evaluate this product] as the most likely target (not to say prey).

Namely, this open source software vendor had been eerily quiet for a while (and ignoring our repeated calls for update briefings) and lately there had been much less activity within its once vibrant FOSS user community. The rumors about Compiere running out of “dough” and looking for a white knight had also floated occasionally. Once the acquisition was made official on June 16, 2010, Josh was swift with his blog post that mostly talked about the abovementioned observations prior to the merger and gave some speculations about Compiere’s future under Consona.

A slew of blog posts from other market observers and pundits, such as Frank Scavo and the 451 Group, came out at about the same time. As expected, there were blog assertions and speculations from some peers and competitors of Compiere, such as xTuple’s CEO Ned Lilly and OpenBravo’s executive Paolo Juvara.

As a common thread, most of these articles lamented about the dubious future of Compiere’s once enthusiastic and active FOSS community and its contribution to the product’s future development. Compiere’s original founder Jorg Janke is currently writing a tell-all blog series on the company’s genesis, from inception to Consona, and we will all certainly stay tuned for that (the first part is already out).

The other day I had a productive briefing with Jeff Tognoni, Consona’s knowledgeable and straight-shooting CEO, who is also a seasoned industry veteran (both as a software executive and investor). Given his longevity in the industry, Tognoni is not averse to criticism, competitive banter, and being challenged by pundits, but in this case he wishes that some of those bloggers had written their pieces after hearing Consona’s side of the story (the acquisition’s rationale) first. To his credit, Ned Lilly was crystal clear about his conflict of interest, and it is not that logical to expect competing CEO’s consultations prior to writing (provocative) blog posts.

First Major Message: Consona Is Not Infor

As a memory refresher and as background, Consona provides ERP and customer relationship management (CRM) software for companies of all sizes. The vendor has 700 employees worldwide, is headquartered in Indianapolis, Indiana, US, and has a few large development centers in India. Under private ownership by Battery Ventures and Thoma Bravo, Consona has quadrupled in size to about US$130 million since its inception in 2003 (at the time called Made2Manage Systems). For more information, see my recent exhaustive article on the company.

In his aforementioned ERP Graveyard blog post, Ned Lilly called Consona an "Infor wannabe" and Tognoni vehemently disagrees with that assertion. Sure, both Infor and Consona have been acquisitive since the early 2000s under their respective private equity backers. Both vendors have also attempted specialization by tackling some defendable vertical niches and both companies pledge to enhance, maintain, and support all acquired products in the long term.

But this is where the similarity ends, starting with these vendors’ different sizes. Infor is at least 15 times larger in estimated revenues, which translates to being much more leveraged (and under much more pressure to pay back the debt). Moreover, Consona is not active in the best-of-breed supply chain management (SCM) space, despite Battery Ventures also owning HighJump Software. Neither is Consona in active pursuit of the public sector, enterprise asset management (EAM), and business intelligence (BI)/performance management (PM) offerings yet, as is Infor.

In addition, a major philosophical difference is that all of Consona’s products and their roadmaps are independently managed (in a profit center manner), based on the feedback and best interests of customers using those products. In other words, contrary to Infor, Consona has never bet the farm on cross- and up-sale of acquired products, and on some unifying (and gut-wrenching) “Corestone”, "Open SOA" or “ION” platform strategy (which inevitably leads to some product rationalization). Consona’s aforementioned operating model was instituted to achieve both organic growth and increased customer satisfaction for acquired product franchises.

In addition, except for perhaps Made2Manage and Paradigm ERP systems (respectively running on Microsoft Visual FoxPro and Delphi platforms), all other Consona products are on relatively mainstream client-server platforms and have enviable micro-vertical industry focus and leadership (e.g., Axis in metal cutting centers, DTR in plastics and injection molding, etc.). Conversely, Infor has a much larger number of IBM System i (formerly AS/400) and UNIX-based “ERP collector items” (not to call them technological “toxic assets”).

Second Major Message: Compiere Was a Cloud-platform Buy, Stupid

First off, Consona and Tognoni are still trying to figure out how best to deal with the business logic part of the Compiere open-source initiative, and they are committed to working with the community to figure this out. Consona also plans on continuing a community version of Compiere after it completes strategic planning and works with interested parties, including customers and partners.

Consona continues to innovate in the on-premises software world and is fully committed to its existing products, especially those on the Microsoft .NET Framework. Still, adding cloud deployment options has lately become a market-driven priority. To that end, Consona had the option of re-writing one or more of its ERP products into multi-tenant software as a service (SaaS) architecture.

However, Consona concluded it was going to take it a few years to move its current core on-premise ERP products to the cloud. The vendor rather decided to “throw the ball down the field” and acquire a platform and product that is built from the ground up to be the reference architecture for cloud computing and thus get into the market for cloud ERP now. Thus enters Compiere, while Consona remains committed to providing a cloud service roadmap for its core on-premise products (it may just be a year or two before they are released).

In addition, all of Consona’s ERP products are manufacturing-oriented (as opposed to targeting distribution and service industries), and manufacturers have yet to jump on the SaaS bandwagon in earnest. Sure, Tognoni is aware of NetSuite (see my recent related blog post) and Plex Systems (see another related blog post), but he points out that the size of these vendors (i.e., about US$150 million and US$35 million respectively) is dwarfed by the size of SaaS vendors that have started at about the same time. Indeed, Concur, Taleo,, SuccessFactors, etc. all rather offer appetizing departmental software solutions with a much narrower functional scope.

Consona CRM Cloud Paved the Way

As stated earlier, Consona’s vision is to become the leading provider of enterprise-class, cloud-based business solutions. The first cloud trial balloon of a sort was Consona’s CRM Cloud offerings as a way to overcome the previously acquired CRM products’ (i.e., Onyx, KNOVA, and SupportSoft) diverging technology platforms. At first glance, there is nothing overly differentiating in Consona CRM Cloud leveraging Amazon Web Services (AWS) Elastic Compute Cloud (EC2) and Simple Storage Service (S3) for the server infrastructure and platform, in light of a slew of other vendors doing the same infrastructure as a service (IaaS) arrangements. Indeed, Oracle, Lawson Software, Sage, Pegasystems, and xTuple would be just a few vendors that leverage meteorically rising AWS for their private cloud and managed hosting offerings.

However, Consona calls its arrangement a private tenant (rather than single-tenant) at the infrastructure level, where Consona offers its software applications “as a service” in a multi-tenant manner (i.e., multiple tenants within a private cloud). Consona also combines Amazon infrastructure and application expertise with its own strategically designed set of affordable managed services and support, including infrastructure and application maintenance services. Flexibility and customer choice can be seen in three software licensing options (i.e., perpetual, subscription, and consumption) and two deployment options (on-premise and in cloud), while having only one professional service organization to deal with.

Part 2 of this blog series will conclude by analyzing what Compiere brings to Consona. Your views, comments, opinions, and particular experiences with Consona and Compiere are as usual welcome in the meantime.
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