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Is Kenandy Turning into a Manufacturing Workday?

Written By: Predrag Jakovljevic
Published On: October 29 2013

In anticipation of the upcoming Dreamforce 2013 mega conference by salesforce.com, we recently had an intro briefing with Kenandy’s top brass. The new company’s chairman and chief executive officer (CEO) is Sandra “Sandy” Kurtzig, an enterprise software industry pioneer who founded former ASK Computer Systems with the veteran enterprise resource planning (ERP) product ManMan in 1972, and helped grow the company into one of the ten largest software companies in the world at the time (ASK was acquired in 1994 by Computer Associates, now CA Technologies, and has since then ended up in Infor’s legacy ERP portfolio).

Kenandy’s First Two-plus Years
In 2010, Kurtzig founded and initially funded Kenandy, once again transforming the world of enterprise management software with a cloud ERP for the enterprise built on the Salesforce Platform. Kenandy ERP was devised and built from the ground up to offer the following value props for customers:

  • Start Fast—Implement new operations quickly and integrate easily to any legacy system in your IT environment.

  • Go Far—Understand and manage your business in real time and align your global network with native collaboration.

  • Stay Flexible—Create your own analysis and apps (without adding to the IT backlog) and let Kenandy manage the upgrades.


In June 2011, the company raised a Series A funding of $10.5 million from Kleiner Perkins Caufiled & Byers (KPCB), salesforce.com, and Wilson Sonsini Goodrich & Rosati (WSGR). In September 2011, Kenandy v1.0 was launched, with salesforce.com CEO Mark Benioff and Ray Lane of Kleiner Perkins (former Oracle president) unveiling the product line at Dreamforce 2011. At the time, the intention was to focus only on manufacturing in the cloud with social capabilities for the small to medium business (SMB) market, whereas Kenandy would integrate to any leading financial management system.

But then the company decided soon after to deliver its own financials—users of ManMan expected even decades ago that an ERP solution would have almost everything needed to run a company, and this is the expectation today too. ManMan did well in both the large enterprise and the mid-market arenas, but then the product got trapped by its own technology—one thing competitors always had against ManMan was that the financials weren't truly integrated. Kurtzig and Lane know the application market very well, including knowing that it’s easier to sell a solution to a company if you can capture the CFO’s heart and mind (and wallet), so it’s likely that the two of them decided the financials had to come quickly for Kenandy.

After a while Kenandy started getting inquiries from large companies as well as from the small- and mid-sized market it started out in. The first few customers were smaller companies, but then the company decided to go upmarket as it is a much more lucrative business. In other words, Kenandy does not want to be in the SMB ERP space like Rootstock Software, Acumatica, or Plex Systems, but rather to be a manufacturing counterpart of Workday. In April 2012, Kenandy v2.0 Financials was released, while Kenandy eProcurement was released in January 2013.

In June 2013, the vendor released Kenandy v3.0 for large global enterprises, and raised Series B funding of $33 million from Lightspeed Venture Partners, KPCB, WSGR, and salesforce.com. The currently available modules are Order-to-Cash, Planning and Production, Procure-to-Pay, Global Financials, and eProcurement, and their detailed features can be seen in Figure 1. Kenandy sells all of these apps as one package.

kenandy-footprint_small.png

Figure 1 – Kenandy Functional Footprint

Kenandy Early Adopters
As depicted in Figure 2, Kenandy can be implemented in the following three ways:

  1. As a core ERP solution,

  2. In a two-tier ERP setup, i.e., with a different Tier One ERP system at a company’s headquarters and Kenandy in other divisions, and

  3. As an “edge” solution, e.g., for e-procurement (getting into an enterprise account via a back door of sorts).


routestoclouderp_3paths_small.jpg

Figure 2 – Kenandy Deployment Options

The company currently has customers in each of the above three scenarios. At this stage, Kenandy has seven live clients across the U.S., in both the SMB and global enterprise realms. As said earlier, the vendor is now focusing on global enterprises with $1 billion or more in sales and/or 1,000 or more employees. The clients are mostly in the high-tech and electronic consumer goods sectors, with the focus moving to consumer packaged goods (CPG) and medical devices soon, where traceability and trade promotion management are critical capabilities. The product is still fairly horizontal/cross-industry and the company is still noncommittal with respect to going aggressively vertical. It is logical that Kenandy would establish itself first and not limit its range at this point. Over time, however, as Kenandy becomes more established, the company will likely determine target industries and become more vertically oriented.

The company now has 55 employees and is growing, with offices in Redwood City, Newport Beach, Chicago, and Boston. All its sales are direct right now, but Kenandy’s sales will eventually go via partners as well. Kenandy is in the midst of targeting all of its desired partners but its primary relationship right now is with salesforce.com. But while salesforce.com’s brand is excellent, its expertise is in the customer relationship management (CRM)/sales/marketing realm through and through. It doesn't often happen that salesforce.com brings Kenandy into its deals. Its sales staff likely don't know how to find those manufacturing ERP deals or know what to do with them if they stumble across them. In fact, it is Kenandy that has pulled salesforce.com in to some deals, not the other way around.

The Salesforce Platform at the Core
The Force.com platform (part of the overall Salesforce platform, see Figure 3) is the “secret sauce”, as Kenandy doesn’t have to reinvent the wheel regarding security and other automatic facilities such as global search, adding fields, workflow framework for any transaction, drill-down/drill-around, Salesforce Chatter, mobility, etc. Kenandy users can work on iPad/iPhone, Android, and Blackberry platforms. The aforementioned social networking tool Chatter provides shared access that is live and in real time, with no data replication, and that is secure and auditable.

kenandy-architecture_small.png

Figure 3 – Kenandy Architecture

Kenandy is fairly infatuated with the Salesforce Platform and is happy that other vendors, even potential competitors like FinancialForce.com, Rootstock, Intacct, and Ascent ERP, are benefiting from it as well. Everyone’s use and input should help enhance the platform. With the Salesforce platform, metadata design supports customization through configuration, whereby easy drag-and-drop and point-and-click tools allow further customization. Users can create and add fields, change workflows, or design page layouts, and those customizations are maintained during updates of Kenandy ERP. Kenandy’s analytics currently align with the Salesforce platform, whereby business users can develop reports and dashboards in a matter of minutes. However, given salesforce.com’s limited knowledge of financials reporting, Kenandy has had to do its own business intelligence (BI) and financial reporting.

The latest e-procurement module is impressive—it looks like Amazon and is similar to Coupa Software. There are no reverse auctions and supplier networks in the module yet, but there are local and punchout catalogs, shopping carts, requisitions, approvals collaboration with suppliers via Chatter, creation of requests for quote (RFQ), and supplier performance dashboards.

2013 marked Kenandy’s turn to the global enterprise—and this turn was validated by sales to firms like Del Monte and Yokohama. The vendor claims to have a strong pipeline as it heads towards 2014, especially in the consumer packaged goods (CPG) and medical device space. Kenandy pricing is per user per month for all available functionality (except for e-procurement extra and limited license for suppliers). One concern here is that all those additional Salesforce AppExchange modules can add up to quite a cost.

Kenandy considers SAP, Oracle, NetSuite, and “do-nothing” as its main competition, and is dismissive of Rootstock and Plex as being too plant-centric and ignoring global financial applications (that lack of strong global financials will likely be their downfall, as it was in ManMan’s case). In the early days of ERP software, the CFO always made the decision. As ERP rose in importance, manufacturing got to make the decision, and then as CRM became key, it was the VP of sales. Now, most enterprise systems have achieved pretty close to functional parity and ERP is becoming a commodity. The CFO is once again the key figure in the sales process and in the decision, so the financials capabilities in ERP systems need to be stellar.

Following in Workday’s Footsteps or Taking the Road Less Traveled?
As mentioned earlier, Kenandy seems to want to be a manufacturing version of Workday, but the company won’t find it easy to follow in Workday’s footsteps exactly. Workday's first several customers were a bunch of unhappy Oracle PeopleSoft customers that Workday’s founders happened to be aware of (as former PeopleSoft founders). Once the company made a little dent and some buzz developed with these global customers (Flextronics, Chiquita, etc.), the others (SAP and Oracle customers) followed. We are not sure whom Kenandy is targeting first, given none of the early adopters were ex-ManMan customers.

Since they have had little warning and caveats about Workday, customers were buying the promise of the cloud. Like the blind migration to SAP R/3 in the 1990s (everyone did it because all of their competitors were doing it), Workday must be careful not to start running into missing features or limitations of the mass market. Kenandy doesn’t have the luxury of unbridled praise like Workday has had, and will have to demo the product’s fit and ease of use so prospective customers know what they are getting or not getting.

Kenandy’s strategy for the upper/mid market and highly outsourced manufacturing businesses (that increasingly rely on contract manufacturers and suppliers) seems plausible. By being a newer solution, Kenandy avoids the problem experienced with many older ERP implementations—high levels of customization (and the resulting “spaghetti code” syndrome that occurs over the decades). This has caused many traditional ERP vendors to attempt to “detox” their solutions to get rid of the complexity that has developed over the years. Kenandy, having been devised for cloud, social, and mobility from scratch, has avoided this over-engineering.

Kenandy currently has a small sales force and no channels. Since there is limited real competition for cloud ERP, the company has probably been opportunistically picking off the low hanging fruit. Given its currently small size, it is relatively easy to achieve growth by just getting one or two big deals per quarter.

But to achieve long-term growth, the company will have to move into SMBs, at least to pull in some plants or facilities. It will also take fully featured software, executive relationships, and a sterling reputation to get Kenandy where Workday is now. The large enterprise segment is saturated for the central enterprise system and dominated by SAP and Oracle. Penetration requires unseating a powerful incumbent, and that isn't easy. I think the aforementioned three-prong strategy, including being a satellite system, is smart because it should help the vendor get a foot in the door, but still no one can be sure how successful Kenandy will be at becoming the main enterprise system.

Kenandy has a huge advantage in starting with a clean slate so there is no need to worry about backwards compatibility. Although it would be hard for Kenandy to actually become a second Workday in a short period of time, if the vendor starts to really execute on sales, it could eventually become one of the top ten largest ERP players of all time. At the very least, a few more of the still floating legacy ERP products will likely die off as a result of Kenandy’s entrance.

Related Reading:

Plex Systems at a Crossroads: Part 2 (July 2013)

In Conversation with Rootstock Management (January 2013)
Cloud ERP Wars Intensifying in Full Force(.com) (May 2012)
 
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