Not Yet Sold on SaaS ERP in Manufacturing? Take a Hard Look at Plex Online - Part 3

Part 1 of this blog series explained Plex Systems’ ebullience and growth despite a hostile and depressed environment, especially in the discrete manufacturing sector. While the software as a service (SaaS) model is now mainstream in many functional areas of business, the article concurred with Frank Scavo’s recent assertion that, for the time being, there is only one true SaaS enterprise resource planning (ERP) solution for manufacturing companies: Plex Online [evaluate this product].

Part 2 then zoomed into Plex Online’s capabilities in terms of technology, customer size, international capabilities, and so on and so forth. The article ended with an analysis of Plex Online’s traceability capabilities that are critically important to medical devices manufacturers.

The final part of this blog series will peer into Plex Systems’ future, and will conclude with a brief question and answer (Q&A) session with the company’s top executives.

What’s in Store for Plex Systems?

For a long time Plex has operated without any external financial investment. The company completed a US$6 million raise in December 2009 from multiple sources, although Apax Partners remains the main investors.

The goal for the vendor is to accelerate growth and become initial public offering (IPO)-ready in mid 2011, at which time the company will evaluate its options. Plex's roots are in the automotive industry, though it is now expanding into other areas such as life sciences/medical devices, food and beverage (F&B), and aerospace and defense (A&D).

The intent is to increase penetration in these industries’ sub-sectors using the quality/compliance management capabilities as an entrée, as well as via trade associations and Web marketing. In addition to growing both its inside sales and direct sales teams (i.e., “the feet on the street"), Plex is also seeking sales and service partners in Europe, Asia, and other geographies (currently generating about 40 percent of revenues via the channel).

Q&A With Plex's Top Brass

In addition to meeting Patrick Fetterman, VP of Marketing, in person in late April 2010 (as mentioned in Part 2), I have since posed some pointed questions to him via e-mails. What follows are the combined answers from Fetterman and Mark Symonds, Plex Systems CEO and President.
Q1: What about any native document/content management capabilities for your traceability capability (mentioned in Part 2)? Or, are there partners’ solutions and application programming interfaces (APIs) required?

MS & PF: Plex Online stores traceability data in the database. Documents such as material safety data sheets (MSDSs) and material certifications can be captured by scanning or via email or electronic data interchange (EDI). These documents are linked to the database records for the material/lots to which they relate.

Each specific container of source material (e.g., bundle of steel, box of parts, gaylord of resin, engine block, etc.) gets a unique label, often a barcode. When a worker goes to record production at a work center, they or Plex Online identifies the specific material/parts being consumed. Plex Online then depletes the source material and creates an electronic link between the input and output. This happens at every operation, including the shipping step.

If it is determined that there is a problem with a given source material/part, the user can enter the ID of that lot/part and get an immediate "trace tree" of where it went (look at relevant Plex Online screen shots here). Likewise, if a customer finds an issue with a product, the user can use the "backward trace" to determine all the specific lots/material that was used in the non-conforming product.

To accomplish this we often capture data directly from equipment via programmable logic controllers (PLCs). Examples include stamping presses, weld cells, and mixers. We have Web Services APIs to support these activities. We capture inspection data from check-sheets, gauges, OLEs for Process Control (OPCs), etc. Again, the data is tied electronically to the material/parts inspected.

Q2: How would you describe your sweet-spot customer in terms of size, the number of users, regions, etc.?

MS & PF: Plex Online customers fall into a revenue range from as little as $10 million to over $2 billion. Customers with revenue greater than $2 billion tend to buy point solutions such as quality, supplier management, and manufacturing execution systems (MES) or solutions for specific operational units. At the other end of the size range we work with BioTech startups. Companies with revenues under $2 billion typically buy the entire solution and replace dozens of business applications.

Plex Online scales to accommodate any number of users and, in fact, we encourage access by everyone in the organization – “from the shop floor to the top floor”. We make shop floor workers knowledge workers. Our pricing is typically by site for unlimited users, thus encouraging widespread adoption.

New Plex Online customers generally are companies that are no longer satisfied with the status quo. They know they need to do things better and faster to outperform their competitors. These companies may have outgrown older technologies or may have considered new solutions due to a spin-off or acquisition.

To date, most Plex Online customers are headquartered in the US or Canada. Most, though, have operations on other continents. We have customers headquartered in Japan, Germany, and the UK. We have localized the product to support facilities in Mexico, Japan, China, Germany, and the UK. For example, we are German Generally Accepted Accounting Principles (GAAP) certified and compliant with the Golden Tax and Audit in China. The product is completely multi-language and multi-currency enabled.

Q3: Who is the unavoidable consistent competition, and why do you win or lose?

MS & PF: Plex Systems competes with on-premise ERP companies such as SAP, Oracle, SYSPRO, and in smaller accounts, Epicor. Plex Online frequently replaces application software from Consona, QAD, and various legacy systems from Infor such as MAPICS, BPCS, Baan, and SyteLine.

We win more than our fair share due largely to the functional fit of the product for manufacturers and the completeness of the solution. Customers don't need multiple products to run their business. When we lose it is typically due to lack of brand awareness. For instance, management may recommend Plex, but faces resistance from the board, who has only heard of SAP and Oracle.

Q4: Geographic coverage and languages? Incidentally, since you admitted that going into a new industry would be a challenge (for the lack of dedicated product managers, see Part 1), would that also be the case with localization requirements?

MS & PF: Plex Online is a solution that is easily configurable to meet localization requirements to accommodate different tax laws, regulations and languages. The language support is completely database-driven. New languages can be added very rapidly. Plex Online offers full support of double-bytes languages such as Chinese and Japanese.

To understand localization requirements, we often engage with accounting or consulting firms located in-country. This has proven effective in defining the system enhancements that may be needed.

Plex Systems is committed to supporting our customers wherever they do business. Plex Online is used by customers in China, Japan, Mexico, and throughout Europe as well as in North America. We currently have a dedicated country director in Germany and see an opportunity to expand our presence with European manufacturers.

As for new industries, we have found that Plex Online does not require a great deal of modification since it captures and tracks data at such a granular level. We track every movement of every container of inventory in a plant. We offer bills of materials (BOMs) as well as recipes in the same product. When we were approached years ago by Cuisine Solutions, our first food customer, we were concerned about the fit. We found very few enhancements required to support their entire business.

Dear readers, what are your views, comments, opinions, and particular experiences with Plex Systems and Plex Online? Do you think a homogenous fully functional enterprise applications suite is possible and desired in manufacturing environments (and in a SaaS manner to booth), or are heterogeneous IT environments simply today’s reality and how the world works?
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