Plex Systems at a Crossroads: Part 1

Plex Manufacturing Cloud is an integrated manufacturing software solution for managing the manufacturing process (including specific lean manufacturing needs), with functionality for:

  • engineering and design;

  • financing and accounting;

  • electronic data interchange (EDI) and orders;

  • materials and inventory purchasing;

  • receiving and tracking;

  • shop floor production and control;

  • process inspection;

  • parts production and traceability tracking;

  • packaging and shipping; and

  • Kanban, Kaizen, and Heijunka scheduling capabilities.

I recently attended PowerPlex 2013, Plex Systems’ 12th annual user conference, where the company’s management talked about Plex’s customer focus and cloud capabilities. In a series of two blog posts, I’ll provide a backgrounder on the company and then take a deeper look into Plex’s current offerings and position in the marketplace.

To understand Plex Systems’ current state of affairs one must understand the company’s history. About 23 years ago, MSP Industries, a manufacturer of forged automotive parts and similar products, developed its own integrated enterprise resource planning (ERP), quality management system (QMS), and manufacturing execution system (MES) solution. After a number of repeated sales and implementations to metal stamping, automotive suppliers, aerospace and defense (A&D) component manufacturers, and similar businesses in Michigan and neighboring states, MPS decided to spin off the software company in 1995. That’s when Plexus Systems was formed (the name was changed in 2009 to Plex Systems, in an attempt to avoid brand name confusion with other unrelated products), and MPS remains Plex’s customer to this day.

Plex has had a somewhat similar inception story to fellow manufacturing software provider QAD, having been commercialized after being originally developed for a specific company. The original QAD product offering was also on-premises, in QAD’s case based on Progress Software technology; the switch to Microsoft Windows took place in the late 1990s. On the other hand, Plex Systems’ transition to the pure cloud deployment and Microsoft .NET took place in 2001, and currently the company has about 300 employees and 800 corporate customers. Most of the customers are from the U.S. (from the Midwest Scranton-to-Waukesha “Rust Belt” to be even more precise). Still, as these U.S. companies have divisions overseas, about 15 percent of Plex Manufacturing Cloud (formerly Plex Online) users log in to the system from abroad (the product currently supports five languages).

Continual Community Product Development
In the early years, when Plex’s customers were “only” a bunch of metal stamping and fabrication manufacturers in the automotive industry, any new product’s functional requirements were easily handled by Plex employees who all came from the auto industry and knew it inside out. Thus, for a long time there was no need for Plex to invest in software product management. The continually-evolving community-based product development model worked well for both the vendor and its customers: Plex would charge the customer that insisted on some new feature for the development work (meaning profitability for Plex, which lots of cloud startups have yet to achieve), and that feature would then be made available to other customers within the core Plex system.

Plex’s model for charging the initiating customer for new requests is interesting and intriguing. Surely some customers must have had some objections to paying for a new feature that then becomes free for everyone else. But Plex continues to “sell” this to its customer base. There must be some “first dibs” benefit written into the T’s and C’s. In addition, the customer that is willing to pay for that urgent requirement is likely also happy to benefit from being more agile and able to run its business more efficiently because of the new functionality (and cares much less about paying for the benefit of everyone else). After all, what goes around comes around, and each company in the Plex network might one day benefit from another company’s contribution (like in the open source software community model).

An Atypical ERP Provider
Contrary to manufacturing-oriented ERP products, Plex Online (now Plex Manufacturing Cloud) has long featured comprehensive human resource (HR) and talent management capabilities, given its customers’ allergy to bolt-on solutions and interfaces. Continual incremental functional enhancements (often on a daily basis) meant no major discrete product releases every 12–18 months and constant product upgrade and migration cycles (the “hamster wheel” syndrome affecting on-premises ERP customers). On the professional services side, the Plex Systems person that implemented the product would continue to be a support source for the customer for life, which worked initially in startup days, but became non-scalable with some customers’ subsequent growth and Plex Systems’ size today (plus, after a while, the implementation/support person would probably like to have some career advancement).

In addition, the community-based product development system became difficult to manage when Plex opportunistically expanded into the food and hi-tech/electronics industry a few years ago. Given the lack of in-house industry experience there, managing new enhancements was no longer a piece of cake, and product managers were introduced as liaisons and guiding experts between customers and Plex’s research and development (R&D) team. Additional issues started mounting over time, such as a lack of communication with customers about what was already available and how not to duplicate unnecessary R&D work (am I wrong, or should this not be a fairly manageable task by almost any run-of-the-mill searchable information repository?) Furthermore, some functional requirements by some customers (who are willing to pay) might not be of much relevance to other customers, and why burden the core ERP system with that code (and getting into the “spaghetti code” syndrome of over-engineered products like SAP)?

However, in a nutshell, success seems to have been chasing Plex rather than the other way around, and today Plex seems to be the victim of its own success. Plex is not a conventional ERP software vendor, to say the least. While its customers have become Plex “fans” of sorts, Plex’s future growth and expansion have meanwhile became somewhat plagued by the parochial Michigan-centric view of the world. The company still has only one major office, in Troy, Michigan, and has only recently opened a customer call center in Irvine, California, currently with five employees, but that number is expected to grow to a dozen in late 2013. Previously, service and support was done via a ticket-based system whereby an expert would respond to the ticket from his/her place (depending on the time of the day), but the response time could be over an hour. The aforementioned real-time call center should be a major customer service upgrade.

Also, there have been no education services and training courses and materials provided by Plex—user training generally happens during implementation and as part of service and support. It goes without saying that Plex was hereby losing a major revenue opportunity, given that other ERP vendors make sweet money on classes, online courses, etc., not to mention the SAP and Oracle Universities and an entire SAP and Oracle cottage publishing industry (SAP Insider, etc.).

Thus, similar to Infor’s diverse local development teams and fiefdom structure being overcome by bringing in Charles Phillips (as CEO) and his ex-Oracle lieutenants (who did not have emotional attachments but had the “big picture” view instead), Jason Blessing seems to be a smart infusion to the Plex gene pool. He is a Michigan native and local university alumnus, which means familiarity with the local mentality, but additionally, his residence in California and connections to Silicon Valley as well as experiences leading a large global product development organization at Taleo and professional services at PeopleSoft certainly bring a new perspective to Plex. Jim Shepherd, formerly of Gartner (AMR Research) and a seasoned industry expert (almost 40 years in the industry), is now a VP of Strategy and should also bring some structure to product development. Both Blessing and Shepherd can help with their industry connections—for example, a plethora of companies in the Silicon Valley have much more knowledge about developing and running cloud operations than Plex’s team in Troy, MI.

Heidi Melin, formerly CMO of Eloqua and yet another “outsider” unencumbered with the Midwest-centric view of the world, will be the CMO at Plex beginning in July 2013. Last but not least, Chris Bishop, who serves as VP of global services and has worldwide responsibility for Plex’s recently bolstered professional services, education, and customer support operations, is a Michigan native, but is a recent hire and has also spent a significant amount of time at PeopleSoft working with supply chain solutions implementations. Make no mistake, the veterans of Plex that intimately know the products are still around, such as Jason Prater, a 15-year veteran and VP of development leading the product and platform development teams. For his part, Jerry Foster is a 23-year veteran and as the VP of research and development he makes sure that Plex is keeping abreast of industry trends.

Part two of this series gives my impressions from PowerPlex 2103, the company’s current state of affairs, and a look at the road ahead.
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