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Plex Systems at a Crossroads: Part 2

Written By: Predrag Jakovljevic
Published On: July 2 2013

At the beginning of June, I attended the PowerPlex 2013 conference, Plex System’s 12th annual user conference, in Columbus, Ohio, where the focus was on the Plex Manufacturing Cloud, Plex’s cloud-based vertical ERP software solution for managing the lean manufacturing process. Following is a look at the product and its position in the marketplace, as well as the company’s new product roadmaps and what looks to be missing from Plex’s current strategy. For more background on Plex, see my recent post on the company’s history and current framework.

PowerPlex 2013 Keynote
Anyone at PowerPlex 2013 who was expecting the rah-rah flamboyance of NetSuite or salesforce.com’s cloud conferences and a “we’ll conquer the world” bravado keynote speech from CEO Jason Blessing must have been disappointed. But the trick of public speaking is to know your audience, and Blessing’s main goal was to reassure Plex customers of continuity (given some customers’ fears that the new owner and CEO might mean a sharp departure from the former Plex charter). Quite the contrary; he confirmed Plex Systems’ focus on its customers by citing significant investments in customer experience resources, product development capacity, and product enhancements. That is to say, any changes will be good rather than detrimental to customers.

Blessing revealed what he has been able to learn about Plex customers during his early days as CEO: these companies have a true passion for their business, and strong beliefs about manufacturing—first, that manufacturing matters, and second, that the best days are yet to come for manufacturing. But, disruption is the status quo in enterprise software, and for the first time the consumer is driving the innovation (as the disruption du jour). These days we all use technology for lots of things outside of work, and most of us have a smart device in our hand a lot of the time. Thus, buying software as a service (SaaS) and cloud technology is approaching a tipping point, with users reporting that they have significantly better ease of implementation with the cloud, and are less likely to encounter upgrade difficulties than with on-premise systems. Businesses, especially manufacturers, are realizing that they must leverage modern tools in order to innovate.

Blessing asserted in his keynote speech that cloud solutions from salesforce.com or NetSuite were built as horizontal and generic solutions, whereas Plex System’s mission is to build a vertical cloud for manufacturing. With the Plex Manufacturing Cloud, implementations can move from taking months to requiring only weeks, customers only pay for what they need, and the focus is on configuration, not costly customization (see Figure 1). He concluded his “salt of the earth” presentation with an indication of the direction for Plex Systems’ focus in the near future:

•    Enhance existing products: investment in R&D resources, key product enhancements (including those initiated by Plex in addition to those initiated by customers), and more consistent communication in the community
•    Enrich customer experience: enhance services and support, build new customer communities, implement Net Promoter surveys
•    Raise awareness of Plex: responsible growth, evangelize in the market, investing in mutual Plex and customers’ future

plex-manufacturing-cloud.png

Figure 1: Features of the Plex Manufacturing Cloud

VP of Global Services Chris Bishop then continued with the introduction of a brand new education services program that includes classroom training focused on immersion into the Plex Manufacturing Cloud. The first “brick and mortar” course is a three-week long Plex Boot Camp, with others to come. The education services program will also include online instructions with function-specific training (the first WebEx online course is slated for August 2013) and Plex TV, which will offer shorter vignette-like courses so customers can learn at their own pace.

Plex Systems has recently reorganized its services into the following groups: professional services, educational services, and customer care. Bishop acknowledged that Plex’s customer care and communication has traditionally been good, but the goal is to provide not just good but great customer service from now on. At PowerPlex 2013 there was the unveiling of The Plex Community, a virtual, collaborative ecosystem supported by Jive Software’s well-known social networking capabilities. The idea is to turn everyone—including Plex employees, partners and customers—into contributing members and active participants who address issues, solve problems, and share best practices. A genie-like feature will be able to proactively push recommendation alerts and feeds to participants.

Going the Product Roadmap Route
While Plex’s focus on driving continuous innovation has made it easy for customers to continually innovate operations and change processes and business models, it has created product management and strategic planning problems for the software vendor. Thus, for the first time in the company’s history, at PowerPlex 2013 Jim Shepherd introduced the concept of product roadmaps, which is a common industry practice elsewhere in the ERP vendor community. It doesn’t mean the end of customer-initiated product development (which has been lucrative for Plex), as it is meant to shape the demand that comes from customers, just in a different way than the community-based product development model of the past.  By allowing customers to plan for how to make use of product functionality and encourage interaction over product enhancements, the roadmaps are meant to visually represent Plex’s medium- to long-term product development schedule and improve communication about future enhancements.

After all, the conference theme, "Get Connected," was an acknowledgement of the importance of leveraging the input and direction of the Plex community and a reminder that through sharing information and insight, the entire extended enterprise should be stronger and more resilient. VP of strategy Jim Shepherd mentioned that the R&D themes at Plex will be about new industry features for verticals, improved user experience, extensions for geographic localizations, and centralized (shared) corporate-level enhancements (e.g., financial consolidation).

Jerry Foster, VP of R&D and the longest tenured Plex employee (and incidentally the most animated and funniest presenter of the conference), concluded the key presentation by talking about the major R&D achievements since PowerPlex 2012. Apparently, over 24,000 customer requests have resulted in over 700 new features and enhancements to the Plex Manufacturing Cloud over the past year or so. While Plex has long supported mobility on the shop floor, a major disadvantage has been support for the Microsoft Internet Explorer (IE) browser only. That will no longer be an issue within the SmartPlex mobility platform that is cross-browser. It uses native apps for login, but HTML5 is used for Apple iOS and Android user experience.

Plex users had also complained in the past about the solution’s lack of business intelligence (BI) and reporting capabilities. That issue was solved about a year ago with the introduction of IntelliPlex (powered by embedded Information Builders tools), whose adoption is now at nearly 1,000 users. Configurable dashboards give customers real-time visibility into the profitability of their operations. In addition, VisionPlex, introduced in 2013, is a user interface (UI) modification tool that is database-driven and aimed at SQL developers. It allows personalizing and customizing the Plex Manufacturing Cloud, for which customization capabilities have been limited in the past. Currently, adding new database fields and tables is not in the works for VisionPlex, but platform-as-a-service (PaaS) capabilities might be in the long-term plan. Some customers have noted that the system can be rigid, e.g., the lot and serial traceability is imposed onto all items (even those that don’t need this feature). Thus, some decoupling capabilities in the system would be beneficial. The vendor is also watching and evaluating in-memory tools and technologies. There are no burning pain points that require the use of such tools now, but the mere volume of data will likely reach the breaking point at some stage.

Another fly in the ointment for Plex Online has been its look and feel. A decade ago or so when the manufacturing users would shout “I don’t care for this Internet stuff, where is my software?!”, Plex’s user interface was designed to appeal to shop floor operators. The screen looked like a CNC console (for the emerging Gen Y workforce that metaphor may be quite foreign and ancient?) But, keeping up with the times, Plex has just introduced the next generation Plex Manufacturing Cloud UI, which features an intuitive look and feel for an optimized customer experience (see Figure 2). The refreshed F5 UI (the name signifying the F5 ‘”refresh key” on PCs) came now because of the consumer technology tipping point, an emerging workforce with consumer-like expectations, and available resources at Plex (which engaged with a Web design agency called Two Rivers Consulting to design the look and feel). This competing with respect to software beauty is in line with Infor’s recent UI initiatives, which entailed a creation of the company’s own internal creative agency called Hook & Loop.

plex-new-ui_small.png

Figure 2: Plex’s new look and feel.

Concerns/Room for Improvement
On the down side, there was hardly any talk of proactive global expansion by Plex Systems (the company has some presence in Germany and a local implementation partner, FIDES IT Consultants GmbH, again based on the divisions of its U.S. customers). In my one-on-one discussion with Blessing, he explained that there is still much more room for Plex’s growth in the U.S. and the rest of North America first (after all, the company only has two offices in the U.S. at this stage). At PowerPlex 2013 there were apparently nearly 40 prospective customers, many of who are on legacy Infor and QAD ERP solutions (Trans4m was mentioned a few times), and who are not thrilled by the vendor’s aggressive license auditing practices. In contrast, Plex offers one-year subscription contracts with automatic renewals and success-based pricing (which many cloud vendors tout as a possibility, but very few practice).

The U.S. expansion, additional revenues from education and other services in the future, and success-based pricing are good enough growth engines for the time being. Currently, Plex has nearly 20 sales employees in the Midwest, and plans to expand into other regions. For now, there are no resellers, but rather implementation and referral partners (about 30 percent of implementations are done by partners). Plex’s sales force has already been vertically specialized to sell to motor vehicles, A&D, and food industries (a regional focus will come over time as well). There will also be a sales force stratification based on customer size, with dedicated account management for strategic accounts. System implementation and referral partner programs will be expanded carefully as well. Currently there are three certified partners—Plante Moran, Revolution Group, and Baker Tilly—but the idea is to have about a dozen or so in the foreseeable future. Blessing candidly admitted to trying to emulate the former JD Edwards partner approach.

This is not to imply that Plex Systems is not eyeing global expansion, but that will only become a priority in two or three years. After all, one cannot forever rely on the “Rust Belt” manufacturing region, especially given the cautionary tale of GM and Chrysler’s bankruptcy in 2009 (and who knows whether their bailout would be approved again if the situation were to arise again, God forbid). Given several years of growth of over 30 percent a year, Plex Systems recently surpassed the $50 million revenue mark. Blessing is content to build up Plex’s capabilities in a lot of areas, put some more pieces in place, and reach the over $100 million run rate, and then an IPO might be an option.

It is not clear how much of Plex Systems’ R&D investment is self-directed vs. customer-initiated (which in turn can be individual customer projects, multi-customer consortium, or community-driven development), and also whether Plex’s plan to commit more to R&D was contingent on the product roadmap, or whether the vendor has already identified product areas to focus on (not shared with us) from which the product roadmap will emerge.

In addition, Plex Systems has yet to solve the FDA validation puzzle in the medical devices, drugs, and some food manufacturing environments, given its public cloud offering and continual enhancements (that might change the consistency of validated process outcomes). Of all of the possible opportunities for Plex, the vendor’s focus on medical devices or other FDA-regulated environments is surprising. I get the track-and-trace angle, but still, why target a vertical that just invites this type of serious inquiry in areas that are targeted by auditors and compliance departments are paid to look for trouble?

The cloud manufacturing space is becoming increasingly competitive, with NetSuite recently making great strides in the space, and a number of cloud ERP startups coming from the salesforce.com’s ecosystem, such as Ramco ERP On Cloud, QAD On Demand, SAP Business ByDesign, Epicor Express, Acumatica, Microsoft Dynamics, and Infor SyteLine are cloud manufacturing alternatives with much more global presence, vaster partner ecosystems, and brand recognition than Plex Systems.

At least Plex doesn’t have a conundrum of managing multiple solutions and technologies and having separate and dedicated product management teams. This situation takes a much more dedicated marketing effort to continually support, and differentiate, the solutions. There is also confusion on the customer side, as customers struggle to understand which product is best for them. How do the vendors handle sales of these multiple ERP solutions, especially when they have both the on-premises and cloud versions? How do they compensate their salespeople for selling cloud solutions vs. on-premises solutions and are sales reps commission structures motivating them to sell one more that the other?

As a recap, Plex Systems’ “walk before you run” approach to expansion and growth is plausible, as no customer likes dramatic changes from their vendor. It is commendable that the new CEO promises that Plex Systems will not be yet another so-called “Zombie ERP” in the market, with no sense of direction. The “new old” Plex Systems will have to carefully balance its new owners’ interests while not spoiling the “secret sauce” of success thus far, and alienate their loyal fan-like customers by suddenly imposing some heavy-handed corporate approach.

Related TEC Content:

Plex Systems at a Crossroads: Part 1 (June 2013)

Cloud Manufacturing Heats Up! (June 2013)

QAD Explore 2013: Veteran Vendor Ready to Tackle the Future (June 2013)

Plex Systems Poised to Execute in 2013 (March 2013)

The Change of Guard at Plex Systems (January 2013)
 
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