Acumatica’s Best of Both Worlds ERP Story

Just want to let you know that we are publishing highlights from recent vendor briefings on the SMB Group web site. As time permits, we discuss our takeaways from the more interesting briefings. I’ll try to remember to post them here as well. There are several up there already, here is the most recent one.

4-23-10

Highlights:

Acumatica is a relatively new player on the SMB ERP scene. It delivers its web-based ERP solution both on premise, and via a software-as-a-service (SaaS) model. Targeting companies with 5–1,000 employees (or roughly $5M – $500M in annual revenues), Acumatica provides accounting, CRM and distribution capabilities, and worldwide currency and language customization.

Acumatica offers customers a choice to run its solutions on-premise or via the SaaS model, providing the benefits of cloud technology and social media capabilities in both delivery models. Subscription pricing for the SaaS version of the accounting module starts at $12,000 annually, while on-premise licenses start at $15,000.  On-premise pricing is CPU-based, not per-user based, enabling customers to maximize the ERP user base without incurring added costs. The company has more than 50 customers using its solutions to-date. About 30% use Acumatica via the SaaS modes, and the other 70% have deployed it on-premise.

Acumatica has a 100% indirect sales model, which provides an attractive and neutral compensation model to motivate value-added resellers (VARs) to sell the solution that will work best for the end-user customer. The vendor has signed up more than 40 VARs to date—mostly from the ranks of Microsoft Dynamics and Sage.

Quick Take:

Acumatica intends to capitalize on key trends and requirements in the traditional VAR community and it the SMB market.  First, as I’ve written many times, SaaS vendors have yet to crack the code on creating a VAR-friendly model. Customer demand for SaaS is on the rise, and  many VARs want to add a SaaS offering to their line-up. But, they worry that SaaS vendors (who often sell both direct and through channels) will disintermediate them once the partner has brought in the business. VARs searching for a SaaS option are likely to find Acumatica’s 100% indirect model, combined with a choice of delivery options and a Microsoft-centric approach, quite attractive. The fact that VARs can sell the same solution via either delivery model is also a plus—most VARs don’t want to be evangelists, they want to sell the solution that best fits the customer’s needs.

Acumatica offers customers a distinct value proposition as well. Customers can either self-select what model (SaaS or on-premise) will work best for them, or Acumatica and its partners can help them decide what will work best. In contrast, other major vendors in the mid-market space—including Intacct, NetSuite, Microsoft, Sage, etc.—have a pre-determined agenda.  Acumatica also offers customers that want to switch from one delivery mode to the other discounts that take into account their prior investments.

As a relative newcomer, Acumatica will have to work harder than more established rivals to prove that it has both the product capabilities and corporate viability to be a “safe” choice. However, if Acumatica can keep pulling in VARs, and broadcast its best of both worlds story out to the market, it should be able to cross this chasm.

Does Your SMB Marketing Message Need a Makeover? Seven Questions to Ask

Countless technology vendors are targeting the increasingly coveted yet still somewhat elusive small and medium business (SMB) market. We do our share of message testing and market strategy work with them, and attend innumerable briefings from other vendors aiming to make their mark in this crowded space.

All too often, we see some warning signs that indicate gaps a vendor hasn’t created a strong enough story to gain a solid foothold and/or build a volume business. Here’s my take on the top seven questions you need to ask yourself about your SMB marketing approach, the warning signs that you need to adjust what you’re doing, and some quick tips to help you avoid falling into these traps in the first place.

  1. Can you state your solution’s value proposition in a clear, compelling way in 60 seconds? Believe it or not, some vendors can’t do this in an hour, let alone 60 seconds. I’m not saying that you need to explain every little feature and function, just what it is you do and why an SMB customer should care. When vendors have trouble getting the point across to analysts who live, eat and breathe technology for a living, it’s a good bet that most SMBs will never get it. To make sure that you’ve gotten your message across, do a reality check to see if the analyst can concisely restate what it is you, what problems you solve, who you solve them for, etc. And a quick example of what TO do: At a recent event, I asked David Barrett, CEO of Expensify, what his firm does, and he said, “We do expense reports that don’t suck.”
  2. Are your presentations acronym free? Big companies are typically much more likely to be guilty of this than small ones. Industry acronyms are frequently indecipherable to many SMBs. Worse yet, your own corporate acronyms are a mystery to them, and often to insiders, such as analysts and press—as well. These are the very people you rely on to help spread the word about what you’re doing–don’t make it harder than it needs to be. Worse yet, if you riddle your presentations or press releases with this stuff, it indicates that you are thinking from a vendor and industry-centric place, instead of a customer-centric one. (In March, I actually went to an event where almost the entire agenda was written in acronyms.) There’s an easy fix for this one. Send anything you present to press, analysts and customers through spell check first, and make sure you spell out an acronym the first time you use it—or better yet, get rid of the acronyms!
  3. Can you get your message across in plain English or are you using a lot of technical and business jargon and fluff? As I discussed in this blog post, Another Plea for Plain English‎, it can be tough to break down complex or new technology solutions into understandable terms. And it can be hard to resist trying to make all this stuff sound (more?) exciting. But you need to demystify technology solutions to get the value across to the broad SMB market. Use HubSpot’s free Press Release grader to evaluate your press release for marketing effectiveness, with the added bonus of providing feedback on search engine optimization.
  4. Does your target audience align with your actual customer base—and reality? The SMB market is actually very fragmented, and consists of many diverse sub-segments with very different needs, goals, and attitudes about technology solutions. Vendors will sometime tell us that they target small businesses–but most of their customers are VC-backed firms (and most of them are other tech companies!). In this case, the vendor has mistaken the outliers for “true” small businesses, which are owner-financed and lack the technology sophistication and cash flow of these elites.  While there is nothing wrong at all with going after the tech-savvy niche, don’t delude yourself! Another bad sign is when a vendor says that they target medium businesses, but their mid-market definition goes up to 5,000 employees or a billion dollars in revenues. I kid you not, I recently attended an event where the vendor defined mid-market as companies with 1,000 to 10,000 employees. By looking at this chart, you can see just how off the mark this is.
  5. Are you spending too much time on religious zealotry, and not enough on why your solution will provide the most value? If you’re Marc Benioff, and have more VC money than you know what to do with, this is probably fine. Otherwise, stop leading with the cloud, open source or whatever platform you’re preaching from. I’m not saying that this shouldn’t be a part of your value proposition (if it truly adds value) just don’t lead with it. Instead, lead with why your solution will do x, y or z better, faster and cheaper than the other guy’s–this is what most SMB customers truly care about. And, when the next new big technology thing comes along, you reduce the risk that your lead message will suddenly sound very dated.
  6. Does it take a detective to figure out how much your solution costs? I am constantly amazed that in this day and age of the Internet and transparency, there are vendors that don’t publish pricing or even pricing guidelines on their sites. You know who you are! This tactic wouldn’t last 3 minutes in the true small business market, so most culprits are in the mid-market space. Having interviewed hundreds of mid-market customers, I can tell you this is a big turn-off for many of them. If you’re not making it easy for them to get ballpark pricing information, they may cut you from the short list before you even get there. This is especially true for vendors that are trying to move into SMB markets from the large enterprise space—SMBs are likely to think your stuff will be too expensive unless its easy for them to see that you’ve priced it affordably.
  7. How can the SMB customer purchase your solution? You may have created good buzz, and have a solution that is priced right and solves world hunger, but if its difficult for prospects to figure out how and where to buy it, they will often give up and look elsewhere. This is a problem that can plague vendors that sell through indirect channels only, or rely on private label channels. Even if the SMB customer can’t buy directly from you, make sure people can go to your site and quickly figure out who can take the order!

Let me know what you think!

What Is an App Store, and Why Should You Care?

(Originally published on April 8, 2010, in Small Business Computing)

An app store can offer a lot more than just mobile apps. Essentially, it is a Web site that aggregates software solutions for business or personal use. App stores, also known as an applications marketplaces, are typically created and built by a “marquee” vendor, such as Adobe, Apple, Google, Intuit or Salesforce.com, that serves as the anchor tenant for the marketplace. App stores operate as a hub where you can discover, search for, purchase and deploy integrated third-party applications.

The marquee vendors that run the marketplaces typically have a strong brand and a large customer base — but no one vendor will ever have the time or expertise to build every possible application that a customer might want. However, marquee vendors can attract developers to build complementary applications to sell to their large customer bases.

The developer gets a new sales channel, and the marquee vendor can offer customers a bigger, more diverse array of applications than it could possibly provide on its own. In many cases, developers must also build their applications on the marquee vendor’s platform so that they will integrate with other applications in the marketplace.

Why Should You Care?
App stores can help streamline the application shopping and selection process, providing a one-stop shop for finding, trying and buying small business applications. Many of feature cloud-based solutions (see
What is Cloud Computing, and Why Should You Care?) that you can trial for free and purchase in a flexible, pay-as-you go model. App stores often offer free apps as well. And, they feature user-generated ratings and comments to help guide your decision-making process,

An app store can help you more easily locate new small business software that will work with apps you already use, adding them in an incremental, yet integrated manner. Instead of starting with a Google search, or contacting a VAR or consultant, and trying to figure out if there is an app that meets your needs and will work with solutions you already have, you can go to a marketplace and see if there’s an application that meets your requirements and work with the solutions you’re already running. An app store also provides single-sign on access to all of the apps that are in it. This means you don’t need to keep track of lots of passwords, and can navigate more easily between applications.

For instance, Intuit’s Workplace App Center provides a central location where small businesses can locate and try business applications that work with QuickBooks and with each other. You can, for example, sync your QuickBooks data to a CRM solution offered in the App Center, eliminating the need to enter the same data twice.

In addition to supplying ready-to-run applications, some app stores also help companies locate solution developers that can build custom applications that integrate with their anchor solutions. For example, Zoho’s Marketplace features an area that lets users submit requests for new apps and features, and developers can build new apps in response to these requests.

Of course, there are also stores for mobile apps that work with different smart phones, from Apple’s App Store to Google’s Android Marketplace. These marketplaces offer customers easy access to applications that are proven to work on and run safely on their mobile devices. In the case of mobile device marketplaces, however, the customer downloads the application to their device instead of running it in the cloud.

What to Consider
In the case of smart phones, customers select marketplaces solely based on the device they use. But when it comes to running apps on your Mac or PC over a Web browser, your choice of which app store to shop at isn’t device dependent — and may be a bit more complicated.

Chances are that you already use applications from several vendors that have a store — maybe you already use QuickBooks, Google Apps and Salesforce.com, for instance. But you probably don’t want to use three different marketplaces, because that will dilute the value of one-stop shopping, single sign-on, integration benefits and so on. So how do you decide which marketplace to use? Here are some key considerations to think about.

How many applications are in the marketplace, and how fast is it growing? While bigger isn’t necessarily better, a vibrant, growing app store means more choices for you.

How simple is it to sign up, sign in and test drive new applications? Try some free trials to see how it works for you.

How active is the user community in providing reviews, comments and ratings? A more engaged community gives you more feedback about specific apps.

What level of integration do you need between your existing application(s) and new applications? Some app stores (such as Salesforce.com’s AppExchange and the Intuit Partner Platform) require developers to use a common data model, which enables tighter integration. In contrast, in Google’s more open approach the Web is the platform. Both approaches promise integrated applications, but the degree of integration will vary. Think about what the types of data you need to integrate and the level of integration that you need.

Dell 2.0: Top Takeaways from Dell’s Virtual Era Event

A couple of weeks ago, I attended Dell’s Solutions for a Virtual Era analyst and press event in San Francisco. At the event, Dell unveiled its new strategy to help companies more readily and easily provision computing capabilities to in the ubiquitous anytime, anywhere information era. At the event, Dell introduced several new hardware offerings based on the new Intel Xeon 5600 architecture to enable cloud-based solution deployment. But for me, the more interesting focus was Dell’s ambitious vision and roadmap to capitalize on the shift to cloud computing, and market demand for better, more cost-effective and easier to deploy, use and manage IT solutions. Here are a few of my top takeaways about what Dell’s vision, how it plans to execute on it and my commentary.

  • Change the economics of IT. Companies spend more than 50% of their IT budgets just to keep the systems they have up and running—stunting investments in new IT solutions that can help them to innovate and grow. Dell intends to apply its “direct” DNA and supply chain know-how to automate IT and change the economic equation to help companies get out of this quagmire. By delivering “open, capable and affordable” solutions with industry standard-based building blocks, Dell believes that it can reduce technology lock-in, complexity and cost for customers. Some specific capabilities in the works include autonomic self-maintenance and management; automated dynamic allocation of resources, and policy-driven management. In a recent keynote at Oracle OpenWorld, IT budgets in North America amount to $1.2 trillion, but through widespread adoption of x86 servers managed in a more automated fashion, $200 billion could be saved, asserted Michael Dell, president and CEO of Dell. He used Dell’s own plan to take $200 million out of its own IT spending by the end of 2010 as evidence that Dell–which provides two of every five x86 servers shipped–can help customers achieve this goal. Our recent research on Dell Managed Services customers also provides a strong proof point that Dell can deliver on this goal: built on its Silverback and Everdream acquisitions, web-based technologies, and Dell data center expertise, Dell Managed Services offers SMBs web-based, standardized infrastructure management services on a pay-as-you-go basis. I’m kind of surprised that its taken so long for Dell to get around to this, as its business model and technology legacy (Dell has no proprietary systems of its own) affords it a significant opportunity to differentiate.
  • Move from delivering solution components to delivering the total solutions experience. In Dell’s view, companies today spend far too much time, energy and money deploying, running and managing IT solutions. Dell wants will to simplify and make IT more affordable with turnkey, pre-tested, pre-assembled solutions that combine hardware, software and services. Although this may seem like a radical departure for Dell—best known as a hardware vendor—the company has been building towards this for quite some time, acquiring software companies (including KACE, Silverback and Everdream), along with Perot Systems. In addition, Dell is partnering with companies including Joyent, VMWare, Microsoft, Aster Data, Canonical and Greenplum) to provide additional solutions expertise and components.
  • Give customers “and” instead of “or” choices. Dell intends to help customers simultaneously pursue evolutionary and revolutionary paths towards cloud computing. To facilitate the evolutionary path, Dell’s Cloud Partner Program (partners include Citrix, Microsoft and VMware) enables companies to migrate legacy applications to more efficient virtual environments, pre-tested and optimized for Dell systems. On the revolutionary path, Dell’s platform-as-a-service (PaaS) will offer an efficient, scalable and flexible platform to deploy and manage new Web application workloads. Dell’s inspiration for this comes from its own Data Center Solutions Group, which provides cloud and high-performance computing solutions for companies that require massive hyper scale environments such as Facebook, Ask.com and Microsoft Azure. Dell’s open source platform is built on PHP, Python, Ruby on Rails, and runs Apache, MySQL, Rails and Java. The vendor plans to offer a full spectrum of delivery options, where customers can self-integrated components or turn on everything as a service. The initial target market for the platform is ISVs, telcos and others who would build on top on it, and sell through their services to end-user customers. However, Dell left the door open to offering it directly to the end-user market at some point in the future.
  • Start with a mid-market design point. Dell’s design point for the Virtual Era is the mid-market—which is a very big deal! Starting with mid-market requirements and scaling up or down from there can give Dell a big competitive edge—for a couple of important reasons. First, mid-market companies have complex IT needs, but scarce IT resources–they can’t afford a lot of expensive labor or IT tools. This aligns well with Dell’s theme of automating IT. Second, Dell’s major competitors, HP and IBM, offer mid-market solutions, but tend, more often than not, to gravitate towards a large enterprise design point for infrastructure solutions. Finally, history has proven that it’s very hard to scale down successfully. One concern I do have is that I heard different definitions for how Dell is defining mid-market in this context. Will Dell center the design point around its traditional definition of medium business (100 to 499 employees), or upwards into what I would call the upper mid-market—topping out at about 5,000? Dell needs to be clear on this because there’s a big difference in designing for 5,000 versus 500 employee firms.
  • Lead in listening. Dell has been a pioneer in building open community forums for customer input and dialogue. The vendor learned the hard way that in a Web 2.0 world, its important it is to let it all hang out–the good, the bad and the ugly. Dell was blindsided in 2005, when professor and blogger Jeff Jarvis used the phrase “Dell Hell” in his blog to describe his experience with Dell support. His blog unleashed a torrent of blogger complaints about Dell service, and escalated into an avalanche of unwanted media attention in publications such as The New York Times and Business Week. Once the shock wore off, Dell took action to listen proactively to and get involved in conversations relevant to its business and interests, globally and 24/7. Since then, Dell has dug deeper into social media to harvest and apply the collective wisdom of ever-larger crowds. Taking advantage of what it calls its “direct nature”, Dell intends to expand these initiatives. As an example, to reach and support their almost 400,000 fans on Facebook, Dell now provides “Dell Support on Facebook” widget on the Dell fan page. The widget is designed to provide Dell fans a way to engage with Dell support via Facebook to get assistance with technical and non-technical issues, check on an order status or any other issue they may be experiencing. Since the launch, Dell’s “customers’ heroes” team is touching about 3,500 customers a week through this widget, catching potential issues and flagging them so Dell can alert impacted customers and get issues fixed early. With social media rapidly displacing traditional one-way marketing in terms of influence, this should provide Dell with an enormous return.
  • Turn up the marketing volume. At the same time, Dell readily admitted that it needs to beat its own drum louder and more clearly to rise above the din in the industry. I think Dell is off to a good start with this event (the first analyst event they’ve held in a few years). I was also impressed with their executives’ ability to rein in business and IT jargon in most pitches. And, when execs did use motherhood and apple pie terms such as “open, capable and affordable” (which almost every IT vendor uses) they did a good job of following up with explanations about how they will actually deliver to those lofty goals. To really fire things up though, Dell will need to get more creative with broad and creative marketing campaigns that spark attention and interest around this new Dell and what it has to offer.

Since essentially reinventing the PC and x-86 server markets with its direct and efficient supply chain model, Dell has taken its share of lumps over the last few years for not moving past its traditional hardware-centric comfort zone. In the cloud era, Dell has the opportunity to create a new game, with new rules—ones that will favor its strengths and approach. Improving operational efficiencies has always been at the core of Dell’s DNA—a strength it can capitalize on again if it executes well in the solution, marketing and partner endeavors that back up its vision.

Getting in the Social Media Management Game

Social media management for small businesses is a very hot area. A few weeks ago, I posted a blog about social media management solutions available to help small businesses manage their online and social presence more efficiently and effectively. While this is still a very nascent area in terms of customer adoption, there has been a bumper crop of vendors bringing these solutions to market over the past few months. We have been talking to many of them, and in the last couple of weeks, posted podcasts (Marchex, ZooLoo), videocasts (HubSpot) and briefing highlights (BatchBlue, ZooLoo) for several of them.

Why So Many Vendors are Bringing Social Media Management Solutions to Market

Several factors are compelling vendors to invest in this area. For starters, growing the business is the number one challenge most small businesses face. They’re always looking for leads–new ways to make the phone ring, and drive traffic to their Web sites and physical locations. In addition, at they become familiar with social media as consumers, they recognize how important it is to monitor and manage their brand in the digital world. Last but not least, individual social media tools are simple to use–it’s easy to jump in and start experimenting with things such as Twitter, Facebook etc.

However, many small businesses quickly start drowning in social media. They’re busy running the business day-to-day, and find it hard to keep up with the ever accelerating rate and pace of change and “new stuff” out there. They typically don’t have the time, money or expertise to decipher what all these things do, let alone how to effectively incorporate them into small business marketing. It can become very time consuming to tend to the care and feeding of social media—from creating content to keeping tabs on what people are saying about your business and responding. And, its difficult to figure out if their efforts are paying off. According to this Wall Street Journal article, “Entrepreneurs Question Value of Social Media,”although social media adoption by businesses with fewer than 100 employees doubled to 24% from 12%, only 22% believe that they made a profit last year from promoting their firms on social media.

Seizing the Social Media Marketing Management Opportunity

But as I said upfront, this area is in its infancy–and small business use of social media will continue to pick up speed. As they get more involved, small businesses will look for ways to move from a trial and error approach to a more systemized way to participate, manage and measure their social media engagement efforts. Right now, small businesses’ awareness of these solutions is low—and the education curve is steep—but this curve should flatten quickly because word about solutions that work can spread virally and rapidly. And, while new social media management solutions aimed at small businesses are proliferating like wildfire, consolidation is bound to start snowballing, with bigger vendors that have complementary online marketing solutions gobbling up the little guys. In fact, this has already begun, with ReachLocal acquiring SMBLive (aka CloudProfile).

The plethora of vendors in this space are coming at the social media management conundrum from different angles. Some are providing extensive inbound marketing platforms, with everything from domain name registration to social media management tools, while others are providing social CRM solutions. Some are providing tightly bundled solutions, others provide tools in an ala carte fashion.

More traditional vendors with other small business marketing solutions—from email marketing to web site hosting to CRM—need to have a strategy in place to determine what capabilities they’ll need to offer in this area–as small businesses will need to use these solutions in a more integrated fashion. If not already doing so, vendors need to thoroughly evaluate the landscape, and assess options to partner, build or acquire the capabilities they’ll need for an effective play in the social media marketing solutions game.

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