Monthly Archives: March 2015

Plex – working hard to get their fill

indexAnother week another analyst day…this time it was to Detroit and a meeting with Plex Systems. Between my attempts to discover where South Detroit was located and enjoying a great tour of the Sanders Fine Chocolate factory, I was able to spend an educational day and half with the Plex executive team. The time was well spent getting an update on where Plex ended up in 2014 and where they are heading for 2015. A few take aways:

Cloud remains the theme of the day. Plex continues to push and leverage the fact that they have been focused on delivering their solutions via the cloud since day one. That all their applications and solutions are 100% cloud focused. While the reality is that users are not 100% sold on going all in with cloud based applications, the tide continues to turn. By some estimates close to half of Chief Supply Chain officers are still hesitant about the value of the cloud. However it is our contention that much of that is due to only hearing terms like “multi-tenant,” “no version upgrades,” or “lower TCO” to describe the value of the cloud. There continues to be a gap in the market of solution providers demonstrating what NEW business models the cloud allows. The elasticity the cloud offers, the ability to quickly achieve network effects or even the fluidity the cloud offers need to be the reason to leverage the cloud. For example the ability for Plex to quickly get on line a factory gives their customers the necessary flexibility to make the business decisions necessary in the current manufacturing environments. The value of the cloud is in the new business models it allows the users of cloud applications to take advantage of, not simply that it will cost less than on premise. Plex has an advantage that they are fully focused on how the business models the cloud offers, but other vendors are quickly closing that gap.

Plex continues to get its house in order: What struck me from CEO Jason Blessing’s opening discussion was the pace at which they are ramping up quota carrying sales representatives. They have doubled the number of sales reps in 2014 from 2013 and plan to continue on that trajectory in 2015. But what is more important is their reorganization of the team. Separating the farmers from the hunters, as well as assigning a team to focus on the process industry, a new focus for Plex. I realize that at times banal items like number of sales reps is not as fun to discuss as new feature function, but the reality is I have yet to see a product that sells itself. You better have the boots on the ground to drive the revenue. Plex is also making continued investments in their R&D, more than doubling the amount invested year over year in 2014. What remains to be seen is can Plex hire the Screen Shot 2015-03-19 at 3.59.02 PMright people to their sales team and will their efforts in R&D keep pace with their renewed efforts in the customer acquisition side? Based on their domestic addressable market they should have plenty of targets to go after for their pipeline. But we will also keep an eye on their potential global expansion – where will Plex make their first true foray into the international markets? China, Germany or maybe India?

Is the portfolio ready for prime time? Plex’s approach to the market by offering a three level approach: full ERP, dual ERP or Hybrid ERP is just a fancy way of saying you can buy our full suite as a stand alone, use it in conjunction with existing ERP system or buy our point solutions. An underlying theme in the discussions was Plex’s move towards enhancing their overall solution portfolio but also starting to approach more sales opportunities with stand alone modules such as MES, Supplier quality, EDI or Inventory Management. This strategy resonates with what we believe the market has an appetite for. The days or major ERP overhauls are past, even if there continues to be disgruntled customers using large ERP solutions from the usual suspects. But point solution sales or tackling parts of the ERP puzzle will continue to be ripe. The challenge for Plex is around their portfolio. They mentioned many stand alone MES opportunities, but what about the other solutions. More importantly where does their product road map go from here? Whether they have more solutions to fill out their overall portfolio as well as sell as stand alone offerings. For example – warehouse management (WMS), forecasting and planning engines or even demand sensing analytical engines. Plex must be shrewd in their decision of where to invest moving forward.

Overall it feels as if bright days are ahead for Plex. The market opportunity is ripe, they have been building on their extensive experience in the discrete manufacturing space, demonstrate a dogged focus on making their customers all “happy ERP customers” and have a cohesive management team. However, they are approaching a stage where many companies begin to lose their way or hit the proverbial wall. It will be up to the executive team to continue to have a laser focus on their primary markets and ensure they are judicious with the development of solutions and applications that complement this strategy. Often companies begin to chase shadows and false hopes while trying to maintain their growth rate. They spend too much treasure and human resources in solutions that are too tangential to their core business or chase markets that are just beyond the reach of their core competencies.

Some will win and some will lose, it is up to Plex to be the former.

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Filed under ERP, Manufacturing, Supply Chain

Apple Watch – it’s about time, not really.

This past week has been a buzz about watches. Remember those devices? Would sit on your wrist and tell you what time of the day it was, much better than carrying a sundial or an hourglass around. Unfortunately for watches, the emergence of the ubiquitous mobile phone has diminished the primary value of the watch – telling time. With most of us staring at our smart phones between 60 – 90 minutes a day, we can see what time it is with a simple glance to the top of our mobile phone screens. By some studies as many as 50% of mobile phone users have no longer a need to wear a watch. So why is Apple, and by some accounts from Mobile World Congress, so many other technology players coming out with watches? Click here for a good piece on MWC from a fellow Constellation Research member.

Here is why it makes sense – it isn’t about the “watch.” These technology players are all trying to get into this space because they want to make sure they get a piece of the real estate that is being battled over – the wrist. The reality is watch sales (non smart watches) has not gone away and is actually on an upswing.

No one is buying watches? Not so fast...

No one is buying watches? Not so fast…

The fact that mechanical types are growing rapidly would reinforce the notion that watches are not about telling time but about fashion, they are closer to Cartier than to Blackberry. The truth is the best watches for time keeping are the digital quartz watches you can purchase at CVS for $10. An automatic watch from Jaeger-LeCoultre probably doesn’t keep time as precisely as a digital Casio – but if you spend the thousands of dollars on a Jaeger-LeCoultre or an A. Lange & Söhne you aren’t doing it because you look at your wrist for the time. We should not think about Apple and the likes trying to compete in the same space as the Omegas, Baume & Merciers and Patek Philippes are in. Wearables are the next wave of connectivity for consumers and corporations. While we are not about to give up our smart phones, the real estate on our wrists has yet to be fully exploited. Of course we have items such as Fitbits that are already finding their way to our arms. Entertainment giants such as Disney are already leveraging the technology with their Magicband. But what is in play for Apple, Samsung, Motorola etc is getting their platform on us. What is done with that platform depends on where application providers’ imaginations can take us. Some use cases that make this more than a watch:

  • Wellness – think of a Fitbit or a Garmin Vivofit with beefed up computation power. Devices will be able to be even smarter with our health. It will not be just about how many steps we took but how has it impacted our glucose levels or our heart rate.
  • Mobile payment – the wallet is really under increased pressure. Payment can be done by the swipe of our wrist. Since we are wearing the device could we integrate some biometrics to validate that we are the actual user…sure beats remembering all those passwords.
  • Manufacturing efficiencies – Many companies are working with the likes of Google glass to bring a wearable the manufacturing floor. Having a device on the wrist that can be voice controlled opens up the door for an array of manufacturing applications. Adding some valuable functional possibilities in the supply chain.
  • Better pick n pack for warehouse and retailers – Warehouse operations are always seeking to find new labor efficiencies with how they find inventory, pick it and prepare it for shipment. This is also true in retail, especially when more retailers are starting to use their physical stores as distribution centers.

Of course we are still in the early stages of these types of wearables and their use cases. Adoption will be tied to the price, not sure if the $10,000 Apple Watch will be the driver for adoption (if I had that kind of disposable

I would take one of these with the $10k

I would take one of these with the $10k

income for a wrist device, it would be a real automatic watch!). The $349 price point for the Apple Sport Watch should be low enough to get some traction  with consumers.

For the business uses the price point will have to come down further. Much like tablets, when the iPad came out the $500 price tag was too high for much industrial adoption, it was only when Android tablets at lower price points did the tablet become more ubiquitous.

Apple once again has created a disruptive device. Question remains will it, like the iPod, iPhone and iPad, have the same level of adoption for both consumers and business usage? But let us not compare what Apple and others are putting out as a “watch.” It is the correct first letter but it is closer to an Apple Wearable. Just like the iPhone is really more than a phone. It became a canvass for application providers to express their creative services.

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Filed under Consumer Product Goods, Current Events, IoT, Wearables

Software AG isn’t picking sides

It must be the season for analyst days, for the second week in a row I attended an event specifically for industry analysts, the media and financial analysts. These events are a great way to get a quick update, spend some quality time with executives and see old friends. Plus this one was a few blocks away in Boston! Software AG rolled out their executives to provide a recap on where they came from in 2014 and more importantly where they see the future for the German software giant.

Software AG stressed their transition to helping their customers’ transition to a digital business. Where does digital disruption come from? From Dr John Bates presentation, Software AG pointed out three areas they are seeing disruption come from:

  • Connected customer: This is nothing new, but we are all aware that the consumers’ voice is growing in importance. Digital aspects such as social media, mobile, big data to name a few, force companies to seek a 360-degree view of their customers.
  • IoT – the Internet of Things: In a way IoT is making machines and devices as connected as the customer. Having this level of connectivity brings great opportunity as well as potential additional IT strain to companies.
  • Proactive risk compliance: This is particularly true in such industries as finance, but also in other verticals such as life sciences and even food and beverage.

In order to address these disruptors and empower their customers they are focusing on providing a digital business platform. An agnostic middleware that will allow developers to create applications that can be created “as needed.” All interesting ideas and make sense. The main question moving forward is how will Software AG balance their desire to remain neutral and agnostic, while trying to create the suite and ecosystem that can propel the software vendor in to a leadership position. Their belief is that the software industry has changed and that the old style that package application vendors went about developing solutions cannot meet the needs of today’s businesses.

There is some merit to this point of view. The fact software has “eaten” the world is the reality of the business environment we live in. Companies will look to have the flexibility and tools available to quickly spin up necessary applications. Solutions that are crucial for these companies to respond to their business needs. For example companies such as Turkcell can ensure they have the proper solutions in place to respond to their

Leaning on SAG to address customer demands

Leaning on SAG to address customer demands

customer needs. Being capable of flexibly creating solutions that address demand creation and shaping are vital to drive their retail practice. Turkcell is dealing with the connected customer, where demands and needs are constantly evolving. The ability for Turkcell to have the flexibility to create solutions to address these ever changing needs is crucial. Taking advantage of this flexibility has offered Turkcell the ability to offer their customers the right promotion at a precise time, yielding $15m of additional revenue.

Software AG is heading in the right direction and is providing relevant case studies when it comes to creating a true digital business platform. The question is can they continue to be Switzerland (with regards to their neutrality) of the solution providers or will they eventually have to commit themselves to an ecosystem?

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Filed under Current Events, IoT, IT, Technology

Capgemini – all about making innovation a habit

index

Last week I decided to escape the snowy and brutal winter that has blanketed Boston and head to a sunny and warmer location – Chicago. Ha, clearly I am suffering from cabin fever. The reality is Chicago was warmer and had barely any snow, but enough about the weather.

What brought my colleague Ray Wang and me to Chicago was to visit Capgemini and attend their well-organized analyst day. The theme over the two days was pretty clear – innovation is the future for Capgemini. Easy to proclaim, difficult to execute. So can Capgemini live up to their lofty proclamation? Only time will tell but here are three take-aways that indicate they are on the right path:

  • Instilling the closed loop process to innovation: Innovation cannot be a one time event, something that falls into a to-do list that we can check off as complete and move on to the next task. Being able to innovate must be something an organization takes on as a habit. Similar to exercising – going to the gym or for a swim is okay as a one-time event, but making it a habit is where we draw the greatest benefits. Capgemini emphasized the importance of infusing a habit of innovating with not only their clients but within their own organization. They highlighted work they did with many of their customers to constantly seek and execute on innovative needs. One such customer is one of North America’s largest agriculture co-operatives, who highlighted two large-scale workshops they had leveraging Capgemini’s Accelerated Solutions Environment facilitated process. These resulted in some important changes as well as greater innovative process for the companies 17 divisions. The framework from Capgemini is simple but requires discipline and rigor to stay with the process:
    • Discover – These are where the in person sessions are vital to flesh out where the needs are and what can be implemented.
    • Devise – Think of this as the fail fast segment. Implement quickly and learn quickly as to what works and will not.
    • Deploy – Take the successes from the prior stage and begin to deploy across the board.
    • Sustain – This is the key closed loop element. This cannot be a one-time project but must constantly build on itself. Sustain brings you back to the Discover phase.
  • Failure is just as important as success: It could be argued that failure is the foundation of success. The whole notion of “fail fast” is what allows you to get to the successes sooner. Capgemini highlighted an example of working with a large CPG to exploring greater efficiencies via using Google glass. Unfortunately, the project did not achieve the goals. But fortunately for all the parties involved they absorbed plenty of learning from the experience. As Capgemini stated, just because the project did not catch on, does not mean it will not resurface down the road. The use of the technology for the original goal did not get adopted, but the learning that came from the process was successful. Capgemini’s customer shelved what would have been a large expenditure, Google was provided with the feedback to improve their product and the findings from the experience provide the basis for potential similar projects in the future. As a client stated during the conference “The toe stubs are where innovation comes from.” Which is why the next take away is crucial to the innovation journey.
  • Long term relationship, not speed dating: Capgemini clearly displayed that their mind set is to develop and maintain long-term relationships with their customer base. They truly want to be seen as a partner for their customers and not only as firefighters being brought on to put out fires. Capgemini highlighted a number of clients Hydro One, Syngenta, Jamba Juice and Coca Cola to name a few. Wanting to create a long term business relationship is the goal of most companies, regardless of their industry. But it is clear for companies such as Capgemini, Accenture, KPMG and TCS to name a few, the days of large one off projects to implement large package applications are dwindling. That revenue stream cannot be sustainable. Becoming a trusted advisor to navigate the continually shifting technology and business process landscape could provide a more reliable revenue stream. It certainly will not be easy, but marriage never is!

It is clear that Capgemini recognizes the needed to move from being an integrator to a trusted advisor. They provided some thoughts and some voice of the customer that seems to point to Capgemini being on the right path. However it will be interesting to see if they can make this innovation partnership a large enough chunk of their business. They did mention during the session that they did see lots of business from merger and acquisitions. These feel like firefighting opportunities. Companies need to consolidate systems and processes after a business event, but does that translate to long-term partnerships? To be determined.

The new model for innovation is about delivering a stream of innovation not just one great idea. The right strategic direction for the company, but the journey will not be without major difficulties. But nothing worth achieving is simple.

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Filed under Current Events