There's news for those of us interested in manufacturing ERP: a new cloud ERP provider is having its coming-out party this week at Dreamforce, the annual user conference of Salesforce.com. Kenandy, which is built entirely on Salesforce.com's platform, provides core manufacturing functionality, such as inventory, shop orders, purchase orders, and material planning. Founded in 2010, Kenandy already has one customer live and a handful of others sold and in implementation.Early this week, several people forwarded me advance word on Kenandy from a Wall Street journal blog post. Normally, the launch of a new cloud provider would not warrant this kind of attention. But this launch has an interesting twist: the brains behind Kenandy is none other than Sandra Kurtzig. She is the original founder and CEO of ASK Group, the developer of the well-known ManMan ERP system--more or less the SAP of the 1980s. She retired something like 10 years ago, but was convinced to come out for an encore by Marc Benioff, CEO of Salesforce.com and her neighbor on a beach in Hawaii. Kenandy has venture funding from Kleiner Perkins Caufield & Byers, and its managing partner Ray Lane sits on Kenandy's board.
Kenandy's Angle
I scored an interview with Sandra and her CMO Rod Butters yesterday, prior to Sandra's appearance on stage with Marc Benioff this morning at Dreamforce. I had a lot of questions for Sandra, and she was forthcoming with answers.- Kenandy is positioning itself for small and midsize manufacturers ($15M - $300M), especially those that source, manufacture, and distribute products through contract manufacturers and channel partners. Sandra noted that ERP vendors with systems designed in the 1970s and 80s (such as ManMan) assumed their customers were vertically integrated. Her perspective is that this orientation has carried forward in the design assumptions of the leading on-premise ERP providers today, which have their roots in systems built during that time period. This is not a good assumption today, as even small and midsize manufacturers are contracting large parts of their operations offshore and have complex distribution relationships with channel partners. Such organizations need an extended ERP system, and Kenandy is being designed with these scenarios in mind.
- Built on Salesforce.com's platform, Kenandy is a full multi-tenant SaaS offering. An organization can run multiple facilities within a single tenant, or it can set up multiple tenants, for its contract manufacturers or business partners, for example, and gain inventory and production visibility up and down its supply chain. (Disclaimer: I have not evaluated Kenandy on any functionality points to confirm these features).
- Kenandy expects very short implementation times. Its first customer, Den-Mat, a maker of dental products, went live in two weeks, converting from a legacy IBM Series i (AS/400) system.
- Kenandy is focusing on manufacturing functionality and depending on other cloud providers to fill out other parts of the enterprise suite. For example, there is integration (of course) with Salesforce.com for CRM, and with FinancialForce.com for financials. In addition, Sandra claims that integration with customer's legacy systems (e.g. Quickbooks) are always an option.
- Development of Kenandy is being led directly by Sandra: in other words, she is not only the founder and CEO. Like many start-up software firms, she is also the brains behind the product and the chief product management executive. She is working with a small group of internal developers and is supplemented by development resources from Persistent Systems in India.
A Market with Lots of Open Space
I am currently working on a research report on cloud-based ERP systems, so I was quite interested in seeing a new competitor emerge in this market. In my view the market is wide open. There are only a handful of pure multi-tenant SaaS ERP providers, and even few that can support the needs of manufacturers. These providers include NetSuite, SAP's Business ByDesign, Workday, Plex, and Rootstock.Compare this to the dozens or scores of ERP providers that we could choose from in the 1980s and 1990s. Today the market for traditional on-premise ERP systems is dominated by two vendors: SAP and Oracle. Microsoft occupies a strong secondary place, especially in the SMB space. Many of the other players have been acquired by Infor and Oracle, though several good providers, such as IFS, Epicor, QAD, Syspro remain independent.
Nevertheless, the broad industry trend is moving to cloud computing, and manufacturers that want full-suite ERP in the cloud have few choices. Therefore, the market is wide open. As I mentioned to Sandra, it's like the Pilgrims landing at Plymouth Rock. There is a whole continent waiting for anyone so inclined to stake a claim. There's no need to argue about property lines with neighbors. Just go out, pick a few verticals, geographies, and organization sizes, and build out your offering. There is plenty of room to grow.
Other providers are already doing so. Plex was first out of the gate, with a full cloud-based ERP offering dating back to the middle of the last decade, and they continue to gain momentum. SAP's launch of Business ByDesign is also gaining traction, not only in subsidiaries of SAP's traditional large customer base, but in net new SMBs as well. Rootstock, not as well known, has a credible offering for manufacturers (especially project-based) on NetSuite's platform, and it has now migrated its manufacturing ERP offering to Salesforce.com's platform. Moreover, other on-premise vendors, such as Epicor and Infor, have enabled their products to operate in a multi-tenant cloud deployment model.
But there are large swaths of open space. Kenandy is a welcome new player.
Update, 10:02 a.m.: Sandy is on stage now at Dreamforce. She's wearing a button with the letters ERP crossed out. Marc asks, "Your previous firm ASK built on HP's platform, right?" She jokes, "Is HP still in business?" Ray Lane, an HP board member, is standing next to her. Sandy mentions Salesforce.com's investment in Kenandy. Ray, as mentioned in my post above, is also an investor, and now relates the story of Sandy showing up in Ray's office, asking for money. Ray, who like Sandy, is well over the median age at Dreamforce, admonishes the audience, "Don't think our generation is through yet!"
Update, 10:20 a.m.: Dennis Howlett looks at manufacturing cloud ERP developments.
Update, Sep. 6: Dennis Howlett interviews me live about my thoughts on Kenandy. Click on the image below to watch the interview.
Related Posts
Workday pushing high-end SaaS for the enterpriseSAP Innovating with Cloud, Mobile, and In-Memory
Plex Online: pure SaaS for manufacturing
NetSuite a viable alternative for SAP customers?
Workday: evidence of SaaS adoption by large firms
7 comments:
ERP systems tend to be horrible kludges of ideas from the 1960's through now. They have at least 10 times more complexity and code than they need. Are any of these newbies really rethinking (as, for example Workday is doing for HR)? (I do not work for workday, by the way...)
I see Kendandy is doing fast MRP in memory, which is better than nothing, but that was also available in the 1980's and MRP has not been rethought fundamentally since the 1970's. I mean the whole planning process in ERP systems is unworkable in today's world.
I guess the complexity with legacy and most current MRP systems is due to technology: you have to run MRP in an implementation that is procedural code on top of a relational database, all in all a headache to maintain.
Change happens when you cross-breed multidimensional, in-memory, columnar or hybrid datastore / calculation engine with MRP - 'code' is pretty basic but the power is immense. So you can't avoid the in-memory part.
Doing things simple is the hardest thing in the world. Show me a on-premise _simple_ MRP/manufacturing and I can tell it is possible as SaaS. So far I have hard times fitting MRP and simple into the same picture.
MRP has been 'rethought' several times - OPT, APS, SCP, IBP to name a few, but I am not sure if this is what people need.
@Arein agree: "hard time fitting MRP and simple into the same picture".
New technologies, were tried before. I2 etc. More to try, low latency web, columnar datastore, Cuda.
But probably not what people require, some how social needs inserting into the process without the complexity of reams of exceptions. SocialMRP?
BTW - Super coverage by Frank, exciting times.
Arein and Clive, thanks for the comments. My own view is that MRP, APS, SCP and *all* of the resource planning tools are good--each in their own place. That's true whether on-premise, or in-the-cloud (those are just deployment options).
The problem, however, is that vendors promote, and customers buy, tools that may not be appropriate for a given scenario. And the sophistication of the tools is quite often NOT matched by the sophistication of the customer. So, the tool eventually becomes shelf-ware, and the customer goes back to informal systems, spreadsheets, etc. And the tool gets a bad name.
This has been a problem since I first started with manufacturing systems in the late 1970s (remember COPICS?). Cloud doesn't change that one iota. In fact, it might make it worse as these tools become cheaper and easier to buy.
I would add that end users are disempowered by highly automated systems - no matter how intelligent the end users. Reliance is shifted onto the system and the small group of technical experts who maintain it. While there are benefits, the major drawback is loss of agility - an organisation's ability to react to changes in market conditions.
Given the amount of change we have seen in the past 20 years, this is a major issue. I think it better to invest in training end users so they can operate a lesser-automated yet more flexible system within which they can adapt their operating practices, rather than having them submit a mini business case every time they need to have the system changed to accommodate a new or changed requirement.
In fact, designers of traditional enterprise systems, and managers within their customer base, have applied over-zealous risk management in an effort to protect organisations from the hands of their own staff, but have paralysed their operations in the process.
My hope is that KenAndy can deliver a system which is easier to use - and easier to change.
Having also been in this space for about 40 years, and an APICS Fellow for 30 years, I was under-whelmed looking at the 22 minute demo on YouTube. While the concept of Cloud is catchy, what makes anyone think that (1) the same end users that refuse to use their current ERP Mfg systems will suddenly adopt this one, (2) that a shockingly simple set of function/feature will satisfy any mfgr larger than a very small and simple mfgr, and (3) what larger enterprise is suddenly going to allow 'end users' to take over (as happened with CRM) and run with mission critical data such as BOM's ... where are the "adults" in this picture? I didn't see anything in the way of system controls other than the simplest of PO approval methods. Cloud is often sold by sales reps end-running IT and going direct to business users to buy a subscription. That happened in CRM, and to some extent with HCM with very angry line of business users stuck with very old software, but can it happen with the heart of your enterprise?
And where is the data collection coming from? Are bar code scanning / data collection firms suddenly feeding the cloud? It looked like everything needed to be keyed in, although the screens were pleasing and nicely laid out.
Maybe I've been around full featured ERP Mfg too long. I was hoping this might be something like ASK, but I don't see it yet.
I agree with all of you that this is potentially a huge market but when I visit mfgr companies and see a near total lack of knowledge concerning "MRP", PLM, enterprise Quality Mgt, Lean practices, even accurate shop floor control ... I'm not convinced that a sexy, social Cloud front end is going to make the key difference. I'd love to keep this conversation going.
btw - I'm not the previous anonymous poster.
ERP Opinions,
Consider that tradition products have much more functionality than most organisations need. These organisations are often forced to make their business processes much more complex than they need to be - or ought to be. The complexity all too often fails to translate into benefit - and imposes an unnecessary and large amount of master data management.
Kenandy is a young product, but if functional extensions can be easily build, gaps can be closed at lower cost. And furthermore, only what the organisation needs it built and imposed.
My own view is that the traditional vendor products (not necessarily the vendors themselves) will collapse under their own weight or stagnate while newer and more nimble approaches circle it.
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