Acumatica entered the Canadian ERP marketplace last week with a Web-based ERP solution that can be deployed on internal or external clouds through traditional software licensing or software-as-a-service (SaaS) models.
A Washington, D.C.-based company owned by ProjectX International Ltd., Acumatica sells exclusively to value-added resellers (VARs) and launched its Canadian presence through partnerships with CoRealize and Les services SIPD Inc.
The cloud ERP solution, which launched mid-2009 after three years of development, targets mid-sized enterprises with complex business operations and financial requirements that are not willing to invest millions of dollars in ERP, explained Ezequiel Steiner, CEO of Acumatica.
Functionalities include the ability to support multiple languages, currencies and accounting standards such as IFRS, he noted. It’s an excellent solution for companies with multiple locations around the world that need to consolidate their financial transactions, he said.
“The fact that the product is a cloud product and can be accessed from anywhere coupled with advanced financial features make Acumatica a great product for the Canadian market,” said Steiner.
Acumatica also offers a CRM solution as part of the overall ERP model, he noted. The CRM product can be standalone, but “the huge value comes when you integrate them,” he said.
Acumatica’s strategy “makes sense for the demands of the mid-market,” said Sebastien Ruest, vice-president of services and technology research at IDC Canada. “It’s a great concept and it’s a great model, especially for mid-sized organizations.”
While large organizations find the pay-as-you-go model challenging for enterprise-wide solutions such as ERP, mid-sized organizations often find the licensing model of ERP solutions too expensive for their usage, he said.
Ruest doesn’t expect Acumatica will face a lot of competition in Canada because large service providers aren’t targeting mid-sized organizations with cloud-based ERP offerings. “The service providers are really targeting their larger-scale clients and helping them move to cloud-based,” he said.
Current demand for cloud-based ERP is very specific to certain components of ERP, according to Ruest. There’s movement towards cloud-based models for components such as supply chain automation, but organizations are not widely adopting the cloud-based ERP model yet, he said.
“There is a lot of interest in cloud-based ERP,” said George Goodall, senior research analyst at Info-Tech Research Group Ltd. But there is also a lot of hesitancy because ERP is so complicated, he said.
What’s interesting about Acumatica’s strategy, according to Goodall, is their “as-you-like-it” approach. It’s very compelling to say you can have the system where you want it – either on-premise or hosted on the cloud, he said.
The mid-sized market is also one that typically doesn’t have a lot of IT support, so Acumatica has a compelling argument for enterprises with a handful of IT staff that don’t have the time to develop and maintain ERP systems, he said.
The channel strategy is “really the only way to go,” according to Goodall. “When you look at any ERP vendor, it’s really all about the channel, particularly when you are looking at companies below 500 employees,” he said.
Small companies are more likely to adopt SaaS ERP, according to Cindy Jutras, vice-president, group director and research fellow at Boston, MA-based Aberdeen Group. “The No. 1 appeal is lower total cost of ownership,” she said.
But businesses in general continue to resist the SaaS deployment model for ERP, she said. “Given a choice where the same solution is available on-premise and SaaS, more companies than not will still choose to run an on-premise solution feeling they have more control and more security,” said Jutras.
According to Jutras, these are not necessarily legitimate areas for concern. “Unless they are running a system that is totally behind closed doors and nobody can even VPN into it … I think they are probably in better hands with someone who is an expert at security rather than their own staff,” she said.
Cloud-based ERP is appealing, from an IT perspective, to those who don’t want to use their own IT resources, said Jutras. But whether ERP is in the cloud, on-premise or hosted somewhere else doesn’t matter from the end user’s perspective, she pointed out. “As long as it is delivered over the Internet, a Web-based interface, the end user really doesn’t know or care,” she said.
The ERP market is not as saturated as people might think, said Jutras. A survey conducted by Aberdeen in late 2009 that looked at the adoption rates of 26 different applications found 41 per cent of 1,230 survey respondents had ERP implemented, she said.