“There is only one true Cloud ERP platform designed for mid-sized customers – Acumatica”.
This is a bold claim by a company that is shaking up the Cloud ERP industry, especially with its flexible deployment and pricing models. In this interview, , VP of Partner Strategy, Product Management, and Services, discusses why Acumatica is different, his advice for Cloud ERP buyers, and the unique Acumatica Customer Bill of Rights.
Editor: Why is the Acumatica pricing model different from that of other ERP vendors?
Jani: At Acumatica, we feel that we have changed the game. We do something that is very different from anybody else.
We don’t charge per user. So, the more customers you have, the more employees you have, the cheaper it is.
Acumatica has a Standard Edition and an Advanced Edition. And for each of these editions the customer can choose the Small, Medium or Large resource level. You can have an unlimited number of users.
Most cloud ERP vendors license on a subscription basis based on named users. But if you look deeper, you will see that behind the scenes they have restrictions on resource consumption too. For example, NetSuite charges by seat, but also by resource level – they call it Tier 1, Tier 2, Tier 3. If your company suddenly starts doing 5,000 transactions a day and starts consuming a lot of their resources, they will come back to you and say you need to increase your resource level for an extra cost - even at the same user count. Large companies also tend to use more web services because they want to change functionality, add customizations or workflows. On top of the Tier level NetSuite also limits the number of simultaneous web services calls you can make per hour.
ERP vendors also typically engage in deep discounting because they know once they get you in, the cost to switch systems is very high. Discounts can be between 20 and even as high as 80 percent depending on the vendor and how important the deal is to the company. Once you are in and decide to renew, the discounts have suddenly shrunk and you are paying a premium in year 2, 3, 4 and beyond. Plus, since you are paying by named user versus concurrent user, if you add an employee, or lose someone it is a change request. The discount that you got on the original order likely no longer applies; you will pay full price.
The point is, with most ERP vendors you will find that the devil is in the details. You must read the fine print.
Editor: Why doesn’t Acumatica publish their pricing publicly?
Jani: I think people make a mistake by looking at the software price. Typically, ERP is not a commodity item. You typically don't choose one software versus the next on price.
It is much more important to focus on finding the software that is the right fit, that it is a software you can grow with, that it has up to date technology, and that it is adaptable. If you focus on which software will help you grow and save money, it will pay for itself. If a company can save even 2 percent on costs or you can grow your business by 2 percent you have won. This is a 7 to 10 year investment. It is important that people look at the total cost of ownership over time, including implementation and on-going IT support costs, so that they can do an ROI analysis.
That being said, I think it's good to give people a rough idea of the price of so they know that we are not QuickBooks. But if a system is $6,000.00 versus $8,000.00 or $10,000.00, it's such a small difference versus the implementation and long term costs.
Typically, software in a subscription model, is 1:5 or 1:4 software to implementation cost ratio. The implementation services always cost much more than the software. But it is still less than traditional on-premises implementations because you don't have to worry about hardware, workstations, or the internal network of the organization.
Acumatica does not sell direct. We sell 100% through our channel partners. Buyers can get Acumatica pricing from our reselling partners, who can help them not just look at the subscription cost, but the total cost including implementation services. Then they can calculate the overall ROI.
Editor: What question should buyers be sure to ask ERP vendors before they buy?
Jani: We always tell customers to ask, “What optional items am I NOT getting?” With many vendors, the pricing structures are very complex. For example, one product I know of has eight different editions and each of them includes only certain modules while other things are not available. Be careful not to select the wrong edition and need to switch later; that will be very complicated and expensive. On the other hand, Acumatica has only two editions, Standard and Advanced, that are simple to understand. A company that starts on the Standard Edition can easily move up to the Advanced edition as they need more functionality.
So, my advice to every buyer is: don't just ask about what you need now, ask about what you are not purchasing today.
Understand the breadth of the offering; chances are you may need it in the future. You want to make sure that the path you are choosing today can lead to what you may need tomorrow, cost effectively.
Editor: What determines if a company should choose the Standard or Advanced Edition of Acumatica?
Jani: Usually when a customer chooses the Standard edition they know that they will be moving to Advanced at some point in the future and it's an exploratory period for them while they're growing. The cost difference for the Advanced version is not that much more per month.
The Advanced edition provides more functionality. Most companies choose the Advanced version because of the extra accounting functionality. For example, you need sub accounting if you have multiple locations with warehouses for inventory management. Or you change from an owner driven company to an organization that needs better dissection of your financials. Of course, if you go international you want multicurrency and consolidation. And some of the modules like Project Accounting and Manufacturing are also only available in the Advanced Edition.
We have our standard policies, but from time to time, we do make exceptions depending on who the client is and what they're trying to accomplish. If we see a path with them to move to Advanced at some point, we can work with clients to get them what they need in the Standard Edition. We are pretty flexible. It is part of our philosophy that we are very customer friendly.
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Editor: Acumatica has three resource levels – Small, Medium and Large. How does a company know which resource level they need?
Jani: We have a very straightforward self-assessment that generally people do during the sales cycle. Companies tend to know roughly the number of transactions they do in any given day. We look at the peak times in the busiest season. To give a frame of reference, even our Small resource level can handle up to 100 complex business process transactions per hour (for example full cycle of taking and processing orders).
Most small companies are doing 100 to 300, maybe 500 transactions per day. If a company has 100 to 150 employees, the majority of them are going to be light users, maybe a few dozen are medium users, maybe a few dozen more are heavy users. So, for us, the majority of our small business sales are at the Small resource level.
The Medium resource level is for companies that are doing much more than a hundred transactions per hour.
Editor: When does a company need to move up to a higher resource level?
Jani: The system would get slightly slower. Transactions would still process but things would start to queue up. Instead of getting sub-second response, you're getting second and a half, 2 second type of responses. And if a company is doing a high volume and wants to get all the orders out the door, they will want to keep up the pace.
We do allow bursting for seasonal businesses. A lot of the businesses have a busy season like Christmas. So, you are allowed to burst up to Medium resource level for a month and then go back down to Small. You basically pay a small premium over a prorated fee. That is another flexibility we offer to Acumatica users.
Editor: What is Acumatica’s upgrade frequency?
Jani: We basically have a continuous upgrade model. We put out regular updates and fixes all the time. Typically, every 2 weeks something new will get merged into the application. However, we do offer large accounts the ability to upgrade less often. They can opt out of those continuous updates and enhancements and they will typically upgrade once a year. This is something that NetSuite offers to larger accounts too.
We also offer Acumatica in a perpetual model. So, if you don't want to subscribe you can get a perpetual model where you buy the license and pay an annual maintenance fee. Then you have full control over the upgrade process.
Editor: What is the Acumatica Customer Bill of Rights?
Jani: Our Customer Bill of Rights is about putting ourselves in the shoes of the customer and not making you feel like you are trapped. For example, the fear that you can’t get your own data and the fear that prices will suddenly escalate out of control.
Number one, we think that customers own their own data, so we provide them full access to their data. You can take snapshots of it and download the fully relational data set at any time. Even if you go on with our online services, you can take a snapshot and store it locally on your laptop, on a nonproduction version of Acumatica, and use it for training purposes. We offer free sandboxes, locally for you to develop and test on.
Number two, at Acumatica we are very friendly in terms of price protection. If you choose the perpetual model, your prices will never go up. You will pay the same maintenance fee through the life of your product. You are guaranteed that the maintenance price doesn't change. If you go on the subscription plan, there's an automatic cap of 6 percent maximum per year and many years there is no increase. So, if we ever do need to increase the price, our customers are protected so they won't see big price increases.
At Acumatica, we believe we have truly changed the game of Cloud ERP.
By ERP Cloud Blog Editors, www.erpsoftwareblog.com/cloud
