Imagine being asked to run a promising technology company. Its mission: Bring industrial-strength, Enterprise Resource Planning (ERP) software to an entire new set of customers via the cloud.
Before accepting this assignment, you begin your homework. First you check to see if the market opportunity is large enough to satisfy your ambitions. (In this case, the total addressable market (TAM) could be in the billions of dollars.) You then check to make sure the technology is competitive and well developed. (It is, you discover.)
Then you inquire about the company’s go-to-market strategy. When you dig deep, you find out that the promising company is eager to embrace the channel, which meshes nicely with your perspective and experience. In fact, the company wants 100 percent of its business to go through partners. Great, you say: How many do you have?
This is essentially what happened to Jon Roskill, the newly hired CEO of cloud ERP provider Acumatica. In October 2013, he left Microsoft after more than 20 years. His last assignment: corporate vice president of the Worldwide Partner Group. After considering his options, the former head of the world’s largest partner organization decided in early March to accept an offer to be the CEO of Kirkland, Wash., company that has just 270 partners.
“When I thought about when I was the most happiest and most excited about coming to work, it was really in the very early days of Microsoft,” he said.
Though it was founded in 2007, Acumatica feels like a startup in many ways; for example, the company has no partner in New York City. Instead, the nation’s single, largest market opportunity is being addressed by a partner based one state away in New Jersey.
Channel Partners caught up with Roskill in between meetings in Dallas, where he was on the ground wooing business allies. Recruitment, enablement and rewards, he said, are all high on his list of priorities. So are product development, customer satisfaction and more. He is a busy man, in other words.
In this wide-ranging interview, Roskill discusses Acumatica’s opportunities, market penetration and business challenges.
Channel Partners: What attracted you to Acumatica?
Jon Roskill: For me, it fits extremely well with what I was looking for. I believe we are in the middle of this big transition to cloud computing, which is a fundamental technology step-change. What I wanted was to be able to go with a company that is building stuff for the cloud and mobile. I’m fundamentally a business software guy; I’m not a consumer person. And everything that I have done has been with and through partners. So the Acumatica opportunity is getting to work with something that is 100 percent channel-oriented and [cloud.]
CP: When you say “partner-oriented,” what do you mean?
JR: A lot of companies will say they are partner-oriented but aren’t 100 percent. Take Microsoft, which is undoubtedly partner-oriented. They still have a pretty strong presence with their sales force and the Microsoft Consulting Service. That created enough consternation in the channel that it was something that I honestly spent a great bit of time explaining. For me, this is a wonderful opportunity to walk into something that is truly clean. There’s no channel conflict going on here. What we’re really looking forward to doing here is to bring on a bunch of new partners that want to work with us in this space in the cloud and grow the Acumatica business together as fast as we can.
CP: You said you wanted mobile, you wanted cloud, you wanted pure-play channels, etc. Tell me: Why did this opportunity convince you that it was the “one”? What did you see technologically and what is the market opportunity?
JR: I spent a lot of time with venture capital firms and equity companies. The coaching I got from them was to go for a large market opportunity. ERP is over $60 billion. So it’s one of the biggest, if not the, biggest market opportunity out there. The second thing is that it is totally primed for disruption. It’s a $60 billion opportunity that is about to get turned on its head by cloud and mobile. That answers your question on the market opportunity. From the technology standpoint, the people behind the company, including John Howell, one of the founders, was the president of Solomon Software back in the early days of client-server ERP. These guys looked at the market and decided to build something that is fresh and clean and very easy for a Great Plains or Sage partner to be able to move onto. Before I took the job, I talked to some partners, and asked them if the technology was real and workable, and if this was something that they could get on board with rather quickly and ramp their skills. The answer I got was a resounding “yes” to both of those. On the technology side, it is on the Microsoft stack. So it’s cloud-based, but running on top of Windows Server and the .net stack. So anybody who builds in Visual Studio can write customizations to the product very easily.
CP: Let’s talk about the disruption. Are we seeing the democratization of ERP? Can partners help you bring ERP-like capabilities and functionality to a new class of customers that heretofore have been priced out of the market or found the technology to complex?
JR: To some extent, yes. Now there is some complexity; just because you move it to the cloud, the complexity doesn’t go away magically. But there are certainly things you can do to make it simpler. Because it is running in the cloud, there is a whole set of configuring and provisioning that doesn’t need to happen. You don’t need a bunch of IT guys running around working on servers. When you talk to small businesses, they have to get to about 50 people before they hire an IT person. So the fact that this now opens this up to a company of say five to 10 people [is exciting]. They don’t need to have a server on premise, they don’t need to reboot the thing, etc. The second thing is that we have worked to make the product, the base-case scenarios, especially, very easily configurable. It’s very easy to get a customer up and going in basic, horizontal accounting mode. I met with a partner this morning who told me that customers tend to start like that and then quickly ask for more functionality. The partner was excited about this because it’s very easy for them to add that functionality and get additional billing services on top. That’s what partners are interested in.
CP: Can partners make a lot of money with you?
JK: We pay a very healthy margin. We’re one of the healthiest if not the healthiest in this space.
CP: How big are you now and how big could you be in two to three years?
JK: We have not been talking numbers from a dollars standpoint. But what I can say is that the company is over 100 people. And we have 270 partners that are in the program right now. We can triple that number in the next two years and not have any issues of conflict. There’s so much opportunity out there. In fact, one of the interesting things is this: We’ve done a map of the United States. We found we have places here we don’t have a single partner. Take New York City – it’s being covered out of New Jersey right now. There’s an opportunity for probably 10 partners in New York City by itself. So you can bet that I’ll be on a plane to New York in the next few weeks working on that. That’s just one area but it gives you a sense of the opportunity we have to scale. In terms of plans for growing the business, we think over $100 million is very doable. And we think $1 billion in 10 years.
CP: That data point about New York City: Is that an aberration or is that indicative of the company’s maturity as a whole?
JK: It’s absolutely the right question. Everything so far has been opportunistic. Partners have either found us or they ran into us somewhere and got signed up. It turns out that we are incredibly strong in Minneapolis, for example. I have this map of the number of businesses to the number of partners and we actually have pretty good coverage in Minneapolis. But we have poor coverage in New York City. And it’s just because no one has sat down with a map of the United States and said, “Let’s build a proper channel plan with how we are going to drive coverage and who are we going to recruit.” We are now at the stage to do that. That’s a big part of why I am here. I’m here to take what has been a very opportunistic approach to the market to a very thoughtful, strategic approach.
CP: Who are you looking for: What kind of partners and what kind of skills fits best with your technology?
JR: Very clearly partners who have experience with Sage, with the Dynamics SL background, the Great Plains background, etc. There are smattering of other things, like Epicore. That’s really the sweet spot.
CP: What are you guys doing outside the United States? What’s your international/domestic split?
JR: We’ve got a surprisingly strong business outside the United States. But, again, it’s quite opportunistic. There’s a large partner that we have an OEM agreement with out of Oslo, Norway. It’s a company called Visma. If you look them up, you’ll find that they are the largest software company in the Nordics. What they are doing is OEMing. They are building their platform on top of the Acumatica platform. They are taking that to market in the Nordic region and they have thousands of customers. That gives us scale in that region. And it’s real industrial strength technology. They are pushing our development team. It helps us by making us stronger. In Asia Pacific? It’s like the map of the U.S. We’re strong in the Philippines, Vietnam and Indonesia. But we are not in Hong Kong, for instance, in the way we could be. So I’m doing the same thing in the rest of the world [that I am in the U.S.]. We’re mapping and then recruiting partners. In Hong Kong that may be working with people who do wholesale distribution in China. We have a partner in England. But we don’t have an office in England yet. So we have to get going in Western Europe.
CP: How do your technological capabilities stack up? Are they similarly opportunistic as your go-to-market strategy? Or is the product a little more screwed down?
JR: I think we have a really good base platform. That’s how I’d characterize it. We can accomplish a large part of what anyone wants to do. Clearly, we are getting requests from our partners in terms of things they would like to see added in in future releases. I can tell you one of the big focus areas for this year is going to be really strengthening the mobile components. We are going to take a very different approach in the mobile area than some of the competitors in that some of them are building their own vertical, mobile apps. They are building apps for manufacturing, for retail, point-of-sale, etc. We think that’s actually taking opportunity away from partners. What we are doing is delivering our core platform and looking to partners to build on top of that.
CP: You spoke before about the cloud. How big of a disruption is it likely to be? Is it going to be as big as the first Internet wave in ’95, ’96 and ’97? Is it going to be as big as the move to client-server in ’87, ’88 and ’89? You’ve been around the market for a while. Give me your perspective.
JR: You can look at those transitions as equivalent transitions. Cloud is an equivalent step as going to client-server and Internet computing. But each one of those has gotten bigger. I don’t think there’s any doubt that cloud computing is going to be bigger than the last two [waves]. As the integration opportunities of real, scale Web services start to emerge, it’s clear that people are going to be able to do things with software that they didn’t even imagine before. Look at some of the things people are talking about with the Internet of Things (IoT). All this stuff with sensor data is going to be available to Web services from all kinds of interesting companies building cool things. The one that everyone seems to know is Nest, the company that built the Wi-Fi thermostat. Nest is now building lights and other things. A lot of the sensor data coming from these devices is going to open up new worlds. Imagine a manufacturing line with devices that provide sensor data that you could feed into your ERP system. There’s an obvious connection with some of the stuff that’s going on with the Internet of Things and what we are doing with ERP and the core software. I brought that down to a specific example where I think we will play. But at the broadest level, there’s no doubt in my mind this is going to be big. As little as two years ago, I was still getting into debates with CIOs about whether cloud computing was real or not. Nobody is debating that any more. The only question is when.
CP: What is your top priority between now and the rest of the year?
JR: Without a doubt, I would say it’s growing our partner channel. We will live or die through our partners’ success. I’m super energized about this.