Paul Esherwood sat down with Anton Chilton, CEO at QAD to discuss their new Adaptive ERP and how it works with global manufacturers to ensure they have the tools to be competitive in a highly disrupted sector.
QAD is one of the original ERP vendors with a history dating back more than 40 years. The company was founded by Pamela Lopker almost by accident when she wrote some software to help a friend run his micro business selling sandals and leather goods. It turned out to be so good that they soon forgot about shoes and handbags and turned their attention to developing the software and launching QAD.
A five year plan after 40 years in the game
Anton Chilton, who has been with QAD for more than 15 years, took over as CEO in December 2018 with a mandate to deliver a bolder strategy focussed on new business growth and the continued evolution of its Adaptive ERP platform.
Chilton said: “It’s the first time that we have gone out and said, ‘this is what we’re going to look like in the next five years and how we’re going to do it.’ It’s based around our vision of the adaptive enterprise. Manufacturers need solutions that are going to help them become agile and adapt to all of the changes in a disruptive market. We’ve painted a vision and we’re going to launch it fully at our big customer event, Explore, in May.”
QAD is a vertically focussed ERP solution that is used by manufacturers that make the same or similar things from standard components in high volume. If you’re not in one of these sectors you would be forgiven for not having heard of QAD. It is a relatively small player with annual sales of $333m, but despite its size, they have a globally distributed customer base, a very loyal following and a suite of products that are more than a match for any of the tier 1 vendors.
Chilton said: “The areas that we’re really strong in are automotive, life sciences, food and beverage production and contract manufacturing for pharmaceuticals. Those are the main industries and we have about 24 sub-segments that we target there too. We focussed exclusively on manufacturing from the start and we’ve been true to that core ever since. We had some great partnerships with people like HP in the early days and that took us into some very large customers and gave us a platform on the global stage.”
Adaptive ERP and transition to the cloud
The Adaptive ERP solution combines deep manufacturing ERP and supply chain capabilities with a modern platform and user experience. It harnesses capabilities from emerging technologies like AI and machine learning and helps manufacturers effectively respond to changes in their industry, simplifying the experience of running a secure and dependable ERP. It is available as both a SaaS and on-premise solution with QAD claiming that about 15 percent of its current install base is on the cloud with the bulk of customers planning to transition over the next five to ten years.
“We started the transition to becoming a cloud company about ten years ago and we’ve been successfully converting existing customers from on-premise into the QAD Cloud. But there’s going to be a fairly long tail and I would expect the majority of our customers would move within the next decade. I know that’s a big window, but that’s what we see and we aren’t in a rush to move our customers to the cloud. When we meet our customers we don’t start the conversation with a discussion about cloud, or AI or blockchain. We start by asking what issues are they dealing with; what challenges are they facing; what are they trying to achieve? We then look at our products and services and offer solutions rather than trying to push them down a particular path,” said Chilton.
All QAD cloud customers are deployed on their own private environment in a single-tenant architecture. Again not the direction of travel for most other vendors but Chilton points to unique difficulties with multi-tenant architecture for customers that operate in their verticals and notes that even those vendors that claim to be ‘multi-tenant’ are in fact running a lot of their largest customers in a private cloud environment.
“We took a very deliberate decision to stay away from multi-tenant; we have a single code line, a common set of architectures but every customer is in their own virtual environment. That gives them the independence and the control without having to participate in unsolicited upgrades on a regular basis.”
Products that deliver value in rapid time
And what about the products themselves? How does QAD stack up in terms of its core applications and complementary product lines? In its 2019 ERP Value Matrix, Nucleus Researchpositioned QAD in the ‘expert’ quadrant highlighting a depth of capability in its focus verticals and the DynaSys demand planning application was recognised as a ‘major player’ by IDC in its 2019 MarketScape report. Another key benefit of the QAD product range, and particularly its architecture, is the ease with which it can be implemented and upgraded. Customers stay with QAD because upgrading applications is relatively effortless when compared to some other vendor products and ease of use and time-to-value is quoted by many as another key differentiator.
Chilton said: “In the re-architecting of our product we’ve done a couple of things. We’ve done a lot on the functional side including improvements in the user experience, embedded analytics and personalised dashboards. But architecturally the big difference from how other vendors have gone is that we’ve separated the application into 17 business components, each of which can now be independently upgraded.
“We’ve completely taken the legs out of where SAP is today with their strategy. Let’s say you’re on ECC 6 – at some point you’re going to have to move to S/4HANA. But there’s no migration path so you better get ready for another 36 month project. Our view is that you never want to be in that situation – where you’re facing what we call ‘the death cycle of ERP.’ Design my requirements today, take years to implement, and by the time it’s finished, it doesn’t fit what we wanted and everybody’s got Excel work-arounds and customisations. Our time to implement and time to value is a massive differentiator and if you’re measuring against SAP we have a five or a 10 times advantage in terms of speed.”
Fast fish eats slow fish
Vendor selection is more critical than ever. Historical lock-in may have handcuffed customers to their ERP vendor because migrating to a new platform was far worse than staying with your incumbent provider – no matter how unhappy you were. But today there is a different type of lock-in – one that is not peddled by the vendors but by the market economics of SaaS and cloud. It is virtually impossible to create a rational business case to move from one SaaS provider to another – it just doesn’t make sense to do so. Therefore, when you are choosing your next ERP partner you really need to think long term. Perhaps it’s a marriage for life. This daunting prospect should encourage ERP buyers to think much more creatively about their choice of ERP provider and not necessarily go for the safe option of Oracle or SAP, if that’s the perception. ERP buyers need to ask themselves what kind of relationship do I want with technology and how does technology integrate with my business objectives. ERP buyers need to look for vertical expertise, platform architecture, ease of implementation and above all else, time to value. What is the problem you are trying to solve? And what is the technology you need to solve that problem? Most importantly, ERP buyers must have the tools to adapt to changes quickly. If you are an intelligent enterprise and you spot something in the supply chain, need to react to a customer demand or a new competitor springs up – you have to be able to respond to that quickly. That’s why a platform that supports rapid integrations and offers agility is paramount. QAD’s 40 year expertise, its robust set of applications and adaptive platform which allows for easy integrations should put it on the watch list for any manufacturer wrestling with the dynamics of a rapidly shifting market.
Summing up Chilton said: “The world is changing and that pace of change is only going to get faster. If you’re worrying about that or at least planning for it, include QAD in your thought processes because I think we’re a really well-kept secret. It’s no longer the big fish that eat the small fish. It’s the fast fish that eat the slow fish. That applies to ERP but we also think it applies to our customers and we can help manufacturers of all sizes become more agile and faster to respond to the challenges of a disruptive world.”