Mark Symonds, chief executive officer and president of Plex Systems Inc., an Auburn Hills, Mich.-based provider of on-demand software, recently talked with IndustryWeek about the growing popularity of SaaS and common misperceptions regarding keeping sensitive data "on the cloud."
Q: Give us a thumbnail sketch of Plex Systems.
A: Plex Systems is a software-as-a-service ERP solution for manufacturers. So we're all about on-demand, the idea being that our customers don't need the infrastructure -- servers, backup equipment, databases and so forth -- on their site. All they need to run their entire business, from wherever they are in the world, is a Web browser to connect to our data center.
Q: What drives some manufacturers to convert to SaaS?
A: Nearly all of our customers have come from traditional on-premise software solutions. And what happens is they buy it, they install it, they modify it, and then a release comes out a year later, and they have to go through the gymnastics of evaluating whether there are useful things in [the latest release] for their business and possibly migrating to new hardware and a new operating system. And very often people don't deal with all of that, and they let their software get very, very old, and it's not meeting the business needs, so they have to re-implement.
Mark Symonds, chief executive officer and president, Plex Systems Inc.
So there are lots of things at play: the always up-to-date nature; not having to be burdened with applying patches, upgrading software and doing backups; and all that non-value-added drudgery for a manufacturing company.
The other thing in play with software as a service is that it is a set monthly subscription amount -- not $1 million or $500,000 or what have you up front. In manufacturing, just like everywhere else, everybody is trying to conserve cash right now -- cash is king -- and so the subscription model is very popular.
Q: What are some common misperceptions that you encounter regarding SaaS?
A: One is that it's just for small companies. In reality, we have customers with more than $1 billion in revenue that run their entire global operations on our software.
Also, there's a fear -- dating back to the run-up to the year 2000, when a lot of companies put in ERP systems to avoid the dreaded Y2K bug -- that manufacturers shouldn't put their family jewels, their "mission-critical systems," out on the Internet. But it's even more important to have those systems out there, because everyone is exposed to the Internet, and companies need the Internet to communicate with customers and suppliers, to get orders, exchange plans and drawings and so forth. But most [manufacturers] don't have full-time focused IT professionals to maintain the infrastructure to make sure that they're very well-protected. Also, the biggest theft of data comes from employees -- a sales rep taking your customer list and your pricing data, for example -- so when people visit our data center and see both the physical and electronic controls that we have, they realize that their data is much safer at our center than theirs.
When we meet with executives from a prospective customer, there's always a CEO or CFO or someone who is very skeptical; they can't wait to shoot it down. But as they learn more, their body language changes, and they lean forward and they get very interested and excited in the solution. And very often their attitude changes from, "Why would I do that?" to "Why would I do anything else?"
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