Plex Systems is a cloud, software-as-a-service (SaaS), multitenant enterprise resource planning (ERP) and manufacturing execution system (MES) vendor with a historical focus on discrete manufacturers that are small and mid-size businesses (SMB) headquartered in North America, largely across the automotive supply chain. The company does have a growing number of customers in food and beverage and high tech. LNS Research recently participated in Plex’s Future of Manufacturing Roundtable, a joint customer advisory board / analyst event. The conference featured a combined review of Plex System’s 2017 progress, customer engagement, and forward-looking plans.
2017: Mostly in the Rear-View Mirror
There were several noteworthy takeaways from Plex System’s 2017 accomplishments. From a technical perspective, it has spent the past several cycles creating a more robust, scalable, and easier to use platform. At this point, the company considers much of this technical debt to be complete, a meaningful accomplishment that frees the development team to focus on other priorities.
From a revenue perspective, Plex expects to exceed $100M in recurring revenue in 2017. It continues to enjoy a 97% SaaS renewal rate due a satisfied customer base. There were 33 new customers through the first three quarters of 2017, mostly in core sectors (SMB and automotive), but several in process industries and with enterprise and global manufacturers. Plex has been positioning a “two-tiered ERP” strategy for several years, and some new customers did deploy with that approach. In these cases, Plex managed site-level ERP and MES including manufacturing planning and execution processes, while Workday, SAP or Oracle managed corporate ERP.
Recently, Plex Systems experienced broad management turnover as it focuses on increasing revenue growth. Francisco Partners, the private equity firm that owns Plex Systems, reaffirmed long-term investment. One important part of its plans is to fully reinvest margin for the foreseeable future, which in combination with the completion of the technical debt, positions it for greater development velocity.
Simply put, Plex Systems has an enthusiastic customer community. We spoke with several automotive SMBs that had digitalized their manufacturing planning and execution with Plex. One customer told us that they reduced prototype delivery from over 30 days to just 72 hours. Another explained how it now delivers product lead in days versus an industry norm of months. Finally, there was a company that deployed Plex SaaS at new sites in 30 days. In every instance, the increased responsiveness had a direct positive impact on revenue.
We found it interesting that several in attendance manage advanced product quality plan (APQP) processes natively within Plex. These customers are generating failure mode effects analysis (FMEA) and control plans within the system and connected to the shop floor. This tight pairing of quality and manufacturing was a highlight for those that deployed it. It creates a data-driven rather than document-driven environment that’s essential yet often missing among manufacturers, resulting in costly disconnects and silos.
A highlight of the event was a tour of Fisher & Company. Fisher has a mature Plex deployment, and the tour illustrated the integration of automation, manufacturing execution and quality. The facilities we toured had started to implement large touchscreen displays to provide real-time updates of current performance against schedules. This approach allows operators to directly and visually capture quality inspection results by annotating quality inspection points on an image of the produced part.
Fisher has also started its Industry 4.0 journey, investigating data lakes and advanced analytics to collect and analyze performance. The company expects to utilize Plex data throughout the journey, although the manufacturer is pursuing other technology to fill in gaps. Leaders throughout the company expect insights from this work to drive efficiency and quality improvement (Quality 4.0).
LNS views Plex Systems’ forward-looking plan from three perspectives: current customer satisfaction, market expansion, and Industrial Internet of Things (IIoT).
Highlights of its 2018 customer satisfaction plan:
- Continued enhancements to the Plex user interface (UI). Plex has taken a more disciplined and user experience approach, which has resulted in ease-of-use upgrades, with more in the short-term plan.
- Upcoming launch of refreshed iOS and Android native mobile apps, with many embedded mini-apps that demonstrate intelligent workflows. The event included demonstrations of these on an iOS/Android barcode scanner.
- Continued expansion and improvements to manufacturing planning and operations, including support for just in sequence manufacturing, just in time procurement, batch processing (although no true recipe management in the short term), and lot inheritance (traceability from supplied lot attributes to final assembled products). There is also a roadmap to fully integrate the DemandCaster acquisition in the next year or so, which is refreshingly quick.
Market expansion was a repeat theme. There are two key strategies at play here:
- Plex has been discussing the aforementioned two-tier ERP strategy for the past several years, which would allow it to separate corporate ERP functions from site-level functions. Leadership sees this strategy as critical to Plex's plans to expand across large manufacturers and to expand globally, as it would enable Plex to become the site-level/manufacturing ERP while connected to an enterprise ERP which could be Plex or the incumbent.
- It has been proposing a manufacturing ERP platform over the past years as well. Ultimately, this strategy would enable Plex to create a rich partner program similar to Force.com, creating additional market momentum.
Both strategies are expected to incrementally move forward in 2018, with a release of an open API and extensibility. These new capabilities would provide greater flexibility for the entire customer base, as well as needed Plex-to-Plex and Plex-to-other ERP, plus Plex-to-partner connectivity.
Finally, Plex Systems is planning to make progress towards an IIoT strategy. Its next step on that journey is to improve native analytics. That’s not precisely IIoT, but it is likely to be a welcome boost by existing customers who would benefit from better insights into their existing data. Additionally, Plex demonstrated a Plex-ThingWorx proof of concept that connected robotic and sensor data to Kepware to execution rules in Plex and displayed data in ThingWorx mashups. The data displayed in ThingWorx was preprocessed with a clever Plex-developed middleware component to add structure, which made the ThingWorx mashups more intelligent and flexible. It also demonstrated proof of concepts in voice-controlled systems.
Plex Systems has had a successful 2017 and is targeting increased growth over the next several years by building on its customer enthusiasm and expanding into new markets. Its core platform does much to provide a data-driven connection between the roles involved in planning and executing manufacturing, and it has been proven to increase the agility, efficiency, and quality of its core customer base. Its 2018 plans are likely to be welcomed by existing customers and add necessary enhancements both to platform capabilities and specific process support.
However, while it fills a strategic position to help its existing customers with their IIoT strategies, it appears to be far from enabling these strategies in the near-term, and its planned 2018 enhancements are early, incremental steps on the journey to enabling its more aggressive growth stance. It has discussed its two-tier ERP and platform strategies for several years, and important segments of its expected market for growth – large and global companies – are still lightly represented in its customer base. More proof is needed to identify if these segments have sufficient interest to fuel Plex’s growth plans.