LNS Research discusses the implications of Cloud ERP manufacturing software vendor Plex Systems' recent acquisition.
On February 24, 2021,Plex Systems announced the acquisition of Kors Engineering. Kors was founded in 1977 and is a small plant floor service provider that has been a long-time and successful Plex partner. Over time, the company has moved into offering software products as its focus, namely its flagship Mach2 that provides machine connectivity (white-labeled Kepware drivers), basic HMI/SCADA functionality, and the ability to develop lightweight manufacturing applications through their no-code/low-code development environment.
This acquisition is a continuation of Plex’s acquisition strategy to acquire small software companies that extend and support its repositioning as a Smart Manufacturing Platform. Similarly, in the summer of 2018, Plex acquired another small software provider, DATTUS, which offered IIoT capabilities to connect devices and sensors to the Cloud with supporting data management capabilities. So, the question facing Plex Systems leadership, its customers, and prospects is...
Can these small acquisitions support a big smart manufacturing strategy?
LNS Research has covered Plex for more than 10 years, and LNS continues to view Plex as one of the leading mid-market ERP providers, especially for North American discrete manufacturers with less than $250M in revenue. The company’s combination of cloud-native architecture, deep plant-floor functionality, and out-of-the-box interoperability between ERP, MOM, and Quality is market-leading.
However, several years ago, the company moved to reposition as the, “Smart Manufacturing Platform.” This has included moving from a monolithic architecture to one that can offer modular manufacturing apps separate from ERP, including MOM, EQMS, and Supply Chain Planning; as well as moving beyond just an underlying cloud architecture to one that also includes IIoT and Advanced Analytics capabilities.
This repositioning included a move by the company to start targeting large manufacturing enterprises to support Smart Manufacturing initiatives that are separate, often very intentionally, from ERP projects. The world Plex is pursuing for incremental growth is very different than the world it is accustomed; it is:
- Dominated by large automation and large IT providers – increasing the cloud hyper-scalers.
- Complexity, devices, and data are at many more orders of magnitude in scale.
- DIY and Best-of-Breed Architectural approaches are common-place.
Impact of the Acquisition
So, will this latest acquisition help Plex effectively sell and deliver to Smart Manufacturing leaders at large enterprises? I have my reservations, neither DATTUS nor Kors Engineering offers market-leading capabilities for their respective solutions. Further, Kors Engineering is only tangentially a Smart Manufacturing play, MACH2 is mainly a traditional HMI/Scada with machine connectivity capabilities. They also do not bring significant experience or credibility selling and delivering to large enterprises. Further, Plex still has gaps when it comes to what LNS believes is need for a full Industrial Transformation Platform including enterprise-level data conditioning and contextualization, AI/ML, AR/VR, No-Code/Low-Code, and a robust ecosystem that includes real partnership with automation providers, other ISVs, and hyperscalers like AWS and Azure.
But I do believe that both acquisitions will help Plex democratize Smart Manufacturing for small and medium-sized manufacturers that otherwise would not have had access to these capabilities nearly as easily. Even though DATTUS and Kors may not have been market leading – they are both solid technology with solid teams that as part of the Plex umbrella can deliver real value to existing and future SMB users. Further, at least with DATTUS, Plex has proven it can retain the talent it acquires for many years, and hopefully the same is true for Kors.
So, in the SMB space, along with the Oracle SCM cloud, Plex is a clear leader for Smart Manufacturing capabilities. This acquisition and market position will also help them fend off many of the new and exciting smart manufacturing start-ups that are considering moving into the SMB space like Tulip Interfaces, and it will also put their traditional competitors further at a disadvantage like QAD, Epicor, and SysPro.
The coming months and years will surely be exciting – we are very interested to see if Plex continues on this current strategy; if they make more significant acquisitions and wholeheartedly go after the enterprise space, if some of the exciting start-ups successfully move down into the SMB space, and if any of Plex competitors follow suit and also make acquisitions in the Smart Manufacturing space.