Thought Leaders in Cloud Computing: Interview with Jason Blessing, CEO of Plex Systems (Part 4)

Sramana Mitra: That sounds a bit high. I think you need to differentiate among the very large manufacturers – like the auto or aerospace industry, where it is an SAP sweet spot. It would be very hard for you to move any of those off SAP. If I were you, I’d figure out what the mid-market TAM is, and which companies are interested in the cloud and a more affordable solution and perhaps more interested in coming at it from the shop floor point of view. I think that is a more accurate assessment of where your opportunity is. I don’t think you’d be able to move to the larger ones. The number you are quoting includes those larger players.Jason Blessing: That is a fair point. Let me describe the scenario that we see very frequently though, which is the concept of two-tier enterprise resource planning (ERP). Are you familiar with that?

SM: I know what it is, but I haven’t really looked at cases very much. I am sure it would be very interesting if you talked about that. I know it is happening, but we haven’t discussed any of those cases in this series.

JB: Two-tier ERP is the concept that headquarters in a manufacturing enterprise will run something like SAP or Oracle. But what is increasingly the case, when you get down to the divisions and more specifically the plants in those divisions, the Oracle or SAP products haven’t worked for them because they are finance-oriented packages and don’t have robust manufacturing execution and quality systems.

What is happening increasingly often is that companies like Plex will get in on a plant level – on the manufacturing, quality, supply chain, the financials and the HR – have success at a plant level, and move across the plants into divisions. Before you know it we own the division, and once we own the division, we move into other divisions in the company. What SAP or Oracle end up being are just consolidation systems at headquarters. Those systems are like asbestos – companies don’t want to rip them out, they just want to contain and compartmentalize them. So, we are feeding summary information to those systems so they can do consolidated reporting. The majority of the business is being run by systems like Plex, that run the plant-level operations.

SM: That is interesting. What industries or verticals are you in within  manufacturing?

JB: There are four that we are focused on today. The company, by nature, started going after suppliers in the motor vehicle industry. That today drives the lion’s share of our revenue. But we have successfully stepped out into three other industries. Aerospace and defense has been a natural progression for us. Aerospace and defense manufacturers are very similar to motor vehicle manufacturers in that they are stamping metal, doing injection molding, assembling, sub assembling – going into larger components, etc. A number of the auto industry suppliers have diversified out of auto into aerospace and defense for that reason, because they are very similar businesses and it diversifies them in the even one of the industries goes south.

The other industry where we have seen great traction is electronics. It is very similar. There are a lot of electronics supply chains stamping out components, assembling them, wiring them, etc. That has been a very successful industry for us. The third industry we started going after recently is food and beverage. You might ask, “Why would a company that has had success in discrete manufacturing, how could that solution possibly have poured over to process manufacturing?” What we found, when we looked at the market, is that the tyranny that comes with growing up in the automotive supply chain has led us to build things that poured over well into food and beverage – more specifically the traceability needed to handle automotive recalls. That functionality play well for food and beverage, where you are concerned as well about traceability: What worker used what lot of ingredients to make a product on a specific day? So, we went into that sector because of the traceability and quality of our system pouring well and we also thought it is extremely important for us, as we continue to grow, to show that we could coexist in both process and discrete manufacturing.

SM: In the auto or aerospace industry you are basically working with the part suppliers – the tier 2, tier 3 part suppliers. Is that correct?

JB: That is correct.

This segment is part 4 in the series : Thought Leaders in Cloud Computing: Interview with Jason Blessing, CEO of Plex Systems
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