Sage Intacct Manufacturing makes noise at Sage Transform - but why cloud manufacturing, and why now?

(Rob Sinfield talking shop at Sage Transform)

In my roundup of the top news stories of Sage Transform 2022, the rise of Sage Intacct Manufacturing made the cut.  Why?

• I believe the future of cloud ERP is vertical. In today's volatile business environment, green-screen industry-data-silos running alongside ERP don't work anymore.
• Expanding from its service industry base is a big step for Sage Intacct. Sage Intacct Manufacturing is not the first of these forays; Sage Intacct's construction and wholesale distribution moves are already in play. But Sage Intacct Manufacturing raises the vertical bar.

Sage Intacct Manufacturing - why now?

Is this a move away from Sage Intacct's winning focus on the office of the CFO? I'll weigh on on that later. For now, what exactly was announced? As I wrote from Orlando:

Sage Intacct has moved into construction, wholesale distribution, and now: distribution manufacturing. Distribution manufacturing was launched in France in February, and in the UK in June. At Sage Transform, this solution is now generally available to early adopters.

In my Sage Transform roundup, I clarified how Sage Intacct Manufacturing fits with Sage's established X3 offering. But discerning readers wanted more. There's no better person to get it from than Robert Sinfield, Global Head of Product Sage X3 and Sage Intacct Manufacturing, Distribution and SCM. During a fast and furious catchup on the show floor, Sinfield answered my burning questions. Let's start with the elevator pitch - why Sage Intacct Manufacturing, and why now? As Sinfield told me:

The announcements of Sage Intacct Manufacturing and Distribution are significant for Sage Intacct customers. It really demonstrates we are able to offer them a comprehensive portfolio of solutions... It strengthens what is already a world class set of financials capabilities, and adds what I believe will be world class operational capabilities, supporting manufacturers, distributors, and hopefully other types of businesses going forward.

It also extends our portfolio, we already have support for construction, real estate, we've got support for retail with the Brightpearl acquisition we made earlier this year. So this makes perfect sense that we would close the loop so to say so we have full coverage across the across the business, the business workflow.

Cloud manufacturing adoption - is change afoot?

Okay, that's the elevator pitch. But cloud-native manufacturing has been one of the slowest areas of SaaS adoption. If Sage Intacct is betting on this, something is changing. Sinfield conceded that in some manufacturing industries, the fear of cloud adoption remains:

From the view of manufacturing and distribution adoption of cloud-native multi-tenancy solutions, I think there was always, like you say, a little bit of a fear about doing that. That's still relevant in certain industries. There are some controlled industries where they're less likely to go down the multi-tenancy route: industries that are in food and beverage, chemicals and pharmaceuticals, just because of the controls that they have to go through.

But in other manufacturing areas, Sinfield says COVID caused a shift:

COVID has actually accelerated this significantly. Manufacturers and distributors found themselves not being able to go into the office, not being able to manage the business, because it was normally locked away on a box somewhere, or on some sort of remote access solution, which didn't guarantee access to everybody all the time. This need for anywhere,/anytime access had certainly accelerated the process. That, in turn with the maturity of multi-tenant manufacturing solutions, has helped to accelerate this.

Sinfield cited a revealing stat. In the March 2020 timeframe, Gartner said manufacturing wouldn't broadly adopt the multi-tenant cloud until 2025/2026. Gartner predicted a 20 percent adoption level by then. But then COVID happened. Sinfield:

Six months later, they published the same report, or a revision of it - and the numbers were flipped. It was 80% adoption of the cloud and 20% adoption of on-premise solutions, by the same timeframe. It's incredible how that sort of flipped within six months of us going into COVID.

The work environment is changing. Workers who supported manufacturing processes, but who didn't work on the shop floor could shift to remote access during the pandemic - so why not consider cloud manufacturing? Broadband access for manufacturing plants has improved. A demanding, omni-channel consumer has added pressure on visibility across the supply chain.

Sage Intacct Manufacturing - functionality and fit

So the uptake in cloud manufacturing is growing, but what about fit? Sage Intacct Manufacturing is still a relatively new solution - where is the best customer fit currently? Sinfield surprised me: the product is further along than I thought.

As it stands today, we have we have full manufacturing capability. So the ability to manage multi-level bills of materials unconstrained by the way - unlimited levels of building materials, which is unheard of in an application in the segments in the market - we have the ability to manage resources, tooling, machinery, multiple costing methods, planning of the work orders and the operations.

We also manage the entire distribution flow. So procurement of raw materials, procurement of services, all the way through to sales and distribution of the product. So there, we can complete a workflow from start to finish, whether it be procure to pay, whether it be quote to cash, whether it be product design to manufacture. So the product is very complete right now.

So what's still on the to-do list? Sinfield:

Some of the things we're working on right now, in terms of integrating them into the product, are things like: shop floor data collection, for both manufacturing and distribution. Shop floor automation is  already built and used by X3 customers, using the same platform... In the next three months, those capabilities will be live for customers in the marketplace.

That brings us back to Sage X3. I've already covered Dan Wilson's take on the differences between X3 and Sage Intacct Manufacturing. What's Sinfield's?

X3 is good for much larger customers, with much more complex and bespoke requirements, in terms of process - and who are looking at a variety of distinct deployment methodologies. Sage Intacct Manufacturing is primarily targeted at discrete manufacturers. Sage X3 is more about batch-based process - and more complex discrete manufacturing.

My take - time to break down the MES <-> ERP silos

Sinfield cited a couple areas where Sage Intacct Manufacturing can excel:

• Connecting to the Sage Digital Network (the Digital Network was my pick for the sneaky big story of Sage Tranform) - Sinfield's team plans to contribute cloud manfucturing business services to the Digital Network, "as we ramp to scale." For now, the goal is to "essentially expose everything" as APIs, including granular workflows.
• Creating an adaptive UX - manufacturing workers typically contend with complex UIs. Sinfield's team believes they have changed that, via a role-based user experience that avoids complex UIs. Extensive customer interviews led them to 32 different personas, including cost accountants and back office support; the UX has been designed with those personas in mind. "Revealed complexity" is one of my favorite UI strategies - show people only what they need to see, but keep a powerful configuration engine underneath. As Sinfield put it:

We never have more than two buttons on the screen for the user. You either pick or pack, or 'go next', or cancel. It's designed so that we can guide users through the process - without unnecessarily complicating it.

But what about quality management (QM) and MES (Manufacturing Execution Systems)? For me, it's the silo between MES and ERP that's caused the most problems with data (and workflow) visibility - and that includes cloud ERP. But building a cloud-based MES system is no simple thing. Sinfield says there is progress on both fronts:

We've actually done the shop floor code. The data collection capabilities we've built for customers offers an MES-like solution as it is already. We're fully API-based; we have the OPS [Open Platform Communications] connectors.

Sinfield says that the mobile connect to shop floor data collection capabilities, which will form part of this MES solution, are on the same tech stack. "We suck that data in directly and users entered indirectly," says Sinfield. A big part of bringing MES to the cloud, in my view, is the ability to layer AI/predictive technologies on top of shop floor data. After all, we're talking machines that can bring an entire team into a state of inactivity when they go down. Sinfield's team has answers:

We've built the foundations for preventive maintenance straight out of the box. So if the machine shows degradation, someone will get an alert. And they'll go and start preventive maintenance jobs - so that's all in the platform from the get-go.

Due to the comparatively slow adoption of multi-tenant manufacturing, there are big opportunities in this space. Yes, Sage Intacct will run into competitors. Plex, now owned by Rockwell Automation, plays in this space, as does Acumatica and Rootstock. Given the sheer volume of manufacturers that haven't moved to the cloud yet - not to mention the variation in requirements by sub-vertical - Sage Intacct clearly has an opportunity here.

As for that office of the CFO thing - I don't think Sage Intacct is abandoning their tight connections to CFOs and accounting organizations. But as a savvy Sage Intacct partner said to me: is it a coincidence that Sage Intacct is expanding its verticals - at the same time that Sage wants to incent more of its older customers to move to cloud-native ERP?

Yes, you need strong financials to win those upgrades - but vertical requirements must also be satisfied. Last week, Sage CEO Steve Hare was quite direct with me about Sage's goals in this regard. They don't want to force customers' hands - but is it a coincidence to these this type of cloud-native industry functionality rolled out at this point in time? I don't think so.

Will customers embrace these moves - and how quickly? Those are the lingering questions. Another story to track in the new year.