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Are You Ready for the Cloud?
Graphic describes the difference between SaaS and on-premise responsibilities. KeyedIn's ability to configure its solution to its customer's need is due to its proprietary KeyedIn KonfigureTM platform.
Graphic courtesy of KeyedIn® SolutionsTM.
KeyedIn® SolutionsTM, a cloud-based software company headquartered in Minneapolis, Minnesota, delivers enterprise resource planning (ERP) systems to support the needs of small-to-medium size manufacturers and large multi-national corporations. KonfigureTM is the company's proprietary rapid application development platform.
According to KeyedIn, Konfigure enables applications to be developed up to 70 percent faster, allowing KeyedIn—and its clients—to quickly deliver solutions to solve unique business needs. KeyedIn Solutions' cloud computing service aims to provide a more flexible, scalable, and affordable means to solve complex problems and deliver business results faster, while providing cost savings over traditional in-house computing.
KeyedIn Solutions' Dave Lechleitner recently spoke with D2P about cloud computing for manufacturers. Following are edited excerpts of our conversation.
D2P: When you have a relatively neophyte customer, how do you respond when they say to you, "OK, what is cloud computing, and why should I be interested in it?"
DL: That's a really great question. At its very baseline, and probably the simplest response that I can give you, is that cloud computing basically allows an end user to access software through the Internet. So there's no need, generally speaking, for the end user's business to have servers, network infrastructure, and the like to host their own, on-premise software. There's nothing to install. Literally, if I can get to a web page, we can access the software. So there's no need to maintain any sort of server environment, which is really a significant advantage, especially for small and mid-sized businesses, as well as large enterprise business as well. Basically, the data is stored through the Internet on our servers, rather than within the four walls of the local business. And so in the end, cloud computing really allows companies to avoid a lot of the upfront infrastructure cost, and really focus on their core of business rather than infrastructure.
D2P: Can you tie that in specifically for manufacturers?
DL: Sure. As a manufacturer runs their company, usually, they're looking for some sort of ERP (enterprise resource planning) solution that would do the typical manufacturing processes of quoting, estimating, order management, scheduling, manufacturing distribution, procurement, and that sort of thing. In the end, what a cloud solution allows them to do, is all of those functions that would be required to run their business. But instead of having to set up a network and servers and install software, all of that infrastructure and the software itself is provided for them through the Internet. And rather than paying for the software and all of the related infrastructure costs up front, the manufacturer pays on a per-use basis through, generally speaking, a pay-as-you-go model, a subscription-based model, very much like a cell phone bill. It really gives them the benefits of an end-to-end solution that would be used to run their business at the price, generally speaking, of a cell phone bill.
D2P: So you're saying that they (manufacturers) don't basically have to worry about the costs and setup issues of setting up an IT department?
D2P: OK, let's take that a step further. So you're saying that you—the cloud service provider—are making it easier for the manufacturers because they don't have to worry about those issues; they don't have to invest the time, effort, and money in setting up an IT department.
D2P: Let's talk about the cost savings. Typically, what do you say when a potential customer says, "OK, is it really going to save me money, though? I mean, how much is accessing the cloud going to cost? What type of cost savings can I typically expect, as opposed to running it in-house?"
DL: When a company is supplying a new manufacturing solution, obviously, there is the requirement to ensure that they have the required network and infrastructure in place. For some companies, that could be a $10,000 file server, all of the networking requirements, et cetera. So all of that really now goes away with the cloud solution. You don't really need (IT) personnel anymore. As you mentioned, really there's no need for an IT department per se, because the installation of the software, the maintenance of the software, all of the upgrades, the patches, are now handled by the [cloud computing] vendor. Backup and disaster recovery—you don't need to really have any of that infrastructure in place because, again, that shifts over to the vendor.
And a lot of times, very often with new upgrades of on-premise software, the requirements and the infrastructure needs of that upgrade might change—something as simple as it no longer can run on an outdated operating system, or whatever the case may be, so now you're again reinvesting or having to reinvest when you're in an on-premise solution in software and new hardware and that sort of thing. I've seen cases where, from a percentage standpoint, companies can literally save anywhere from probably 70% to 80% in IT costs by migrating to the cloud.
D2P: OK, so a manufacturer is talking to you, and they sound interested. They say "OK, you've convinced me that cloud computing is the way to go, but we consider our company to be different. I want to make sure that you're not going to just try to force a cookie-cutter solution on me, and make me change my business to suit your system." How do you respond to that?
DL: Yeah, that's a really great question, and it's the same question very often that an on-premise solution provider gets as well. You know, we have a pretty interesting value proposition. You're absolutely right—in the normal SaaS (software as a service) model, typically, it's the same solution that is deployed for every single company and every single end user. KeyedIn Manufacturing and KeyedIn Solutions is a little bit different. We actually have what we call a configurable SaaS solution. Meaning that, let's say we go into a company, a very specific kind of manufacturer, and they have a business process that's different than other manufacturers, even within their marketspace. Our Konfigure platform allows us to actually configure the application very specifically to the customer. And candidly, we don't even have to do that—the Konfigure platform is intuitive enough for what I would call a "business analyst type"—if you understand business process, you'll be able to use the Konfigure platform to perform your own customization. You just have to be really good at understanding process.
So with Konfigure, what it allows the end user to do, the company to do, the customer to do, is to really modify anything from how the user interface looks, how the screens look to the end user, all the way to how the actual application operates. Let's say that there's a certain type of scheduling that manufacturer wants to do. If they have the sense for "What is the process that I want the scheduling engine to use when it encounters a certain type of job?" they can go in using the Konfigure platform and make those adjustments unique to their particular instance.
D2P: So you're giving your customer the capability to basically modify the system to suit their business needs?
DL: That's exactly right. And in a typical on-premise [solution], as well as the majority of cloud solutions, if an end user had a customization like that, they would have to go back to the vendor, and the vendor would scope the project and usually get back to them with some sort of a quotation to do that service—meaning added cost to the end user. And then, obviously, the inherent danger is either one of two things will happen: When the next upgrade is deployed, that customization, in a normal environment, would either go away or break. And so now, the end user has to go back and get it (the customization) done again. Again, added cost to the end user company. Or, they choose not to deploy the upgrade, and now they're on an old, legacy, and potentially unsupported version of the product.
With Konfigure and with KeyedIn, all of that goes away. We have ways, even when new upgrades are deployed—upgrades that are invisible to the end user because they're in the cloud when a new upgrade is deployed—we have ways within that upgrade process to see that certain things were modified by the end user, so we don't touch those things.
D2P: Do you provide some handholding, some training services for companies who need some assistance, who say "OK, that sounds great, but I'd like to make sure that we're doing it right—can you help us get started on the right foot?"
DL: Yeah, great question. And that's why I really position this sort of a tool—it's probably not a typical end user tool, but again, more of a business analyst type of a tool—with someone that really understands business process. But absolutely, through the normal implementation process, part of the training that we provide to the end user customer is the training to use the Konfigure platform. To, again, make anything from those very simple stream modifications to building out potentially an entire application or making a modification to a business flow.
D2P: I'd like to come back and ask some more specific questions, but I'm going to take a little detour first. What I'd like you to do, if you could, is to give me some success stories. Tell me (describe) some cases where your product has been sold, rolled out, and implemented, and given results to manufacturers that you're really proud of.
DL: We have lots of those, so it'll be a little difficult to narrow to just a few, but I'll try to do that. I'll give you a couple of success stories kind of at both ends of the implementation spectrum. We brought on board a customer about two months ago, and this particular company is a tool and die and mandrel manufacturer, a small manufacturer. Everything, literally, was in the owner's hands, and their bottleneck and pain point was getting quotations out the door because the owner was the sole person that did that. So they were in tremendous pain, they were getting lots of quotes, it was taking them anywhere from a week to two weeks to get quotes out the door, just because of the backlog—and the owner really was the bottleneck.
They knew something had to change and they came to KeyedIn, saw the application, really liked what they saw. For the most part, it fit exactly what they needed, except for the fact that, because this particular quoting process and how the owner quoted it was very specific, the KeyedIn quoting was, candidly, going to be too generic for them. It really wouldn't save them any time.
Basically we asked, "Well, OK, how do you quote today? What's the methodology that you use?" And we were able to basically build out for them a methodology using the Konfigure platform now, where another key individual with the company that has no quoting experience is now able to quote using the KeyedIn Manufacturing solution. Literally, we were able to build in the business logic that the owner had in his head, in essence, now allowing a person with no quoting experience, no estimation experience, to be able to do that. So it's now eliminated the backlog; they can now turn around quotes in anywhere from 1 to 2 business days versus the 5-to-7 business days that it used to take.
That's a brand new customer that we're just bringing on board.
D2P: And have you heard back from them that it's great—being able to turn around the quotes quicker? Have they been able to come back with any numbers or percentages to show what that's done for their bottom line?
DL: Yes, and we can probably get that number for you; I don't have any specifics for it off-hand. But several years ago, I heard an interesting statistic in the manufacturing space—that if a company can turn a quote around within 24 hours of receipt of the RFQ, there's an 80 percent chance that they're going to win that quote. So again, cutting their quoting time from 5 to 7 business days down to that timeframe now where they can actually win more work.
D2P: OK, terrific, that's from the quoting end; can you give me more success stories from other aspects of the business?
DL: Another one of our customers—and this really speaks to the benefits of the cloud—was a client at the time that they decided to deploy a solution, and it happened to be KeyedIn. They had 6 employees, and they knew that they really wanted to grow the business. They wanted to put employees and offices out in the field, specifically for their sales people. This particular company is a custom sign manufacturer, custom sign manufacturer. And one of the things that they were able to do with the cloud solution, is it really supported that business decision of distributed manufacturing and sales presence.
With KeyedIn Solutions, they were able to add offices and sales people much closer to their customers. They found that cloud solutions and KeyedIn really fit into that business strategy. And what it's done for them is it's now allowed their sales people, while they're in the field directly working with a customer client, to access data, and for them that was huge. That was really the differentiator for them and allowed them really to weather the economic downturn that we had a few years ago. During the downturn, they actually grew their company [by] a significant percentage because of the deployment of the cloud solution by KeyedIn.
D2P: All of us have read and been scared by the stories of people like Target stores and ATM and credit card information not being as secure as it should be. So you're sitting across the table from a manufacturer who says, "OK Dave, how can you convince me that my confidential data, which is my (company's) lifeline, isn't going to get hacked?"
DL: Great question, and it's something that we take very seriously at KeyedIn Solutions as well. We went through, basically, a vetting process and decided that data warehousing was not our core competency. We wanted to reach out to a vendor, and we happened to choose a vendor called Dimension Data to be our data warehouse. And part of that whole vetting process is understanding what they have in place to mitigate that data security issue.
What we have actually found going through that process—the vetting process in choosing our data warehouse company—is that when you go with a good data warehousing company or vendor, the data is going to actually be more secure than on a traditional on-premise customer site because those data warehouses do stake their reputation on the security in their system. In the case of Dimension Data, they're audited annually by an outside company that actually comes in and audits the level of security, nd redundancy, and risk mitigation that they have in place. And generally, through that auditing process, they've proven to us that they have the security measures in place that are sound and solid.
D2P: Say you've got a conservative potential customer and he says "OK, even if it's saving money, I'm making a significant change to my business because I'm moving this stuff (data, computing) off-site, and I'm trusting you and Dimension to take good care of it. What kind of assurance do I have that I'm going to be covered and my business in not going to be left in the lurch if KeyedIn Solutions or Dimension Data has some type of business interruption?
DL: Absolutely. We guarantee, from a day-to-day standpoint, a 99 percent uptime to our end user clients. And if we don't meet that standard for whatever reason, obviously, there are things that we do from a customer satisfaction standpoint. I can tell you that in the three years that KeyedIn Solutions has been in business, we've never had lower than that 99 percent threshold. From that standpoint, we're very proud of the uptime that we do provide our end users. Typically, if there is a down time for whatever reason, we try to do (schedule) that during off-business hours. So again, we alert our clients ahead of time that there will be an outage for a potential infrastructure upgrade, or whatever the case may be, and, obviously, we mitigate the risk. But 99 percent uptime is what we guarantee to our end clients.
And then just like any other software company, we are legally obligated that if something does happen to us from a company standpoint, that data is still available and will go back to the customer. So the customer doesn't lose their data; they will always have a way to get at that data, even if Dimension Data or KeyedIn Solutions goes out of business.
D2P: We've talked about business interruption and data security. What kind of other concerns do manufacturers typically bring up to you when you're discussing cloud computing for their business?
DL: I think the two main issues, or three main issues that customers bring up to me is probably in the order that we've talked about it. Every manufacturer [regardless of its size] believes that they have a specific way that they do things, that they are very unique. And so the question is "How can your software not only help me out as I am today, but really fit what I need it to do?" Konfigure allows us to have that unique value proposition.
Secondly, data security absolutely is usually the next question on their mind. What I actually find quite interesting is when you ask those same people "How many of you do online banking transactions through the web with your personal bank account?" probably 99 percent of them will say "absolutely." Yet when you ask those same people "Would you then be willing to do the same thing with your business data?" there is some level of concern that always comes up. So I always find that very interesting. We gently remind them that yes, absolutely, probably 99 percent of you are doing personal financial transactions every day through the web. A cloud solution like KeyedIn is really no different than that.
And the other issue, sometimes, is the scalability. A lot of large enterprises have a certain level of belief that cloud solutions aren't scalable; they're for the little guys—"I'm a billion dollar enterprise with 50 facilities worldwide (and) cloud solutions just wouldn't be scalable." Interestingly enough, cloud solutions are probably more scalable. What's kind of interesting with the cloud is that for a large enterprise—let's say the business is on an expansion track and they're acquiring two or three or a dozen new manufacturing facilities across the world—a cloud solution actually tends to be more scalable than an on-premise solution. If you think about it, imagine all the things that need to happen to deploy an on-premise solution in even just a half-dozen new facilities. Usually, you're talking anywhere from six months to a year per facility just to bring each facility up and running, to make sure the infrastructure is in place and what not. With the cloud solution, it's literally a matter of hours that we can provide those additional user logins.
Most of our training is on demand. As soon as I log into the application, I can start the available training that's available for the application. What's generally really nice, and part of the responsibility that we have as a vendor, is a standard training and services model that we can deploy very easily and quickly across the globe. That's usually the other concern that we hear from large enterprises—"How scalable is this solution and will it really grow?" and we believe we have the capability there.
D2P: So basically, you're saying that it's going to be easier to scale up with the cloud than trying to do it yourself.
DL: Exactly. And conversely, let's say that for whatever reason a business decides to contract for a certain period of time, we have a model in place that they can actually, in essence, reduce the number of users as long as they have a baseline in place.
D2P: So your potential client says "I think we've decided we're ready to go with cloud computing. Why should I go with KeyedIn Solutions?
DL: A couple of things come to mind for me. There will always be the feature/function question and that, sometimes, is the bulk of what the decision process is, maybe in the beginning. But once we move beyond the feature/function discussion, it really comes down to "Who do you trust and who do you want to do business with?" The KeyedIn proposition is really the fact that we have, even though we're a relatively new company, a tremendous amount of manufacturing and ERP expertise. We have people with anywhere from 15 to 20 years of experience in the small and mid-size manufacturing space. Conversely, we have people on staff that have that many years in large enterprise manufacturing ERP deployment. So what I like to say is KeyedIn Solutions is a new company with over a hundred years of experience in manufacturing ERP deployment.
Our principals of the company, Lauri and George Klaus, came from a company that you may be familiar with: Epicor®. It was really their vision, once they left Epicor, to invest really 100 percent of their finances and 150 percent of their energy into cloud, and that's what they've done over the past three years.
D2P: And what percentage of KeyedIn's customers would you say are in manufacturing?
DL: If I were to do a quick calculation in my head, probably somewhere in the neighborhood of 60 percent of our customer base is in manufacturing. One of the other acquisitions that happened was a projects management solution, so that accounts for the other 40 percent of our customers today.
D2P: We've talked about your product Konfigure, that it enables customers to configure manufacturing software themselves. What is your product KeyedIn Manufacturing, and how does Konfigure relate to it?
DL: KeyedIn Manufacturing—we have two editions of that product: KeyedIn Manufacturing SMB (Small/Midsized Business) and KeyedIn Manufacturing - Enterprise Edition. KeyedIn Manufacturing really is an end-to-end business solution that encompasses quoting and estimation, order management, scheduling, manufacturing execution, purchasing, inventory management—the key components of traditional ERP. It's really here for the two different markets, in that we make it very simple, very easy, what I would call an entry-level solution for that SMB space. For the enterprise space, a very scalable solution. On the enterprise side, for example, a large enterprise might run, let's say, SAP as a corporate enterprise solution, but that really doesn't fit the manufacturing plants that they may have. KeyedIn Manufacturing Enterprise allows us to go into those situations where they might have a tier 1 solution, and plug-and-play KeyedIn Manufacturing Enterprise into those manufacturing environments, and then communicate seamlessly up and down to SAP, for example.
So really, KeyedIn Manufacturing is that traditional ERP solution, and Konfigure is the platform that it was built on. Konfigure was acquired several years ago, and we built KeyedIn Manufacturing on top of Konfigure, really, as an internal proof point for us that Konfigure was a scalable solution.
A lot of people look at an application like Konfigure as simply a replacement for spreadsheets. You know, "I want to build a data repository for a spreadsheet that I have because I need other people to collaborate with me." A lot of people look at Konfigure as not being very scalable. So we built KeyedIn Manufacturing on top of the Konfigure platform to really demonstrate the depth and breadth of an application that could be developed and deployed very easily.
From end to end, from what I call the white board all the way to our first commercial product with the Konfigure platform, it took us six months to build KeyedIn Manufacturing.
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