First of all, how are you and your family doing in these COVID-19 times?
Ned Lilly: Thankfully, my family has been fine. One daughter is at a small college, being tested weekly, and the other is working in New York City, which appears to be through the worst of the COVID experience.
Tell us about you, your career, how you founded xTuple.
Ned Lilly: Enterprise resource planning (ERP) is very complex. Considering it manages the breadth and depth of a business – from accounting to shipping — it stands to reason. But my idea, the core that xTuple was founded upon, is that while the software itself may be complex, the process of getting it up and running and using it shouldn’t be.
For years, even pre-dating the busy days of the Y2K scare, there is story after story of ERP implementation disasters at companies, many of whom were household names. Even today, industry research from 2018 forward indicates an average of upwards of 9 months to implement ERP – and that’s on the aggressive side. Some research says it’s upwards of 17 months. And here is the killer … in more than 50% of instances, the first-time implementation failed. That’s not acceptable.
Properly implemented, ERP is critical in the industries we serve – manufacturing and distribution; ERP provides a platform from which a company can manage the entirety of an operation. It’s key to long-term success and the cornerstone of sustainable growth and profitability.
xTuple was founded on the belief that small and growing manufacturers/distributors deserved affordable access to the same tools/functionality as the “big boys.” That belief and commitment led to the creation of a company called OpenMFG. As the name suggests, the intention was to take a more open, transparent approach to bringing ERP solutions to the world of manufacturing. Which meant, among other things, making the source code of our software available to all customers and partners, empowering them to make their software do whatever they needed.
Eventually, we expanded this approach to include a fully free and open-source “starter edition” of our software and renamed the company xTuple, reflecting the fact that we were focusing on growing companies (double, triple, quintuple … xTuple!) and also customers in manufacturing-adjacent spaces like industrial distribution.
This was during the late 2000s when open-source software was causing massive disruption in the traditional IT world. For certain types of broad, horizontal technologies (operating systems, databases, web/cloud infrastructure), open-source made perfect business sense. That led to huge interest in the question of where else “pure” open source could disrupt large markets – and more vertical applications such as CRM and ERP got a lot of attention. xTuple developed a well-earned reputation as a leader in this space; with good reason, we referred to ourselves as “the world’s #1 open source ERP.”
While our core mission of delivering high-value ERP functionality to (usually) smaller companies remained, our messaging and identity during this period increasingly highlighted the open-source angle. The free version of our software was downloaded millions of times, and many thousands of those downloads turned into actual production installations. Of that group, hundreds became paying xTuple commercial customers – usually by upgrading to one of our commercial products, which had more advanced functionality.
Over this period, the open-source became the standard for the infrastructure-level software. Even companies like Microsoft and Oracle got on board in various ways, and the whole dynamic started to turn, particularly for the more vertical applications “up the stack” of information technology. In our conversations, we found sales prospects less interested in acquiring open source applications just because they were open source. Instead, they were much more focused on actual business value. It was becoming much less a technical thing and much more about “what can this software help me do.” Or, to use the question from some of our early marketing efforts, “Does your software help your business grow?”
Here at xTuple, we are very proud of our product. It is a full, end-to-end ERP application that can do an amazing number of things. It’s not unlike the giant Swiss Army knives of old, which folded out to include almost any imaginable tool. But we’re even prouder of the relationships we’ve developed with our customers over the years – helping them meet their business challenges, grow into new market opportunities, and become bigger and more profitable as they put smart systems in place to support and encourage that growth.
Today, we are refocusing our energies on that all-important barometer of Customer Success. When you engage in a conversation with xTuple, we will be talking less about source code and other technical minutiae and more about business goals and delivering a functional system within a fixed schedule, usually under 90 days. It’s a subtle shift, but important – after many, many years in this business, we have some very well-informed principles for successful onboarding of new customers, how to understand a company’s processes, and then see them reflected in a simple, immediately useful installation of the xTuple software.
This company has been in continuous operation for nearly 20 years, and we still hold the same core values, which is to provide a robust, accessible, and affordable business operations solution to growing companies.
How does xTuple innovate?
Ned Lilly: First and foremost, we listen to our customers and examine our customers’ needs. Naturally, we keep an eye on tech trends to make sure our roadmap is on track. But quite simply, we want to make all of this easier. There’s a natural gravitational force for software companies like us to get pulled into bigger and bigger, more complex engagements. That’s a great business if you’re SAP or Oracle. But frankly, our mission – and our hearts – have always been with the smaller companies on the early edge of their growth curves. More and more, we will work to make the various pieces of our ERP system – all of them – implementable on a more modular basis and connectable in real-time to other business systems that are in place.
For example, xTuple has an extremely robust accounting system that accountants and bookkeepers love. But, we know that many small companies make their initial jump from spreadsheets to QuickBooks, so we integrated with QuickBooks to allow growing companies to add the end-to-end capability of ERP to their operation without disrupting their accounting process.
We also know that especially now, small manufacturers need an eCommerce solution, so we’re integrating with Shopify, WooCommerce, and ShipStation. Before the end of the year, we’ll be adding a multi-channel platform and Amazon solution.
How the coronavirus pandemic affects your business, and how are you coping?
Ned Lilly: Our mantra is: let’s keep the supply chain moving! So, we turned this time into an opportunity to make some adjustments. Everything from adjusting our pricing model to be all-inclusive and refining our training programs to launching an eBook with tips for manufacturers seeking financing.
As far as our operations, like many other companies, we are working on a mostly remote model; however, I am very pleased and quite fortunate to say that our entire team has remained intact. Most companies today, but technology companies, in particular, have remote team members, so like many, we easily and quickly made the transition to remote without missing a beat. Our department heads made sure they kept their teams engaged with everything from daily scrum calls to virtual happy hours.
Our team is doing very well, but the company has not gone unscathed. We are fortunate that we have a solid base of customers and are doing well with expansion and retention; however, like many companies, our new business growth is not what we had projected. That makes sense for companies who are just getting to know us and who are, after all, already wary of the investment of time and resources that an ERP system represents. But we see signs of improvement there too, as our new messaging takes hold, and we start to roll out new offerings like the QuickBooks integration to make the decision a little easier for smaller companies.
Did you have to make difficult choices, and what are the lessons learned?
Ned Lilly: Honestly, the hardest thing was choosing between moving ahead with a somewhat scaled-back version of our growth plans for 2020 or to hunker down and try to wait out the storm. Remember, back in March, everyone was saying this would be over by the summer. I wanted to believe that and felt like that would have been possible if all our policy-makers got things exactly right – but clearly, they didn’t. So the lesson there was if you don’t have a clear view of how long the storm’s going to last, better to bet on what you know and power through.
How do you deal with stress and anxiety, how do you project yourself and xTuple in the future?
Ned Lilly: I’m a pretty easygoing person, but moreover, I’m fortunate to have a great team that has really pulled together throughout this crisis. I’m confident that as things get increasingly closer to “normal,” we’ll come out on the other side of it stronger than ever.
Who are your competitors? And how do you plan to stay in the game?
Ned Lilly: xTuple competes with everyone from NetSuite, SAP, and Oracle on the high end, to Syspro, Microsoft, and Acumatica. It really depends on what a company needs.
How will we stay in the game? xTuple has been providing ERP software for nearly 20 years– we’re doing more exciting things than ever; we’re on average 75% less than other providers with similar functionality, and we get new users up and running in as little as 90 days. I think we’ll be good for another 20+.
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