Hindenburg Drone crash at Macola event previews, parallels channel go-to-market unpredictability

The opening keynote at the annual Macola customer and partner event featured a drone demo intended to show mastery over adjacent technology that backfired spectacularly, although harmlessly. The event itself also featured an air of unpredictability – over the role of the channel in the Macola go-to-market going forward.

CHICAGO – The opening keynote of the Macola EVOLVE 2018 event here featured the company’s Managing Director Alison Forsythe – and a drone. Forsythe’s talk itself was a sequel of sorts to her keynote last year, in which she said all the signs indicated manufacturing was emerging from its slumber. This year, she emphasized that the tides had indeed turned, with economic synergies not seen for a long time. The Institute for Supply Management’s February report reported 14 of 16 business sectors experiencing growth, and the best outlook for U.S. manufacturing in more than a decade. The Q4 report from the National Association of Manufacturers indicated that 94.6 per cent of manufacturers have a positive view of the economy.

Forsythe emphasized that how things get manufactured is undergoing a paradigm shift, with the growth of distributed manufacturing leveraging expanding and largely cloud-based IT networks allowing companies to adjust local production to meet the needs of regional or local customers.

“This ‘glocalization’ – local reach combined with global product development – allows regional manufacturers to tailor for local requirements and thus reduce shipping costs, if they can leverage digital innovation and have the ability to scale,” Forsythe said. “For this, you need high-performing ERP.”

Forsythe emphasized that in addition to making its software more agile and user-friendly, they are also embracing digital manufacturing and the newest wave of high technology.

“We are doing what we can to develop this at Macola,” Forsythe said. “We can tame technology just like Elon Musk and his team tamed gravity.”

Forsythe then conducted a demo to show how Macola is integrating drones into their technology. The drone – designed by the Macola Labs for spread out work environments like a lumber yard – was tasked with using its drone’s-eye video to scan a bar-code item on a table on the stage. The drone began by flying over the front rows of the audience, with its blades stirring a cool breeze on those of us underneath, and stirring fears in some executives whether this was appropriately covered in the event insurance. The drone then whirled, and headed for the table to execute its mission. However, it suddenly swerved and flew in a different direction, through the open curtains and through to the back stage, where the audible sound of a crash soon took place.

“It’s not quite ready yet to ship!” Forsythe said afterwards.

‘That was our Hindenburg Drone Demo,” Derek Ochs, Macola’s software of software development, who also has responsibility for Macola Labs, joked later. He pointed out that the demo – which worked successfully multiple times in rehearsals – wasn’t a complete disaster, however.

“There was no fire involved, and we didn’t kill Alison — which was a success,” he told the audience. [The Hindenburg was an airship that mysteriously and spectacularly burst into flames in 1937, while about to land in New Jersey].

The element of unpredictability introduced by the Hindenburg Drone parallels a more serious concern for Macola partners, however – the channel go-to-market strategy that will be followed going forward. Following the acquisition, Apax Partners merged three Exact business units — Macola, JobBOSS and MAX, with ECi Software Solutions of Fort Worth, TX, under the leadership of ECi management. The concern here is that while Macola has had a partner-led strategy since Forsythe took over as managing director in 2013, the original ECi business, ECI M1, has had a predominantly direct go-to-market strategy, as have the other two businesses that came with Exact.

Forsythe has been told Macola’s partner-led model will not change, and that ECi will support Exact’s strategic direction.

“ECi has a very much direct-centric model,” Forsythe said. “However, Ron Books, the CEO, told us that they were interested in our channel go-to-market model, and we for our part were very interested in their third-party technologies and shared service model.”

Forsythe remains as Macola managing director, and remains a forceful advocate for the channel. For Macola partners, however, two issues of concern remain. One is past history. The other is that the management model has changed under ECi, with Forsythe – and the other three manufacturing units – all reporting to a new executive in a newly-created role, who remains something of a wild card in the equation.

Partners – particularly those who were with Macola when Exact bought them in 2001 –  are understandably concerned about a change in the go-to-market model. Before that acquisition, Macola sold entirely through channel partners. Exact reversed the strategy, changing to a direct-led model, which they maintained until Forsythe got it changed in 2013 as a condition of her taking the managing director position.

“When Exact bought Macola, they said they would go direct, but they also said that they would not give up on the channel,” said Tod Replogle, owner and President at Bonita Springs, FL-based Exceptional Software Solutions, who has been with multiple Macola-focused solution providers since their early days. “I was worried about what would happen, but I’m an entrepreneur, which makes me an optimist, and I had faith that the channel would prevail, and it eventually did.”

“We never considered switching to another ERP  during the direct-led phase because the software was very flexible and feature-rich,” said Bruce Henderson, Vice President of Business Development at Calgary-based Harvest Ventures, another long-time Macola Technologies partner. “Because of the way things were structured then, we expanded into business automation tools to augment the Macola product and build on its strengths. That broadened our offerings around Macola for the long term, and helped us tremendously.”

Since the reversal of policy in 2013, Macola has been aiming towards a target of getting to an 80-20 direct sales ratio by 2019. What complicates the predictability of that course now is the change in the business model, which adds a new management layer that was not there under Exact, which never did much to co-ordinate its North American business units.

“I and all the other industrial managing directors now report to Jeff Ralyea, who was appointed to a new position as ECi Manufacturing Division President this February,” Forsythe said. Ralyea has had a long career around manufacturing software at ERP companies like SAP and Infor, and was most recently Senior VP and GM of the Cloud Business Unit at Ellucian, which makes cloud performance solutions for the education market.

“Jeff is very engaged in this new role,” Forsythe said.

Exactly what his plans around the channel are remain the great unknown, however.

Harvest’s Henderson met with Ralyea at the event.

“He’s an exceptionally sharp guy, very knowledgeable,” Henderson said. “He also told us that he was coming into this role without an agenda. We don’t really have any idea what he is going to do though.”

Jeff Ralyea, ECi Manufacturing Division President

Ralyea himself said both in a Q&A session on stage, and when talking to ChannelBuzz, that he has not made any decisions on the Macola channel’s role in the go-to-market, but that it will depend on his assessment of productivity. He gave the impression that he believes too many partners are content to focus on serving their existing install base, when they should be more aggressive bringing in new customers, and even cross-selling other ECi products if they are appropriate.

“The channel is very similar to a direct sales model,” he said. “It will all come down to productivity. How productive are partners in driving business for ECi. We need to drive a productive business model that makes money for us as well. They want to grow their businesses.”

Ralyea said that the channel needs to do a better job of bringing in new customers.

“We want new logos,” he said. “Many partners are more focused on serving their existing customer base, and selling them services. That doesn’t make ECi any money, however.”

Ralyea emphasized that his philosophy is very much growth oriented.

“I’m focused on driving growth, not on managing assets to create income,” he said.

In response to a question during his Q&A, he did indicate that if a customer lost their channel partner, those accounts would not be going to another partner.

“Right now, we would be moving customers direct who lose their partner,” he said.

Ralyea also provided more detail on other aspects of policies he may follow, even if only to indicate that no decision has yet been made. ESi is pooling all four manufacturing ERPs into one for the purpose of more efficiently providing shared services around support and R&D. To date, not much has actually been done there, although there have been some preliminary integration meetings. Forsythe mentioned that  customers and partners think they should be much further along than they are. Ralyea was asked specifically how the planned integration of ECi’s suite of common applications like CRM, sales analytics, and mobile apps that will go across all those platforms will work, given that Macola products have some of this functionality already.

“As to whether these will run through shared services. I don’t have a plan yet,” Ralyea said. “We haven’t gone far enough down that road. There is a CRM capability in Macola 10 now, which has already been invested in, and it would make no sense to pull that out.”

Ralyea did emphasize strongly that he has no plans to end-of-life any of the Macola products.

“We aren’t going to stop supporting those solutions,” he said. “ECi has no heritage of de-supporting solutions. in 30 years in this business, we have never ended the life of a product. We will continue to support Macola Progression, for example, and continue to update it so you can continue to run that for an indefinite future.” This was facilitated by the acquisition also included the rights to the source code of Exact products like Synergy and Event Management that had been bundled into Macola 10.

Finally, Ralyea telegraphed a training-related initiative that is being worked on.

“We want to build ECi as a brand leader and a thought leader in manufacturing, not just providing innovation from a technology perspective,” he said. “We have started working on an initiative around education from a learning perspective, which you should see in the next couple months or so.”