Full Transcript
Carl: Welcome to the Connected Enterprise Podcast, where our guests share how they stay connected in their business lives. I'm your host, Carl Lewis from Vision33, and my guest today is my good friend Brad Windecker from Orchestra Software. Brad, you and I know each other well, and you're in one of the most fascinating businesses because I'm deeply invested in it, and that’s microbreweries. I can’t wait to hear about technology for microbreweries. Tell us about yourself, Brad.
Brad: I’m from a background of small business owners. I grew up in a small business in a small town doing petroleum software and serving agricultural customers with lubricants, diesel, etc. I learned the business from a small kid until when I was in college, but I decided I didn't want to take over the family business and move back to the small town, so I took a job implementing ERP software. And I just fell in love with how that software touches all aspects of a business.
I started at Orchestra in 2008 and looked at the world of ERP from the angle of focusing on a very specific industry. We picked a fast-growing industry back in 2008 – craft breweries – and today we serve craft breweries, distilleries, and other beverage manufacturers with ERP software and other technologies.
Carl: How many craft breweries are there across North America?
Brad: There are about 7,000 craft breweries operating and another 2,000ish with licenses to operate but that haven’t started producing beer, so in the next year or so, we'll be approaching 10,000 craft breweries in the U.S.
Carl: Wow, that’s a big number.
Brad: To give context, that industry is much newer (starting in the 1980s) than the wine industry, but there are only 9,000ish wineries in the U.S.; the craft brewing industry has surpassed that.
Carl: And in such a short while! So, in the microbrewing industry, ERP is at the heart of things, but what other systems and integrations are people doing, especially related to automation?
Brad: There's a lot of talk about moving everything to the cloud, but in manufacturing, equipment can’t be in the cloud, it's on the floor, and it generates a tremendous amount of data. Think about it in a brewery: pipes all over, from the brewhouse that makes the beer to the tanks where it ferments to the centrifuge. There are flow meters everywhere, so anytime the liquid is moving, the system knows exactly how much flowed through the pipes. It knows the temperature, it knows the Ph level, it's checking the temperature level every second of the day.
So, there's a lot of on-premise data generated by on-premise equipment, so when we talk about Industry 4.0 or the fourth Industrial Revolution, what we mean is the connection between the systems that have moved up to the cloud – accounting, inventory, business transaction data, and more – connecting with the data being collected on the brewery and manufacturing floors, etc.
Our customers are looking at a tremendous amount of quality control data residing on on-premise devices or databases whose value hasn't been unlocked yet. A lot of customers are wondering, "How do we start to connect quality-controlled data that's coming out of the sensors as we make the beer correlate to sales and other places where we store quality control metrics (e.g., spreadsheets) when we take tastings, etc.?” It’s very fragmented, so connecting it into a single, unified data source is a huge initiative we're seeing across customers of all sizes.
Carl: Interesting. Are more of these devices, the sensors, the flow meters, etc., capable of connecting into a network that’s recording data into a database? I imagine the older ones aren't, but are the newer ones?
Brad: We typically see that platform players have arisen during the years and solved those problems. In our industry, there's a company called Inductive Automation. Their technology platform, their specialty, is understanding how to connect to those devices, typically called PLCs, and there's a handful of major manufacturers on those. They figured out the APIs, and a lot of our customers use that company’s tools to pull the data out of their on-premise devices, which then integrates the data source that comes over to our system. Companies, from a platform perspective, have solved the problem of interoperability among devices and created a standardized platform that companies can use to take the standardized data set and connect it into their ERP system.
Carl: It sounds easy, but I bet there are big challenges trying to make this stuff work. What are the biggest challenges?
Brad: The biggest challenge right now is the human side. We always see this in technology. People talk about the complexity of technology, how powerful it is, how long it takes to learn, but those problems are very solvable. The human side is a much bigger challenge. We can take the environment – breweries – down to the smallest brewery operating with a handful of people, and they have the same situation where they're generating data on-premise and they need to get it up to their cloud, and they need a unified view into their business. Our large customers have the same problem. But the large customers have an in-house IT and can adopt that technology.
Smaller customers don't have in-house IT, so they need a partner to figure out the technology, understand how to apply it, and turn it into an easily adopted solution that doesn’t require in-house IT. Then they must deploy it and get value out of it. And that's what we see – that small companies need a partner to take this technology and make it usable for them. We’re that partner for our customers.
Carl: Some companies hire interns and put them to work for three months, saying, "Figure out how to do this." It’s a way for the intern to get experience while also delivering value to the company from the technology they've invested in. Do you see companies taking steps like that yet?
Brad: We see it regularly; I think it's normal in larger customers because they see it from a budget standpoint. A smaller company says, "I have 10 or 15 people I need to hire full-time. I can't justify the budget for them because we're already maxing out as best as we can and so forth." So an intern is out of the question, whereas a larger company may think more strategically. Bringing in someone who’s going to learn, who’s a sponge, who doesn’t have any preconceived notions is a strategic move. We find that in the larger companies.
We're advocating to see that at smaller companies because we see the need to leverage technology and understand how it affects your business. An innovative way to address that if you don't have the budget to build a full-featured IT department is to bring in an intern, give them a project, and see if they can offer a way to step forward into some of the innovative technology. I think it's a good strategy, but we only see that with the larger customers right now.
Carl: You mentioned that the bigger companies are more strategic. Is that because the little guys are caught up in the daily tactics of getting the next batch out the door, and can’t think long term? That sounds like a big challenge for small companies.
Brad: Absolutely. What we talk to our customers about is how the world's changing faster than ever at the macro level. Within the beer industry, legality and compliance are at the state level, sometimes even the county level, and always complex, always changing. Then there are macro factors you can't foresee, like the government shutdown. That affected getting beer labels approved, so for 24 weeks, no beer labels got approved – that was 750+ beers people wanted to get on the market that they couldn’t because the label wasn’t approved in that state.
So, reacting to the world, your industry, etc. as they change will be the differentiator of companies that thrive. As a small business, you need to do that without the same resources as a larger company, so you need to look at technology platforms and partners to help you do that strategically.
Carl: Very interesting. I’m going to change gears and ask about yourself and your business today. How is most of your business communication done, and is it changing?
Brad: I'll start with my direct team. I'm CEO, so I'm talking about my executive team, which is a COO and three VPs. We do most of our communication face to face. We’re a technology company, but we have a unique mindset – especially here in Oregon – that everybody needs to be in the office. I see magic happen when people are together. And while we can do business virtually, when we look at what it takes to build the culture we want to build, deliver the customer experience, we see it happens best when people are face to face. So that’s built into our culture, and our meetings are face to face. Every employee gets a weekly one-on-one. Typically, you walk around the waterfall lake right in front of our office.
With our customers, from a sales perspective, we do a lot virtually, but we see more value in getting out and talking to the customer in the sales cycle and walking around the brewery and asking them what's going on and getting into the business at a much deeper level than you can over the phone. So whether we're building a relationship, understanding what the customer is looking for in the discovery cycle, or just visiting the customer for a check-in, face to face is more powerful every time. Today we look at that as a challenge to do affordably and efficiently because it's a big deal for us.
Carl: It's not the normal path everyone’s on today. I don’t go to the office anymore. I work from home, and I only see people I work with occasionally. But I remember the good old days of being in the office. We used to call walking around ‘management.’ It was fun.
Brad: I think it ebbs and flows, and a lot of people are talking about going remote. And I don't disagree that that's a good way of doing business for other businesses, nor do I believe we can do the office indefinitely as we continue to scale. But I look at it as, "If we can get the people together, then let's find a way to do that. If not, we have virtual communication as our second option."
Carl: I can say it's more fun to have a beer when you're with people than by yourself.
Brad: That's true.
Carl: Given those two extremes – people working virtually and people in the office – what's the biggest challenge when you're trying to collaborate with critical third-party people outside or inside your company?
Brad: Well, you could talk about some of the logistical challenges of getting people together, but I'll go a level deeper. We’ve spent a lot of time understanding what it takes to get ideas out of people, and there are various groups of people, so when we deal with customers, we're not always dealing with folks who get in a room and brainstorm with stickies on a whiteboard. They don't do that regularly, but we still need to understand what the brewers care about. We must engage other partners and generate ideas and understand how the integrations might work. We spend a lot of time asking, "How do you get ideas out of people?"
And we design thinking; it's a technique that many people are talking about. It encompasses how to engage people so the loudest extroverts who come up with the ideas the quickest don’t dominate the conversation. Often, if folks haven't been in that room and asked to generate ideas, it can be daunting, especially if someone they know is dominating the conversation.
So we engage our customers to overcome the challenge of, "How do you bring people together for the best ideas?" We discovered when we sit down with our customers and talk about how initiatives like this failed before and ask how to ensure this one's successful, they talk about buy-in, making sure people are passionate, making sure they feel like they contributed to how the system was configured so they have ownership. A project doesn’t fail because some feature didn't get implemented or some project management box didn't get checked, etc. – it’s real human stuff. It's because they weren't emotionally involved enough to support the project when things got difficult, and when it got sideways, it went off the rails.
We spent time overcoming that challenge, making sure people have their voices heard and can contribute. And we do that in creative, fun ways that, when you add a beer into it, makes it easy.
Carl: I can see how someone on the shop floor who just wanted to make great beer gets involved in an ERP project and wonders how they’re going to add value. But maybe they have some of the vital information you need. So that's definitely a challenge.
Brad: Exactly. And most people want to be involved, and most have good ideas. They're out on the floor doing the work. It's the people involved in the project driving the project. It's their job and their responsibility to make sure we engage those people and get them excited because they’re the ones with the right information everybody's looking forward to understanding. How can the system support their jobs? Because we don't want to get in their way, we want to capture the information in a way that's streamlined and integrated with their work.
Carl: Are there parts of the customer or supplier relationships, things around actual business transactions, that your business has automated to make life easier for you?
Brad: We've automated very lightly. I think “lightly” is typical in the U.S., and I say that because I have familiarity with the level of automation from a business transaction viewpoint in Europe. We automate our customers' monthly payments, but that’s not much different than setting up an automatic bill. With what we see in other countries and what's possible, we're just scratching the surface. We have customers we've helped automate more, though.
People say, "I already have a document that’s a precursor to another document – a sales order is a precursor to a delivery, or a delivery is a precursor to an invoice, etc.” If everything happens normally, this document becomes the next stage in the process; 90% of the time they don't have to change anything, they just process it. And they do that looking for the 10% of times they have to change something. Well, let's automate that. So we focus on the customer first, and they automate their transactions with some of our software before we've actually automated ourselves.
Carl: You probably know there's also a lot of electronic banking that goes on in Europe that we don't do in the U.S. And some industry standards make some of that much more doable ... everything is a customization for somebody in North America, right?
Brad: That's right. Electronic banking has been around a long time there. Much of taxes is electronic, although it's still complicated. And now laws are being passed around the world, not in the United States yet, but laws are being passed to do away with electronic checks and move to electronic payments, to file taxes electronically, to upload specific files to automatically generate the taxes as opposed to having every single company pay an accounting firm to create different reports. Even at the government level, globally, there’s a drive toward standardization by leveraging technology. And it's forcing businesses – small and large – to adopt new systems and adapt their systems to spit this data out because it's a requirement.
Part of the world will become more electronic rapidly, just by regulations being passed and the time they've already had to do that. In the U.S., we don't have as many regulations, but I think there’s a similar drive to find the same value in moving data and having it flow automatically. And if something happens the same way 80% of the time, there’s an opportunity to automate that to allow humans to do things with more value.
Carl: I have one last question: what do you think is the next big thing?
Brad: That's a good question. I just came down from Silicon Valley, and if you look at the news, most people would tell you the next big thing is AI. And I think in our world, and from our perspective also, if you're looking at cancer research and similar things, the next big thing was probably AI and leveraging that. If you look at the small and midsize business worlds, where most people work, I think we're a couple of years away, so AI isn’t the next big thing – but it might be later.
The next big thing is integration. It’s going to shift everything. The big companies have pieced together their many systems, and they got value during the last 10-15 years – although they still have a long way to go. Midsize companies aren’t there yet. And largely, they're dealing with spreadsheets everywhere. So this idea at the small and midsize company level of integrating their business pieces so they can see the truth of what’s going on, make good decisions, and adapt to the changes. Giving small businesses the ability to adapt to the changing landscape is coming faster in the next couple of years, so giving small and midsize companies the ability to make good decisions and compete with the big guys will be the biggest shift.
Because those small companies, they’re the job creators. They're the next big companies in the future. If you look at a lot of our customers, they've grown 10x since we sold them our system five years ago. They had 25, 30, 40 employees; now they have 400-500 employees. And so those businesses getting insight into what's going on, and continuing their growth as they grow from 500 employees to 2000, you look at the potential to help those companies compete.
And not just the size of the companies, because that's only part of what we do – get them up to that – but then taking advantage of technology that used to be in the realm of only the biggest companies. They had to have data scientists on staff because the technology's expensive; that same technology is now being democratized because it's available on AWS, Google Cloud, and Azure, etc. Smaller and midsized companies will be able to compete by leveraging data, which is a huge thing that will happen over the next couple of years.
Carl: It seems like when small businesses start, they can be agile because they're leveraging a great idea. As they grow, they lose that agility because the good idea is lost in the data someplace.
Brad: That's right. Just like if you look at one of the last big things that happened was the ability for small companies to bring a solution to market because they didn't have to spend so much money on servers and hardware and such. They could rent that from AWS. That allowed an explosion of software companies. If you go into the future, this ability for small companies to adopt large enterprise-grade technology will grow. And if you add a partner who can make sense of that technology and democratize it down to where a small business can adopt it, they have the potential to compete and adapt to changes in the marketplace like they never could before. And I think that's going to be a huge shift. Exciting.
Carl: Brad, I appreciate you joining us on the Connected Enterprise Podcast. And I'm positive other people will like this conversation; I always learn something when I talk to you, and today was no exception. I try to keep these short and to the point, so until next time, everyone stay connected.
