Good morning. How are you? My name is Richard Monkman, I'm the CFO of Kinaxis, and it's my pleasure to, on behalf of Kinaxis, welcome you to our 2019 Investor Days. It's great to see so many familiar faces as well as a number of new faces. We do appreciate your support. It's very important, and we hope today will be informative. Prior to starting, there are a few additional members of the Kinaxis team I want to introduce. Our chair, Ian Giffen, is here, as well as another board member, Jill Denham. Paul Carreiro, our Chief Revenue Officer, and many of you know Rick Wadsworth, our VP of IR. We're fortunate today to have a number of guests as well. To start off, John, our CEO, is going to give you some updates, as well as talk about some of the new strategies we're deploying.
Anne Robinson, a recent member to the team, is going to be talking about some emerging trends. Andrew McDonald, our Chief Product Officer, will then next speak, as well as then David Kelly, who heads up our professional services organization. We're also extremely fortunate to have representation from EY at Regina, as well as then Ronan from Ipsen, as well as a long-term customer, Gus, from Flex.
We got sound? There we go. Good morning, everyone. It's a distinct pleasure to have such a full room. I'm told we might have more people here than some of our competitors, who shall remain nameless, but larger, but still, it's great to have a full house. I just wanted to add my welcome, obviously to our guests, Regina, Ronan, Gus. It's great to have one of our newest additions to the strategic partner initiative. We have a customer who we have known now, it's got to be 20 years, Gus. So it's great to see someone with that kind of tenure with us, and you have Ipsen, who is relatively new. Okay? So you're going to get a great story from those folks. Okay. I wanted to just start by setting some context with that as a background.
The fact that we have customers for 20 years, how does that happen? That kind of stickiness. What we have done at Kinaxis is more than build phenomenal technology. I like to describe what makes us so relevant and makes us so potent in the industry is the fact that we've invented a new technique. That's what's relevant. We are campaigning against the likes of JDA or SAP or those usual suspects that we might see in the field. We start first by talking about technique and not technology. So you've heard us talk about concurrency as the basis for what we do. I have to tell you, what concurrency brings to the supply chain market is a giant leap forward.
This isn't one of those situations where we're slightly better than the competitors, or our product looks better, or it's easier to use or those kinds of nebulous things, which I think are all true also. I would say the notion of concurrency is really the basis for what makes us so special. To give you some context, because not everyone in the room is going to be a supply chain practitioner, but to give you some context, for where the world was and where we are bringing them. The past for supply chain has been about planning in silos, working on one chain link at a time, focusing on demand. You hear about products that are about forecasting, I'm going to improve your forecast. Imagine that's just one chain link out of this supply chain.
There might be another piece of software and another vendor focused on capacity, I'm going to optimize your capacity. Someone else is working on distribution, somebody else is working on multi-echelon inventory optimization. You hear all these buzz terms, et cetera. The point is, they're all working in a silo, and they're focused on one chain link. What we know to be true is that each one of these functions affect one another, like a chain. When you think of a chain, if you pull a link of a chain, what happens to the other chain links? They move with it, right? Concurrency is about inextricably connecting all of the elements in one system, one brain. We use the brain analogy a lot to describe this and the significance of this, because every human brain is actually concurrent, right?
The greatest example of that is when I say the words four times four, you're all thinking 16. Yet scientists have proven that the language part of your brain is distinctly different from the math part, yet they're inextricably connected. It's almost like a reaction, right? You couldn't help yourself. Like I can't tell you, please continue to listen to me, but stop understanding. You can't, right? Your brain is concurrent. It has to happen. What we have done for supply chain is the same thing. We've connected demand to master scheduling, to capacity, to inventory, to distribution. We've connected them all into one inextricably connected brain. What that does is it creates what I call hyper agility, right? We're compressing time.
The speed at which you can detect you're out of kilter anywhere in that supply chain gets collapsed. That's just the context for the value proposition and what makes us so unique and so special. The next few slides I wanted to cover, it's just a description of our strategy, or at least the strategy that I spend time with the board discussing. I'll call them five major rocks that we're trying to push forward. Okay? This is how I would describe it. Certainly, we're hyper laser-focused on dominating the market segments that we're focused on. You know us to focus on six, right? We're in aerospace and defense, life sciences, high-tech electronics, automotive, industrial equipment, and missing one. CPG. The most, I'd say, exciting one for us, I might say the CPG market space dwarfs all the others combined, why we're so excited.
Now you see one of the recent wins there, Unilever, which we announced last quarter. We've got some phenomenal names in that space already. Some we can't talk about, but we're obviously thrilled to have Unilever on that list. The other market segment that we talked about was in Europe. I'm going to spend a little bit of time on that subject, because a year ago, I stood up and said we're going to double down on that region. We were being successful, I would say, quite by accident, not by purpose. So we thought, "Hey, what would happen if we actually applied real energy and real investment and real focus on that region?" Well, I'm happy to say it's done exactly what we anticipated. Even in the last quarter, as we described, we had Unilever, Dyson, Novartis. Earlier in the year, BASF.
These are all phenomenal European names, and those are the ones we're allowed to talk about. I can tell you, for the first time in the company's history, over 60% of the new people hired were outside of North America. There's clearly a shift towards being a global company, not just saying we are. These are just artifacts of our growth. The other strategic area is around product innovation. We talked last year about the self-healing supply chain. This is very much a modern, I'll call it, emerging type of technology, where we're leveraging machine learning technologies and machine learning techniques and applying them to the supply chain. What's exciting about what we've done with self-healing, notwithstanding winning an award for it, which is pretty phenomenal, from Forrester. One of the key elements around the self-healing supply chain is that it was born of practitioners.
These are not academically interesting technologies. There's a lot of that around machine learning and AI, a lot of academically interesting articles to read. Our focus was to go talk to the likes of Ronan and other practitioners and say, "Listen, what do you need? What is valuable?" From that was born the self-healing supply chain. We're quite thrilled there. The other area you've heard us talk about is the platform. Andrew will spend a little bit of time talking about this as well. There's something truly unique about-- well, there's a lot of unique things about Kinaxis, but one of the things that's actually quite phenomenal is the fact that we're able to serve these six very distinctly different market segments. Whether you make missile systems or tofu, those are completely different supply chains, and they're using exactly the same product. Exactly the same.
That is a testament to the value. It's not about the technology, it's about the technique first. We have been focused on RapidResponse as a platform, although not necessarily marketing it that way. The facts would bear out. You can't support a tofu manufacturer and a missile systems company at the same time with the exact same object code unless you're building it on a platform. A lot of the innovations that we have been focused on, especially in the last, I want to say, three years, have been around the platform. We'll share a little bit more about what we've been doing there. The other areas of innovation aren't so much, I would say, new modules like the self-healing supply chain. That's something we can resell to the base.
A lot of the innovations have been in focus or in support of new market segments. Okay? CPG, as we described a year ago, we said we're going to go tackle that, and a lot of investment in the R&D factory has been in support of that new market segment. The other thing I will say is people have asked me, "When's the next market segment going to be announced?" I will tell you that the way we enter market segments is very much the same. It's been this way as long as I can remember. I don't know another way to be. Go find a lighthouse account. Prove that you can satisfy that new segment. There was a time we couldn't support tofu, and now we can, so we can talk about it, okay? We are in other market segments. We just haven't described them yet. Right?
It's not a question of if, it's a question of when. Can we use this technique to solve forestry? Yes. Oil and gas? Yes. Retail? Yes. I can go on and on. Fashion? Yes. Furniture manufacturing? Yes. It's just a matter of when. In many cases, spending time with the partner ecosystem is where we're going to accelerate that. Continuous value for customers is an area that we're also focused on. As we grow, I recognize that it's very easy for companies that are being successful to focus on the next one, and to potentially neglect your past.
As a strategy, I've been working with the management team, with the board, to apply a lot of focus on continuous customer value, and make sure that we don't neglect our land and expand, because it's always exciting to announce big names like Novartis and Dyson and Ipsen and others. These are phenomenal names, and you can get wrapped up in that, but we'll be focused on customer value. Great to have Regina. I just came back from Europe. I was there a couple of weeks ago and spent time with some of the team over there. Man, there's some serious talent at EY and supply chain, I'll tell you that. We're super excited about that flourishing partnership. I'll say this again, why are we so hyper-focused on partners? We simply don't believe we'll grow organically fast enough to support the demand.
We just can't grow organically fast enough. I'd rather share and bring in some of the greatest partners in the world that have armies at the ready, and have the talent at the ready. It's a scale equation for us. I said this to all of our partners, we know what we're good at, and we know where we just don't have the pedigree. We're not a large SI, we're software. We're software at our heart. That does not mean that we're neglecting, if you will, the professional services side of the equation. We just know that isn't our future, scaling that function. This is where we need to light up partners. This is one of the areas that's very near and dear to me.
I learned some great lessons from some great leaders about companies that are in high growth. Culture is one of those things that is first to get neglected, especially if you're growing globally. I recognize that every new human being that you hire is a new ingredient to your culture. If you're not focused on it, you get some random flavor, and that can poison you. Especially, again, as you start hiring outside. We're now, I think, 13 countries. We have people in 13 different countries. If you don't focus on culture on purpose as you grow, you won't know about it until months or maybe even years later that you're poisoning yourself, quite by accident. We hire against a cultural standard. We know who we want to be. We know the personality that we have.
Think of it as a framework. There's certain characteristics that we're looking for. I've worked very closely with Megan, who isn't here, Megan, our Chief Human Resources Officer, on making sure we hire for cultural fit. Often the highest academic fit doesn't make the cultural fit, they don't make it in the door. What's that line? Culture eats strategy for breakfast or something. There you go. Again, I really think this is important. Some people might think it's kind of a soft thing. Let me tell you, I've learned it's not. You got to do this on purpose. You have to invest in it, and you have to make sure you're communicating with everyone in the company, every executive. Right? Because I'm telling you, I've watched it.
When you slip, you know you do, and you have to sometimes come back and fix things. In short, the areas that we're focused on for investments, you're going to hear from Anne. We brought Anne on board, I'll let her run her introduction of herself. We recognize that we can absolutely continue along the vectors we have today and be wildly successful. We've been at it for quite some time, so we've gotten really good at this. Part of being really good is being very consistent. Frankly, it's just not good enough. We think that there are plenty of opportunities yet to explore, and plenty of accelerants, I'll call them, to add to the equation. We're investing in the Office of Strategy, where I spend a lot of time with Anne talking about the next three to five years.
For the next zero to three years, we pretty much have a pretty solid handle on what that growth strategy will look like. The three to five year is where we can see opportunities to invest now on some accelerants. Part of that is in R&D. Last year, we made a very big push into Europe. During earnings calls, I talked about how quickly Paul outpaced our desires by an order of magnitude, and we lit up that region very quickly. This year, with Andrew's help, and you'll hear from Andrew, we're igniting R&D in a very specific way. A lot of that is tied to RapidResponse as a platform. Again, I won't steal too much of his thunder, but I'm absolutely thrilled with where we are right now from a technology disposition.
I'm thrilled with the fact that no one seems to be able to catch up. You can ask our customers. Ask Gus. I challenge you. We have something quite special. I'm also thrilled with where we can take the technique. In fact, when people ask me, "What equation is RapidResponse solving?" I answer it the same way, and I eliminate all the supply chain buzz. Okay? It's a very ubiquitous problem. It's a problem that exists when you have volatile supply or demand for something that's constrained. You don't have an infinite amount of it. That's the problem. There's volatility in the supply or demand of something that is constrained, or you can fill in the blank something with a word. There's volatile supply and demand for cash that's constrained. That's a supply chain problem. Okay?
Obviously, that has us thinking about where we could apply the technique further using the platform. We're going to continue to focus on Asia and Europe. We've seen a remarkable increase in pipeline in those two regions. As you would expect, when you invest heavily in sales and marketing, and you go at a region on purpose, and you win the names that I just described, it creates a little bit of momentum in those regions. We're going to continue, obviously, to focus our attention there. Just a short note on pipeline, because I said the word. I've said this in earnings calls. It's significantly larger now than it was 12 months ago. It just is. It's not slightly. It's significant. Again, it's reflective of the investments we made early in 2018. What's more remarkable to me is that it's incredibly balanced.
There's no concentration problem. It's not like it's 60% high-tech electronics and then the rest. We've seen an uptick in aerospace and defense activity, for example. It's very well-balanced, and it's also remarkably balanced across all the geographic regions which I care about. I want to know whether we have some concentration in one region or one sector, and we're seeing none of that. We're quite thrilled. We're going to continue to focus on Asia and Europe. I talked about the customer experience and the customer journey. As we grow these accounts, I say a couple of things internally at Kinaxis to drive this home. Number 1, you have to win your customer every day. That's the world of SaaS. It's not like the world of perpetual software where you win it, book it, on to the next. Support and maintenance stream is a smaller element.
In the world of SaaS, you win your customer every single day. You have to do it on purpose, and it has to become a part of the cultural fabric of your company. The other thing, in conversations I've had with Andrew in R&D, that one of the hardest things in SaaS is to have your R&D group, the developers, and the testers, and the product managers have to love the customer more than they love the product. That's really hard if you're an engineer. Those are the sort of the seeds for making sure you create the proper customer experience, because we want every single customer to be like Gus, 20-plus years, great relationship. Twenty years from now, it will be Ipsen and others. That happens on purpose, and that purpose requires investment, so we're going to focus on that. I mentioned this earlier.
This sort of happened over the year, it was only at the board meeting, the February board meeting, where I was sharing with the board our growth in headcount and how it happened and where it happened, again, I was almost surprised to see it over 60% outside of North America, not just Canada but U.S. It means we're growing in Asia and Europe at a faster pace than we are anywhere else. Again, making sure that we don't fail at that. We're focused on the HR function and making sure that we can continue along that scale. Lastly, this is sort of a reflection, obviously, of what we've already shared, but we're expecting another very strong year.
Based on our investments of 2018, based on the current conditions that we see in front of us, based on where we currently are in the year, we're seeing a total revenue between 21%-25%. Again, continued strong profitability. This is, again, just part of our personality. We don't know another way to be. We think that. This is the definition of SaaS. It should be highly predictable and profitable at the same time. We've built Kinaxis, and we've built our business on purpose to be growth with high profit. I think we've consistently done that. Lastly, looking at our benchmark, which is SaaS, the SaaS element of our revenue, looking at 22%-24%. We feel very comfortable at this stage with those numbers. With that, I will pass the baton here. I think it's Anne who's next.
Anne, come on up.
Morning, everybody. It's a great pleasure for me to be here today. I feel very honored to have joined such an interesting and innovative company. I wanted to start by first just telling you a little bit about me. I know some of you have been poking around on LinkedIn profiles and whatnot, but I am proudly from the tropical island of Newfoundland, so it did my heart very well to join a Canadian company and to be moving back across the north of the border again. I spent many years in supply chain as a supply chain practitioner. As I go through today, a lot of it will be very pragmatically from that perspective that you'll hear from me and echoed by our customers and partners who will speak after me as well. I was a professional academic for a very long time.
I like to tell small children that I stayed in school till grade 25, just to watch their eyes bug out of their head a little bit. Now I'm very pleased to be able to put all of that in action. I'm probably one of the few people out there that can say everything I learned in school, including my PhD thesis, which happened to be on order promising and order fulfillment, I have used it all in practice. With that, I wanted to spend a few minutes to tell you a little bit about my organization and how it fits into overall Kinaxis. I know there were some questions on kind of the different roles and what the expectations were. Really, my role is to look to the future and craft that vision of what's possible for us in the three to five to 10 year timeframe.
Along with that, I have an expectation around the skill that's going to be required to be able to meet that vision and to truly position Kinaxis as a recognized destination beyond what it is today for computer science, advanced analytics, and supply chain talent. It's really looking into where can we go? What does it need to look like? Who do we need to get us there? How do we figure that out, what we need today to be able to achieve that vision? There are three areas that I'm primarily focused on. The first is industry outreach and thought leadership. This is really understanding what are the trends, where is supply chain going, where is advanced analytics and planning going? Let's make sure that we have all the leading trends in our current verticals, as well as the spaces that we're exploring next.
How do we identify which industry forums, which organizations to partner with, and really position Kinaxis in a broader range than we necessarily are today? That's one of the things I've spent a career kind of in the advanced analytics space, positioning organizations out there. I want to make sure that Kinaxis can have that same level of presence. The second is around strategic development, and this is really the incubation zone. I like to say this is my team, R&D before R&D. An example that I think I've used many times with Andrew is if you think about blockchain sort of five, six, seven years ago, when the words were just kind of coming out, this team would really focus on let's explore, let's see if there's an opportunity. Is this the right fit for Kinaxis?
If yes, let's translate that into R&D with the product roadmap and go from there. This is the idea incubation area. We expect to look at potential opportunities to explore new ideas, also potential adjacencies, and where we can see Kinaxis and RapidResponse growing over time. The third area is probably the one John is most excited about, is around strategy management. This is the group that really takes all of those ideas as they're coming out of our industry outreach and thought leadership, as we're curating from the strategic development, saying, "Let's put that into the framework, and let's turn it from the art of the possible into our big vision, into that roadmap that'll allow us to get there.
Let's make sure we have our metrics, our change management in place that will actually allow us to accomplish that vision." As the organization expands, and I'm sure many of you know, ensuring that we have that ability that every individual employee understands how their role fits into that big level vision, this organization will be the mechanism for making that happen. You can't do any of this alone. Very specifically, the messaging from outreach, and the messaging from marketing need to go hand in hand. When I talk about R&D, you'll hear from Andrew, but the strategic development and R&D need to be in lock sync. When you talk about strategic development, strategic management, and the ideas, if we don't have the right people and the right financing in place, then it clearly doesn't make sense.
This organization is definitely a partnership organization as we look at moving forward. The inaugural focus areas for my team for this year really focus on let's get the right muscle in place, as John mentioned, for the future. Looking at the metrics, establishing that pervasive voice of expertise, not only in the capabilities of planning, but specifically around each of our verticals, having a presence in each of the geos as well, effectively positioning for the long term, and as John mentioned, the focus on customer excellence. Every single person needs to be focusing on continuous customer value, and it's through this dimension of my organization that will make that happen. I've had many questions as to why did I switch from being a supply chain practitioner, running large organizations, to coming to join Kinaxis.
As I look at what was available, as I had decided to make a career change, I've been in the digital transformation space myself for many, many years. As all of you have probably, you get bombarded with different ideas, and some of them have a lot of credibility, and some of them are sort of just vaporware ideas out there. I wanted to make sure that I was joining an organization that I felt aligned with what I was truly seeing supply chain organizations go. When I was asked to speak here today and kind of talk about trends, I could have gone through and said, "You need these algorithms," but that's not reality. I wanted to take you through what I was experiencing as a practitioner, and how that afforded my choice in coming to join Kinaxis.
If you look at the landscape, the amount of change that has happened over the last five years is breathtaking. We call it the Amazon effect. I know we've all had that instant gratification of ordering things personally, but the reality is that organizations, even large organizations, are expecting that same level of personalization, attention to detail, attention to customization, and specifics that we as individuals expect in our day-to-day lives. The amount of product proliferation that that's resulted in as an organization has also gone through the roof. If you look at iPhones alone, as an example, something that we can all relate to, in 2007, 2008, 2009, two, three, four models of phones, and this is very close to the world I just came from.
When I left, so 2018, there were 60 models of iPhone, of which about 200, 250 models were required to cover all the variants of all the different cell providers in the world. That is just one tiny example of product proliferation that we're seeing happening ubiquitously. The supply chain network complexity. On the back end, suppliers, the number of suppliers, the different types of suppliers that everyone's requiring. I think P&G at last count was over 75,000 suppliers, and those number can change overnight as we look at dual sourcing. We're looking at diversity in our supplier portfolio. We're looking at ensuring we have the right mix for all of the different regulations. This is causing a proliferation across all of the supply networks or supplier suppliers and up the tier, so it makes planning that much more complicated. Then technology.
Everywhere you turn, there's yet another technology that's available to you, another way of looking at your data, another way of running your technologies. This has just created a crazy mess of landscape for most corporations. One thing that it's done that's been really interesting is it's put the supply chain at the strategy seat. There's a realization that supply chain now, with all this diversity and complexity and everything going on, they're the last ones before that product reaches the customer. Back in 2013, 2014, Lora Cecere, one of the supply chain guru types, said, "You will see a shift from the marketing-driven supply chain to the market-driven supply chain." All the nuances as customer interests change, as customer expectations change, that information is not going to come necessarily from your traditional sales and marketing information.
It's coming from your customer base, and it's the supply chain's ability to sense and respond to those changes. That's what's really driving a lot of organizations. You're seeing Chief Supply Chain Officers not only having the same amount of clout in the conversations about organizational strategy sitting at that table, but you're actually seeing the path of the Chief Supply Chain Officer becoming the CEO. With this in mind, there's a lot more pressure on supply chain organizations, clearly, I think you'll hear that from our peers as well as they get up.
This notion of digital transformation and figuring out what are the right sets of solutions has really put a bright, shiny spotlight on that Chief Supply Chain Officer to get it right, to get it right in a timely way, and to get it right in a way that's not just for today, but for the future. How many of us have been in a situation where we've had a new technology introduced, it's worked fantastically right now, and next year you're having the exact same conversation because you over-engineered to where you are today? That's not acceptable anymore. It's about looking towards the future and figuring out what that needs to look like. Digital transformation, everyone's talking about it. They're talking about accelerating. We want to scale. We want bigger.
Because of this notion that the supply chain is at the big seat at the table, we know we have partners in marketing. We have partners in sales and finance. We have beyond the supply chain. The conversation often led from the seat of the Chief Supply Chain Officer is scaling beyond those traditional walls. Everyone's asking for it. I think one of our board members recently said it's digital confusion. That's what's out there, that everybody's talking about it, they're driving different things, there's not a clear definition of what they're trying to accomplish through this adding all this digital stuff.
What I've found, and I do see it now, is that they're inviting partners to come in to talk about what is it, to try and create some sense out of all of this confusion and really clear the fog. The other piece that we're seeing, and I'll talk a little bit about this later, is that it's fundamentally changing the supply chain operating model. It's no longer a support organization, and the expectation of the supply chain leader being the strategic role has elevated all of his or her staff to also sitting in a much more strategic position in the organization. Let me talk a little bit about the favorite topic. I couldn't get out of here without talking about the technologies and the technology evolution.
This is my personal background, is in advanced analytics, and we are seeing a load of things happen around what's the next descriptive, predictive, prescriptive tool in the toolbox that's going to help make the supply chain perform better, more efficient, and more effective. This is leading to, I think we've heard the word augmented analytics. It's the tricky balance between the most complex analytics and how much automation. The reality is these two pieces, as much as you want to invest in it's absolutely pivotal on trust. Trust in the data that goes in. Clearly, we need to trust what information we're relying on. It's trust in the technology, that we have strong technology partners, because now we really are putting a lot of faith that that technology's going to drive the right solution for our business.
It's also trust in the operator, because the supply chain operator has changed. We have this information. Back in the 10 years ago, we had a lot of people that were really just data operators inputting information, typing in the plan, verifying that each data number was right and going through. That's not the case anymore. We're seeing that the supply chain operator is absolutely being upskilled. A few months ago, I think we were all talking about an article that came out from Harvard Business Review called "Death of Supply Chain Management." Probably the biggest thing that came out of that was shame on Harvard for doing a clickbait article. What they were getting at wasn't that the supply chain was going away.
It was that the traditional operator, the person who didn't need to be actively involved in the supply chain, those positions were not necessary anymore. The supply chain operator now, the talent that's required, is somebody who truly understands the dimensions of the supply chain. What are those trade-offs? What's happening? What's happening in my specific space? How do I operate when there's an exception? Because guess what? The technology is smart enough to do things when the world is going as planned. It's when things start to go sideways, change, evolve, we introduce a new product, you need to be actively involved. That supply chain professional is a lot more skilled. They not only know the domain of supply chain, they need to understand the business strategy because they need to know how their role fits in.
Oh, by the way, they need to be really good communicators and collaborate, and have an understanding of change management. That is not the profile of somebody who graduated with a supply chain degree 10 or 15 years ago. We're seeing those skills change and evolve. Absolutely, I think I've called it out individually here, collaboration is absolutely the key to success. With that, I just wanted to sort of summarize all of these pieces, and you'll see that as I put this together, and then I was thinking about why I joined Kinaxis, and they really do go hand in hand. The use of the advanced technology, this holistic approach to supply chain, and to be able to operate at the speed of business, that's what winning supply chains, that's where they're playing.
Being able to get the information from the customer as quickly and sense and respond to that as quickly as possible all the way up the supply chain, reducing that latency as much as possible, echoes so much of what John just talked about. Finally, probably the biggest thing, with Kinaxis, isn't all about technology first. It's about the human, it's about the planner and the process. Absolutely that notion around change management and how to drive and really own the supply chain is absolutely key to being a winning supply chain. That was probably the biggest piece for me, was recognizing that it's the human and the process complemented with the technology, looking end to end and reducing all that latency that allows you to be in the top class.
With that, I'm going to hand it over to Andrew to take you through the innovations in the platform. Thank you. Andrew?
Right Now? Thank you.
All right. Thrilled to be here. I want to talk about three really key areas that we're investing in. Before I do that, going to give a little introduction to myself. I've spent my whole career in software. I love technology. I love innovation. I love the chance to build a business using technology. I've been in some roles that were broad and global. When I was at Alcatel, I had responsibility of a business that was over EUR 1 billion. I was part of the executive committee. I've been part of businesses recently, a small venture-backed company that got sold to Ericsson. Through all of that, and during the sales process, I started to think, what do I want to do next? I started to talking to John.
The reason I joined Kinaxis is I thought back to probably the favorite part of my whole career. The favorite part of my career was early 2000s. I was at Alcatel, we bought a company, our thesis was Internet is going to change everything. It seems pretty obvious now. At the time, the best effort Internet was kind of the hippies in the corner who were doing some radical things, but they weren't delivering video, they weren't delivering voice. There's no way anyone would trust a 911 call on that infrastructure. Our thesis was, with great technology and a better solution, we could break into the duopoly of Juniper Networks and Cisco. When I thought about why that was the favorite part of my career, it's because we had a mission. We had a mission, we were going to go and get this done.
We had a great team. It was unbelievable, we also had a technology that no one else had, we rode that real hard as we entered the market. When I talked to John and I met the whole team, I saw all three of those characteristics. Being part of a business that grew from zero to CAD 1 billion in eight years was phenomenal, I wanted the chance to do that again. That's really why I joined Kinaxis. I live in a part of Ottawa that a lot of folks who are analysts here, they have financial planners are obviously reading your material. I noticed a transition. As soon as I joined Kinaxis, before that, they always asked me to move my money to them.
Since I joined Kinaxis, they're actually asking what's happening at Kinaxis and trying to get the information on what's going on, which I thought was kind of interesting. I get accosted at the gym regularly trying to find out what we're doing. Since I've been there, it's been better than I thought it would be. It really is because of all those three elements, of how strong the focus is on the mission, how strong the people are, the technology. I'll talk a bit about why it is differentiated. My organization is responsible for the development of the software. We've got a great R&D team, making sure the quality is there, making sure it's well documented, training material, everything to do with product, my team is responsible for.
We've got a great product management team who knows the industry really well and is listening to the customer to make sure that we stay ahead of everyone. Finally, we also have the SaaS operations, which is really integral. It is the embodiment of the product. This is how we deliver our value. We brought all that together in this organization to make sure we deliver a consistent product to all industries. I'm going to start off with an area that we're really investing in. John mentioned that we're investing heavily in R&D this year. If you look at the numbers, it bears out in our financial plan. I think what you see as we go through the year and we report on it, you'll see that we're putting a fair bit of investment in our R&D capacity.
There's three principal areas that I have the team focusing on. One of them is how do we earn money in kind of the, I would say, short to medium term. That really is, we're a supply chain planning company, and we have phenomenal capabilities, and we've got to make sure we invest in those to stay on top, and we are. We've got some innovative new ways to help practitioners understand what's going to happen to their supply chain. This is about predicting the future. We've already proven we can do this in a number of areas. We're turning our attention, our investment. We've got quite a few data scientists now, and we're working closely with a number of customers on figuring out how we can do a better job forecasting the demand for their products.
If you think of a big supply chain network with thousands of products and tens of thousands of parts, the implications for these kind of vibrations in demand are huge. If you can kind of get a few points better in the demand sensing side, it has a phenomenal impact, and we're already seeing that bear out in a lot of the work that we're doing. We've got a whole bunch of disparate data. Kinaxis is at the center of planning. That means we have data across all the enterprise. We see across all the different supply chains, even in cases where a company's been built through acquisition and has multiple systems and multiple disparate manufacturing plants, we have one view of all that data. We're a very rich data source.
The number one thing you want, if you're going to be able to predict, is great data, and we have that. We couple that with some really publicly available data like weather, data like market share, data like social media sentiment, and we're already starting to prove that we can do a better job at forecasting the demand that's coming. It has pretty profound impacts. Whenever we build new capabilities, though, we want to build it into a way that automates as much as possible for the practitioner. Today's practitioner doesn't have time to look at the 10,000 parts and what does that mean. We've got to automate all of that. When we do sense differences in demand, we bring that back in. We show them, you're going to have a demand variation that maybe you're not ready for.
Here's a couple of scenarios that you can use, and we automatically build a capability to show them so they can analyze that. We're investing in that heavily this year, and I think it's going to be pretty impressive when we start rolling that out. We also want to have the best techniques. Planners, it's a very technical world out there. There's a lot of different ways, Lean, Six Sigma, MRP. There's new techniques that are always coming out. We're always going to be on the leading edge of all of these techniques. We're going to have the most complete planning solution in the market. Demand-driven MRP is a combination of some of those techniques. It's especially applicable where there is high customer service expectations. We're starting to see some interest in this, so we're investing in this space as well.
The most complete product also means we want to invest in some breadth. One of the things that really impacts the bottom line is the efficient use of expensive equipment. If you follow this space and you know, there's a lot of companies that are very targeted on how do you optimize the manufacturing part of the supply chain, and that's a very bespoke, very different in all these different industries. We're building capabilities so we can work with those systems and we can broaden. We really want to broaden who works with RapidResponse in our customers. Being involved in the production, the sequencing of what you manufacture is a key aspect that's going to bring us more breadth that the customers were already at.
The more we can start bringing out new capabilities that expand our current base, those are easier sells than even acquiring new customers. Both with production planning and with S&OP, this is an example of our innovation tightly coupled with our customers. The first public event I was at, I met, I think, a couple of you folks. I was only a week in the job. It's an event we hold called Kinexions, and I was absolutely blown away by the customers and how they love the product. It gives us an unbelievable capability to work closely with practitioners who can listen to our ideas, iterate through challenges that they're having, figure out better ways to do things.
A couple of these supply chain, or actually all those supply chain capabilities that we're doing, it's all close coupling with customers, making sure what we develop in the end comes out and works in their environment. In the sales and operations planning, we realized that we've got so much great data that we can start adding more capabilities. What we're doing is we're starting to add more capabilities that'll appeal to some folks in the financial side of the house. Again, what we're trying to do now is expand the people who use our product. People now on the financial analysis side are going to be able to take what we're doing in these investments this year and be able to do better planning on their side of the house.
We're excited to try and expand, not just in capabilities for some of the planners, but also start to expand by who uses it into the financial side. The mid to long term investment really is a technology play. If you don't make the right investments in technology, you can miss a few year opportunity quite easily. I've been on the good side of some of these technology decisions. I think right now, Kinaxis, we're on the good side of some of these technology decisions. The decisions that the team made in the past, we're riding right now. What are we investing in in the future? This is a very simple slide, we'll see if we get some questions later.
Our in-memory database is something that in the industry, people have asked about ever since competitors have come out with their own in-memory database. The idea that you could store some information in memory versus on a disk, simply put, that should be faster. That kind of misses the point of what we do, though. What we do is a different type of database. The competitors have a database, and there are many competitors out there that have databases they use, whether they are from a big database vendor or something they build themselves. Those databases are generally something called a relational database. They are very good at a lot of different things. They are really good at, say, high transaction. If you are getting a lot of, say, a point-of-sale system, an ATM machine that is doing a lot of withdrawals, a lot of writes, changing data.
What we have is a planning application. Way back when Kinaxis was formed, it is not just that the database was in-memory, and that was amazing at the time, by the way, the fact that the team went that way. It is two other things. The versioning database, and I will not get into all the details about that, but in a nutshell, it means it is possible to make a scenario, an exact copy of the entire supply chain instantly. The whole technology is optimized over decades to do that. Relational databases do not have that. They do not have that capability. The other one is, since it is our database, we tightly couple the math. Everything behind what we do is calculations, lots of calculations. We tightly couple the calculations to the version database.
If you have a generic off-the-shelf or even a database that you have built for multiple applications, it is very difficult to do what we are doing. That is why I feel very confident that when I talk about the three things that were interesting me in joining, the underlying database technology is so attuned to planning that no one else has anything like it. We understand competitive forces. We do not want to rest on our laurels, we are coming out with a new version, it is coming out this year. It is just going to be more of everything, more data, more speed, more reliability. We are very confident that we are going to stay ahead. Right now, we do not see anyone coming out with exactly the same techniques, but it is possible. What I do know is with the decades of engineering, each iteration gets better, gets faster.
We have a good amount of runway ahead of us with this underlying technology. That gives us a technological advantage. My team's responsibility is keep technological advantage as much as possible, and that is what we are going to do. The other thing that is really happening in the industry is, a decade ago, it was okay to ingest information overnight in batch. Let us get the latest data from the ERP system and by the time the day runs through, you are about a day out of date. Not too bad considering the state of the art at the time. Since that time, there has been a lot of investments, we are really doubling down on making everything real-time. The reason for that is exactly what Anne was talking about, is digital technology. The expectation that trends like IoT will have impact on planning, we are already ready for.
If all of a sudden there's a shipment that's late, these investments are going to be able to tell us, and they're going to be able to automate what your planning outcome should be. How are you going to replan for that? Huge amount of relief for a supply chain executive who's trying to figure out, how do I staff, and how do I support with all the challenges we have in finding the right professionals? The more we can automate, the more it relieves that pressure. We're already doing integrations with other data sources. We're already doing trials with IoT companies. We're going to keep investing in this. This year you're going to see more come out from the POP product in this regard.
I think John said it really well, that there are a lot of PhD papers going on today about machine learning, what we've chosen to do is work very closely with customers to automate their pain points. We're using machine learning to predict. That's really the main focus of what we're doing today. We're predicting better than what you can do with your current supply chain team. Take, for example, lead times. When you're trying to do your planning and you're trying to figure out what you should build, you're going to look at how long it takes you to order your 10,000 parts. 10,000 parts, that's a lot of lead times to look at.
What we've shown already in a number of customers is we can look at the historical deliveries on all those 10,000 parts, we can just keep analyzing it all night long, all day long. When we see trends and we can predict better, and we see misalignment between what was designed, so the lead times that someone put in, they maybe got it from a supplier. Yeah, we'll deliver it to you within 60 days. Put 60 days in the system. What if that supplier is delivering it in 80 days? What if they're doing it in 40 days? What if it's consistent? We can change that result. Now all of a sudden you've got a supply chain that has the right values. You cannot afford to have humans sitting there looking at that data.
We're picking the areas to automate that really make impact in making a more accurate plan on a consistent basis. We're going to do that across the supply chain. The demand sensing that I talked about is using the technology that we've built. We're already seeing some pretty good results. Some of the results I mentioned, 55% of the lead times were not as delivered. The parameters were just wholly insufficient for proper planning. Really excited about what our machine learning team's doing. Technology's about the midterm and long-term. John talked about the fact that this is a platform that we've built, one binary from tofu to missiles. It's very clear that we can't build the business fast as we want unless we can leverage partners.
If you think about the global reach, if you think about being in every country, if we can only grow as fast as we hire our services people, that's going to restrict the amount of growth that we have. We've known that for a while. One of the biggest investments, and I only have one slide on it, but one of the biggest investments is in a platform that allows our partners add more to it. They're already working and doing integrations, what more could they want? One of the things that we really do want to build is a platform that will enable them to be creative, to add value. We don't know a lot about forestry right now. What if we have a partner who knows a lot? How can they add those capabilities in?
The day that they start coming back and surprising us with the applications that they build on top of the platform, that's the day we know we're successful. This investment's going to take time to really bear that kind of fruit, but we're investing in it heavily now. We are really going to allow them to be creative on top of our platform and add value like we never have before. This is one of the longer-term plays. I think you're going to hear about us talk about this in the coming years. The investments we're making now are going to enable us to go into other areas, other sectors, other verticals, without having to have a massive team because we're going to allow us to now leverage a partner network that's just flourishing.
We've been in discussions with some of the partners, most recently we had an event in London that John mentioned. As we talked about this, the excitement level from those teams was palpable. My excitement was extreme because these folks have knowledge in sectors, like I said, that we're not in. The partner strategy and building our capabilities in the product, and specifically it's all around new experiences for the user. How can a partner build a new experience in a new vertical that we don't understand? A lot of it is going to be related to how do they build new calculations in math for areas that the product doesn't support. Making the product extensible for them will be a brand-new capability that we're really looking forward to unveiling to the market and to the partners. With that, I will hand it over to David.
Okay. Thank you, Andrew. Thank you folks for having me. I am looking forward to talking with you. This is the first chance I've had to speak to this group, let me forward the slide ahead here. My name's David Kelly. I joined Kinaxis just about five years ago. When I started, we were just about to go public. I've been here for the journey with you all. Prior to Kinaxis, I was with IBM. I was within the IBM software group running a services business within a brand within the software group. My career, I've spent a lot of time working in the services business within software groups. This is a very natural spot for me to be, it's just been a great journey. A quick overview on the business that I run and what we focus on.
As I mentioned, I joined five years ago, and there are folks on my team who have been working with RapidResponse for 15+ years. I have a team of individuals that are deeply knowledgeable in RapidResponse, the capabilities of the product, and what it can do. As Anne said in her presentation, over the last five years, we've seen a huge shift in the marketplace. Companies expect more from us. They look for value to be achieved faster. They look for us to guide them in their deployments. As that market shift has changed, my team needs to change as well. Our capabilities need to change. We have done projects successfully with just about every single customer. I don't think there's a single customer that we don't touch.
Today, we have a lot of partners involved in our engagements. We are still working closely with those folks during these deployments. You can see the average expertise we have within my team. Again, a lot of folks with a lot of tenure. Most of the folks that we hire historically come from industry or have been working with Kinaxis for quite some time. We're just now starting to shift to bringing in some younger talent to, well, quite frankly, replace the folks that are moving out. We need to grow that pool. We also are looking at models in which we can bring down the total cost of deployment. We have a team in India right now with a strategic partnership with one of our partners that we're doing that. We are focused on a methodology that is an agile deployment.
A lot of companies think of these projects in a waterfall approach. That can take a little longer to get value. We look to do this through an agile deployment methodology, which drives value a little faster. Some of these key customers here, some of them have been longtime customers. Some are newer customers. This is a mix of projects that we do directly or with our partners. Each model varies. I'll talk about that throughout the presentation. Some highlights. This is a pretty interesting slide. This talks about on the left here, you can see that Kinaxis, roughly CAD 32 million in professional services revenue. We have a team of a little more than 100 folks. That is an expanding team. I think what's more important is the ecosystem, the partners that you see up there.
When I started five years ago, there were four names on that list. Today you can see how that's expanded significantly. When I started five years ago, I would guess, I don't have any specific numbers, but I would guess that those partners did maybe CAD 5 million in services revenue as it relates to RapidResponse. Today, I believe all those partners combined probably do 3, 4, maybe 5x what Kinaxis does in services business. The ecosystem has significantly increased. We see these partners working on a global basis. My team works with every single partner up there doing joint projects. Either those partners could be prime, we could be prime, or we both have direct relationships with the customers. We work in a lot of collaboration with our partners to drive greater value for our customers. As well, at the bottom, we mentioned this Kinaxis delivery center concept.
We've had a lot of people working virtually, I mentioned bringing up some younger talent. We've established an office in Amsterdam and Chicago, through a strategic partnership in India. This is where we have individuals located in one facility, then we can send some requirements to these folks to focus on some specific activities during a project. This allows us to groom individuals to then go out into the field in the future. It's kind of a development center, if you will, for resources on my team. We expect to see that concept being built out over time. Where do we have folks, and where are we located? When I started, we had an office in Ottawa. We always have had an office in Ottawa, obviously. We had a location in Tokyo. These are physical offices.
Today, you can see that map has improved quite a bit with offices in London, Amsterdam. Hong Kong has been there for quite a while as well. Seoul, Chicago, the new office. Then where are the people located? In North America, very common for folks to work out of their house. When we get outside of North America, that doesn't work so well. That's why we have more of a presence with physical space when we get into some of these other regions. This doesn't represent where we're doing work. We have active deployments throughout Southeast Asia right now, down into Singapore, and other markets in that region. Our customers take us everywhere in the world. We have folks that will head down to South America and then in China for those customer deployments and to support those engagements.
My team is truly a global team, this is something else that we have worked very aggressively, is to put people where our customers are located, so we're not flying people back and forth across the world. That burns out the team, but also we are not as responsive for our customers. A few things that we've also evolved in the services offerings is, again, how do we drive the value for our customers faster? A lot of our focus has always been on the implementation services, the deployment of RapidResponse. As we've engaged with our customers and as the market has changed, our customers are looking for more from us. I'll just highlight a few boxes on this slide. Change management. When we think of change management, a lot of people think of organizational change management.
They think of broad changes within a division or a region for a country or for a company. That's not the focus of what my team is necessarily doing. What we're focused on is helping companies change the process by which they're going to do a specific task. We deployed RapidResponse. They're replacing spreadsheets, potentially. They're replacing another tool, potentially, but how does that specific job change? We're not here to do change management from the scope and scale that a partner might be doing. We're here to complement what that partner might be doing. Another aspect I'll highlight is what we call premier support. Our customers engage with us.
We finish a project, we leave, and they say, "Wow, I still could use a little more help here." We want to put in a model that is a little more cost-effective for them to be around with that customer, to support them as they have new requirements, as they have new features that they want to deploy. This is where our India team comes in, and we can help them in a lower-cost model, or even with the Delivery Center, we can have folks located closer to their facilities. I'll also mention here the Business Transformation Roadmap. I think that that is something that we, too, are getting a lot of interest in that a customer says, "Okay, how are you going to make me successful on this journey?
What are we going to go do to make sure that at the end of this project, I know it's going to finish on time and on budget?" Again, we want to be able to work with the customers to drive the overall sales cycle to get them to a successful deployment. This is where on this journey we will start that initial phase, working with the customer. We could come in and do a roadmap session, something that talks about where are we going to go, how are we going to deploy the different phases, how are we going to deploy by region, by brand, how are we going to engage or be part of a broader program. We get into a lot of customer engagements where we have a systems integrator who's currently involved doing a much larger transformation program.
We will engage with that customer to be a subset of that overall transformation. These are some of the typical steps that we'll go through to get to where the project starts. A project then might be 9 to 12 months, typically. Not all projects last that timeframe. We have some that can be six months, and I actually have an example here at the end of the presentation that I'll talk through that's a little faster in that respect. Generally, 9 to 12 months is a typical engagement. We do also get into engagements that are multiple phases. We might deploy an initial phase up front, a phase 1 deployment by region, by world, by overall requirements, and then we'll continue on to subsequent phases.
That's also another area where we'll turn over some of that work to a partner to let the partner drive those long-term deployment activities. Collaborating with partners. I want to talk about that for a minute because it's not an either/or. It's not Kinaxis or a partner. I'd say in most cases it's an and. We do have customers that come to us and say, "Look, Kinaxis, we're buying the solution from you. We want you all to deploy it. We want to make sure it's successful. It's going to be a narrower scope, specific around the technology." That's probably 20% of our engagements. It also might be in a new region of the world where there's not a lot of talent around RapidResponse. We have to bring people in to support that activity.
A lot of our engagements today are collaborated with partners. We will engage upfront with that partner. We'll map out a joint plan and a joint approach. We'll bring the best skills from the Kinaxis team and from that partner to drive success for that customer, and we have multiple examples of where that has worked quite well for us. This is an example and a representation of how we would engage with a partner. This here shows six months, but six months, this is a phase of an overall engagement. This actual project lasted, I think, two years. You can see the various components and activities within that project, and you can see who led or where it was led by the SI, led by Kinaxis, and then the joint involvement by each party.
I think that this is where we, in this scenario, brought in the core expertise and capabilities around RapidResponse. The folks that we had on this project have a lot of deep expertise. They have direct knowledge and collaboration back with Andrew's team from a product development perspective. Then we can represent that with that partner and drive that program forward. This is something that we have done on a number of projects, and we're really trying to drive this when we get into the large-scale customers. This works quite well. A couple of examples of where we've had success. This is an engagement that I talked about, was about six months in effort. This is a large global automotive manufacturer.
In Europe, in the European Union, there's a requirement that the mix of cars that are sold has to have a certain level of CO2 that's emitted. If they go above that amount, there's a significant penalty in which they need to pay. How do they get the visibility of which cars are being manufactured and sold, and then what's the volume of CO2 that those cars are emitting? This was on a very tight timeline, a very tight requirement that had to be delivered late last year. We worked with this customer to define that model and to deploy that overall solution and to allow them, from a global perspective, to create that mix. This, too, was engaged with a partner of ours, a large systems integrator, led this activity, and it led to a successful deployment.
This manufacturer has met their objective for the European Union, and they have not paid any penalties that I know of to date. A very significant win there for us. Another example here is with a beverage company, a global beverage company, actually, but we did this work for the wine division of this company. When you do a project out in wine country, fortunately, it's not very difficult to staff that project. That's one of the challenges I deal with is staffing projects. People do like to, for some reason, they spend a lot of weekends there. This was a very unique scenario, too. These are some of the challenges that we take on from a project perspective that people don't really think about.
The most interesting component of this project is we think in a year of 12 months, maybe January to December. In wine-making, grapes don't think that way. A vintner year is very different than a calendar year because grapes grow at a different rate. There's weather that plays a big factor in that. It could be a 13-month horizon, it could be a 14-month, it could be a 10-month horizon. We needed to accommodate that because the grapes come in at different times potentially, and the volume of grapes come in at a different time. As a result, this company had a significant challenge with inventory and shipping the wine where it needed to be based on the market demands. We worked very closely with them to define a solution to meet this requirement, which is now applicable, obviously, across that entire industry.
A very unique use case here and something that drove significant value for this customer in reducing what they call as stranded wine. They would ship it to locations where there is no need for it, and then they have to go back and pull that in. A great scenario and a great example of RapidResponse solving a unique business challenge for our customers in a great industry. Looking ahead into 2019, where are we going and what are we doing? I do get asked quite a bit, where do I spend my time? A lot of my time is in our newer markets, certainly over in Europe and in Asia. We need to hire folks over there, and we need to grow those markets, and we need to develop our partnerships and our deployment capabilities along with our partners in those regions.
John talked about the culture, that's a very key component of what we do as we expand into new markets. I'll tell you, when I was at IBM, I had the chance to travel the world as well, and I would go into China, for example, and the culture at IBM in China was exactly as it was in New York City. That was one of the values of IBM, and that's something that we're really trying hard to do here is to make sure that when you walk into the office in Japan or in Korea or in Amsterdam, it's the same culture that you would get in Ottawa. It's not an easy thing to do because they have cultures, obviously, in those parts of the world, we work very hard to do that.
That's where I do spend a lot of my time is going out and expanding our abilities to deliver into these new markets where our customers are buying our solutions from us. We are going to continue to be developing out this Kinaxis delivery center concept, certainly something we'll be doing in Asia. As well, what we're calling these strategic services offerings. Again, these are meant to be complementary to our partners, working side by side with our partners. When customers are saying, "Hey, we want to focus on a narrow scope or a specific technology focus," this is where we can come in and work with our partners and provide these skills. This will not be a large team of folks that we have. It's a few folks that we have focused on this who kind of wear two hats, actually.
We may be bringing in architects with deep RapidResponse expertise, but then they can go and work with the customers to deploy a roadmap and how best to define a solution and deploy that based on their business requirements. This will be a key focus for us going forward into 2019. That is what I have, I think at this point, I'll turn it back over to Richard.
David, appreciate that. We're going to take a short break now and come back at 5 after 10 for the presentations by EY, Ipsen, as well as Flex. We're going to have a Q&A session afterwards, thank you. Welcome back to the second half of the Investor Day. It is my pleasure to introduce Regina from EY, she's going to give you EY's perspective. Right after her session, we'll have a few minutes to ask direct questions, we'll proceed with our other two customer presentations. Thank you.
Good morning, everyone. Really glad to be here with you guys today to represent EY and our supply chain practice. This is a huge new strategic partnership for us. I think you probably have seen some of the press releases. We're really happy to be part of this, I'm really happy to start doing even more work with Kinaxis. I'll start off with a brief introduction of myself, Regina Sanders. Based out of Atlanta, Georgia, I have been a consultant my entire career. However, I started off being educated as an engineer. I always say that engineers make the best consultants because we know how to solve problems. We know how to get into the details. Over the past 20 years, I have been on the systems implementation side as well as the supply chain transformation side of the house across multiple industries.
I've spent most of my time in the advanced manufacturing or industrial product sector, working with a lot of the heavy industrials, a lot of the aerospace and defense companies, as well as chemical companies. Implementing supply chain softwares, doing supply chain transformation, really getting into the weeds of what the real business problem is and how we can actually solve those. I spent a few years also doing consulting, primarily with private equity firms and their portfolio companies, looking at opportunities to take cost out. At the core of everything that I have done, supply chain planning is at the center of it. It's so important to understand what needs to be done from a demand side, a supply side, and how to put all that together to make sure that manufacturing has what they need in order to get the product out the door.
This is an incredibly important part of a business and its operational value, and I for one have been extremely happy to see over the past 5 years in particular, supply chain has now become less of a conversation about operations of getting things from point A to point B, and more of how can I leverage my supply chain to be a strategic differentiator in how I run my business and how my customers perceive me. I am going to spend a little bit of time today talking about our EY supply chain practice globally. I am going to talk about some of our experience. I will talk about some of the market challenges that we see, as well as what our vision is.
I will talk about why we have decided to do some partnership and work with Kinaxis, and why this is so important to us, and give you a little bit of flavor of how we partner. You heard a lot of the conversation today about, they bring the expertise, we've worked with businesses, and we know how to really bring that change management component to make sure that whatever we're implementing sticks. Right? I will talk a little bit about how we're going to partner on that particular area, and then I will talk a bit about our future vision. I will hopefully leave a little bit of time at the end to take some questions from you guys. Does that sound good? All right. Globally, our supply chain practice at EY has grown 25% since 2015.
If you really think about it, EY kind of reinvented itself from a supply chain perspective, not necessarily supply chain, but advisory services perspective, back around 2008. We got back into advisory services, and supply chain was one of the areas that we spent a great deal of time really building out. You will see that the highest concentration of our supply chain practitioners are, of course, in the Americas and in Europe. We have emerging growth in Asia-Pacific and Japan. You will see in that total number, we have a budding and growing supply chain planning practice, again, with the highest concentration being here and in Europe. In terms of an integration perspective, we plan to continue to grow this practice. This is a huge investment area for us. We expect to eventually reach 6,000, so we want to take that almost double.
We want to realize CAD 3 billion in revenue. We have a lot of growth targets from an investment perspective, and we really want to be perceived as the number one or two supply chain provider. You will see in a few slides ahead, we recently got a great accolade from ALM Intelligence of being in the top quadrant of supply chain planning providers in the Americas, as well as, actually, globally. It's a global survey that they did on the level of Gartner. You will see that a little bit later. As you can see, we've got a nice footprint that I think that balances out the Kinaxis footprint that you saw earlier. In terms of experience. When we think about supply chain, we kind of kick it off with this framework. There's a strategic layer that we call our supply chain intelligence layer.
That is all around analytics and using data for decision-making. From there, we have got our strategy layer, where we look end-to-end at what the operating model needs to be, what the network strategy should be. Then this area in the center, the integrated operational excellence, is really kind of the core of the plan, source, make, deliver, right? This is where we get into a lot of the integration that we will talk about with Kinaxis, how we actually execute supply chain planning. You will see at the very top of that integrated operational excellence layer is integrated planning segmentation, because that is the heartbeat of a supply chain. Digital, you heard Anne talk about that earlier. In everything that we do, digital is embedded in that from a data perspective as well as using advanced analytics.
There is a lot of things that you see out there, the reason that we listed those on the left-hand side is because there is a digital thread in everything that we do in our supply chain practice in terms of how we create our solutions, how we determine who we want to partner with, as well as how we deliver to our clients. That last layer we call supply chain resilience. That is our sustainability layer. That is once we do all the strategy, once we use the data, once we improve the operations, how do we make it sustainable? That is where the change management component comes into play. Understanding a company's business readiness, understanding what their culture is, what their aptitude is for change, how we are able to make whatever changes to the systems or people or technology, how do we make that sustainable?
That is our supply chain resilience layer. The other thing that I will add to that is risk, right? With a growing and complex supply chain also introduces additional risk, right? One of the things that we like a lot about Kinaxis in particular is the ability to do a lot of the simulation so that in a disruptive market, in a market of uncertainty, we can be responsive, and that sort of helps with that whole supply chain resiliency piece as well. Here you will see all the sectors in which we do supply chain work. I have highlighted the ones that we have in common with Kinaxis, you see there is several others that are listed there. I mean, these are opportunities as we continue this partnership to help and expand together into those ones that you see in gray. The Kinaxis EY alliance.
What we have done is join forces to really drive supply chain reinvention. We feel that together with the capabilities that we have and the wonderful tool that Kinaxis has, we can drive even more penetration across the market. I will talk about this in a little bit more detail later, what you are finding now is that there is a lot of companies that are beginning to open up the hood on their ERPs as they look at re-platforming. This is a great opportunity now for them to really look and see, do I have the right solution for my supply chain planning since it is becoming such an area that I need to focus on? You will see that our alliance focuses on transformation, solution architecture, program management, as well as the change management piece that EY will be bringing to the equation.
From a Kinaxis perspective, the in-memory speed, the rapid scenario planning, and the flexibility of being able to look at data from the end-to-end supply chain in order to make decisions. That's the core of why we have identified that this is a great partnership for us to be part of. You'll see that as we continue this relationship, we have the industry synergies already. I mentioned earlier, there's other industries that we'd love to be able to move into together. In terms of co-innovation, there's opportunities as we work together and solve problems for clients, figure out ways that we can help make both of our solution sets better.
How we can learn more about these other industries, how we can figure out other ways to add additional capabilities to Kinaxis, at the same time, how we can help them with those challenges of organizational change management as we implement the solutions with the client. The market challenge. Anne spent a great deal of time talking about just the evolution to Industry 4.0. The reality is that when we look at our clients, they fall into different stages of maturation when it comes to this evolution. Some of our clients, particularly the ones that I work with in manufacturing, they have amazingly innovative products. When you look at their operations, their operations aren't so innovative. They need the help, they need the additional visibility that supply chain can bring to them.
This past year, we did a survey of over 400 companies in the U.S. and Canada that are in the industrial product sector. They anchored on six things that we call the six big bets that they want to focus on. I'll share those with you. The first one was customer connectivity, being closer to the customer, being more responsive to the customer, being able to respond quickly to increasing customer demands of personalization and customization. As mentioned earlier, our business-to-business customers are beginning to want to have things at a drop of a dime, just like our business-to-consumer customers do, right? In order to be able to achieve that, we've got to have a very responsive supply chain.
The second big bet was supply chain reinvention, really looking at supply chain as a strategic differentiator in terms of operations. As well as leading to that customer centricity piece with making sure that they're being responsive to their customers and increasing their customer service metrics. The third one was, of course, digital. The fourth, advanced analytics. Fifth was talent and being able to bridge that talent gap. Lastly, risk, and being able to take a more proactive versus reactional look on risk. Those are all six big bets that really help companies move from the right-hand side all the way over to the left when we talk about the industrial revolution and the need for digitization, the need for looking at data in a more strategic way. There's a few things that we feel that our joint partnership can address.
These things anchor on, I really like the one in the center here. New planning technology and robotics will actually, if I move over to the right, I'm sorry. 80% of all companies have some semblance of a sales and operation planning process, but only half of that is really something that is a strategic differentiator for them. What we're looking at is a large number of companies that have what they call an S&OP process, but how effective is that process? Are they really getting the return that they could if they were focusing on that in more detail, had the right tools, had the right people in place, had the right organizational structure? You'll see that there is also a huge change in the complexity of the ecosystem of supply chain.
Now there's a lot more opportunity for data sharing between suppliers and customers, between the company that's actually making the product and their customers. There's a lot of opportunity to take advantage of this platform and this new ecosystem. And with that new ecosystem, as I mentioned earlier, introduces more risk, which means that it's great to be able to test out different scenarios before you actually commit to what this new plan is going to be. Or if there's some disruption that happens, I can very quickly go in and be able to figure out what impact is this going to have on my overall supply chain. In addition to that, people are also trying to identify where they need to actually place their big bets. What technology should I really invest in that's going to give me the biggest ROI, right?
What new products do I need to invest in? How do I introduce those new products? Being able to have additional planning capabilities like Kinaxis, and that's one of the reasons that we want to partner, is it helps us with those types of decisions, and it helps us just bring a better overall solution to our clients. You'll see that there's also big gaps in supply chain planning talent, right? To the degree that we can automate some of those supply chain planning processes allows us to make those planning jobs of old, a little bit more attractive to this newer generation of talent that's coming out of college, right? These are people who want to be on the cutting edge. They want to be on the bleeding edge of new technology. They want to use analytics.
They don't necessarily want to be the person who enters in the plan in the computer anymore. That's just not the way that a lot of the millennials and the new millennials are wired anymore. To the degree that we can introduce automation, AI, IoT into the planning process, this helps us attract even better talent, and it allows us to focus on those things that are really going to matter versus those things that are very manual. Couple other points. 88% of companies have ERP systems, but only 22% are using it effectively for planning. I would argue that some of the large ERP systems that are out there have planning capabilities, but are they the planning capabilities that are really needed for very specific and unique problems that our clients are facing today? Are they really helping them be proactive? Are they helping them to be responsive?
Those are some of the challenges that we see that this joint Kinaxis EY alliance can address. Moving into this. Why EY and Kinaxis? Of course, Kinaxis is considered a best-in-breed. When we partner with supply chain software providers, we want to make sure that these are individuals who are represented in the top quadrant of Gartner. Kinaxis is there. RapidResponse in the concurrent planning is a huge differentiator in terms of just how Kinaxis goes to market and what really differentiates the software. From an EY perspective, as I mentioned earlier or alluded to, about 90% of our customers are on other planning systems. When I say other planning systems, these are planning systems they might have had for years.
Now I feel like we're kind of back in the stages of the late 1990s when everybody was out doing software selections to figure out what ERP they needed. Now, I feel like with the re-platforming of a lot of the ERP systems that are out there, the hood is open, and companies are beginning to reconsider or consider some of the other emergents like Kinaxis to say, "Well, wait a second. I have even more need for more robust planning capabilities.
What are the companies that are out there that are the best that I might look at?" I feel like there's gonna be a lot more resurgence of software selections and a lot of opportunity for companies like Kinaxis to take some of that market share away from those that have traditionally depended on their ERPs for planning. In addition to that, I mentioned that EY also brings the breadth of capability and the practitioners. We have spent a great deal of time building up our practice, building up some of our internal solutions that can be complementary to Kinaxis.
We have been recognized, as I mentioned earlier, in the top quadrant from ALM from a breadth perspective, a reach perspective, as well as working with our clients versus coming with a bag of tricks and saying, "Hey, this is going to work for you." We actually sit down with the client, understand their business problem, and make sure that we're bringing the right type of solution to whatever their business needs are, be it an industry-specific solution, or be it something that is going to help them be better at new product introduction, or help them be better at predicting and responding to different disruptions that are going on across the supply chain. How we partner. This slide is a bit akin to what you saw earlier from David.
When we look across the top, all of these roles are represented on any engagement that we will embark upon. Program management, change management, process enablement, data integration, and development. The areas that we'll jointly be working on, of course, span this entire spectrum, but the differentiating factor that we really bring is the business process architecture and the detailed business process design. We spend a lot of time learning about what's important to different industries, and how we can best implement the software solutions for those industries. Organizational change management and business readiness are key to success in any software engagement. With our proven methodology of working with clients to understand the business problem, obtaining the right buy-in at various levels within the organization, as well as figuring out the right structure of the organization to actually receive the new solution, this is our sweet spot.
This is one of the things that systems integrators bring to bear when it comes to implementing these solutions and making sure that you've got the sustainability and the stickiness to really get the return. In the past, there's been cases when I've implemented software solutions, and if something goes wrong after go-live, the client has a tendency to just blame the software. Part of our role is to identify process adherence metrics, how you really should be using the software in order to make sure that at the end of the day, you can see the market change and how you're running your business process, how your people are responding to it, as well as what changes and roles in an organization might need to be tweaked a little bit to really get the biggest effect of implementing the new solution. This is where we play.
This is how we feel like our capabilities can be vastly complementary to what Kinaxis brings to bear. Future vision, kind of a summary of everything that I've spoken about. First of all, training. You might ask, do your guys already understand Kinaxis? Are they already trained in Kinaxis? Over the past six months, we've been working to develop a plan to really upskill our EY resources. We've already accomplished this in North America. We've had three sessions, and right now, I think we're at about 50+ practitioners that are familiar with Kinaxis, that are learning more and more about it, that are participating in these sessions that we've had, that we're ready to go. We also have been sharing our pipelines.
Those companies or clients that we have that we have on both of our target lists, we've been having periodic calls to really understand what that pipeline looks like and how we can further penetrate that pipeline. As mentioned earlier, the way that we partner is looking at shared customers, but then also figuring out other customers that we might be able to go in together jointly with. This whole training piece and teaming is how we've really been working to date. The market, we will also be inviting some of our clients to Kinexions. That's going to be coming up. We're looking at how we already play in certain sectors and figuring out how we can penetrate new sectors.
Lastly, from co-branded assets where there's opportunities, where we've been doing some experimentation with machine learning and AI, we're sharing that information with Kinaxis to see if there might be, in the future, some type of joint development opportunities. That's our vision for us to be able to work together, to complement each other as we're delivering, to also go to market together and teaming along the way, making sure that iron sharpens iron. That's one of those situations that I feel like we're in here with EY and our supply chain practice, working with Kinaxis, two great companies coming together to really deliver the best in solutions to our clients. With that, I have a few minutes left for questions, if anyone has some thoughts based on what we just talked about. Yes. Mm-hmm.
Initially, we will focus on where we're both in, those industry verticals that we also are present in, and we're identifying one or two so we can really get going and prove the model and execution. From there will be discussions. In fact, we're about to enter into our fiscal year planning process now. When we do our fiscal year planning, we actually do it by sectors. We're going to be bringing in and inviting Kinaxis to some of those sector planning sessions so that we can understand what our target accounts are that are the same as some of those that Kinaxis is also looking at, and we'll be able to do some joint planning from there. The timing is great because right around the April-May timeframe is when we really in earnest start doing our fiscal year planning.
This is going to be a great opportunity for us to focus on where we already are there together, see where we can further expand. Okay? Yes. Mm-hmm. I think that the way that Kinaxis goes about it is really unique, and the breadth of it is unique because it is more end-to-end than a lot of the scenario planning tools, software tools that I've seen out there. To me, that's the uniqueness, the breadth of it because it is end-to-end. It gives the visibility. It allows some flexibility in terms of trying out just the different scenarios.
I will have to say that when I first had my demo of Kinaxis, that's the thing that I gravitated to the most because when I look at my clients that are really trying to figure out trade-off, that to me is a huge differentiator, and the ones that I've seen in the market don't really compare yet. Okay? Yeah.
Do you partner with any other software vendors on the supply chain management side? If you do, can you sort of give us a sense of the relative ranking where Kinaxis would fit?
This relationship with Kinaxis is a new one. First, to answer your question, yes, we do. Our position in our supply chain practice is that we are system agnostic, but we want to identify the right solution for our clients. That could be a Kinaxis solution, it could be something else. For the most part, we want to make sure that we're partnering with those that are best in breed, such as Kinaxis. In terms of ranking, because this is new, we haven't developed as big a pipeline as we might have with some others, but it's growing. We're spending a lot of time and a lot of energy to make sure that that happens and a lot of investment to really educate our people and go to market together because we see Kinaxis as leading.
I think that very quickly it's going to surpass some of the other partnerships that we have. Yes, right here.
I think you said that a lot of organizations are reexamining their ERP solutions. A lot of these ERP vendors have their own supply chain solutions.
Can you talk about, are the supply chain decisions being made independent of the ERP provider, or do organizations tend to favor ERP providers that have their own supply chain solution?
This is the age-old question of how the business and IT organizations are working together and which one is really leading. When we go to market, we work with those individuals who are in the business. I can say, in my experience, we see a lot more business-driven decisions when it comes to supply chain transformation. When we see that, we see people looking across the spectrum at the right solution, not just going with a particular ERP platform because this is what the IT directive is. To answer your question, I see a lot more business. I'd say maybe 70% of the companies that I work with, the transformation is being looked at as a strategic business decision.
When it's being driven that way, people open up the hood and want to make sure they're getting the right solution, not necessarily one that is dependent on their existing ERP layer, because we can always integrate. Now with the advent of the cloud, it makes it a lot more easy to share information. Gone is the day of having to actually build out these arduous interfaces. There's a lot of plug-ins. There's a lot of opportunity for data sharing in the cloud and data lakes. It makes it a lot easier for businesses to make that decision to go with something that's different from their ERP platform. Okay. Over here.
You mentioned that you're right in the middle of a big wave of procurement planning vendor selection. Is there something unique about today or this year that makes that happening, why that's happening right now?
I think that it's just the focus on having to build a supply chain that is responsive and that is a differentiator. I feel like there's just more emphasis on making sure we get the right solution versus just looking at it from a technical implementation perspective. In the past, people were moving from manual processes to a system. Right? Now, people are becoming more strategic in those types of decisions. It's not just about getting an IT platform in place. It's about the right IT platform that's really going to address my business challenges. I think that consumers have driven that for companies to look less at operations and more at the strategic value that they're bringing to their customers.
When they begin to look at things strategically, it's all about making sure that I'm enabling my business processes in the right way versus just putting in a solution to make things go faster. I think people have figured out that a solution is not going to solve the problem if we've not got a strategic vision and we've not got right processes in place. Okay. Any other questions? I think we're almost at time. We can take one more.
You mentioned that a lot of customers are coming to you because the ERP vendors are kind of re-platforming their positions or their platforms. Could you talk a little bit about that and if you have any quantitative stats around what you're seeing?
I can speak in generalities on this, but I would say that in the advanced manufacturing sector, which includes aerospace and defense, industrial manufacturers, heavy equipment companies, and chemicals companies, I would say of the group that we work with, about 60% of those are looking at other solutions besides their ERPs. I will also say that people are feeling a sense of urgency because there is a timing of when on-premise is not going to be supported for some ERP systems that are out there. That's creating a sense of urgency to begin to take more of a look. I'd say a good 60% of the clients and growing into 70% are really taking a close look at, what am I going to do?
Do I just kind of take my chances and stay on-prem, or do I really move to the cloud to make my business more responsive? If I'm going to do that, well, this is an opportunity for me to take a holistic view at everything that I have. Data sharing is a lot easier, so it's not as important for me to have everything on the same platform anymore because as long as I have a data lake and as long as I have extractors, I can get the data that I need, and I can use the best solution. Okay. Thank you very much. Appreciate the time.
Hey, good morning, everybody. Name is Gus Shahin. Oops, sorry, let me That. Oh, there you go. All right. Gus Shahin, I work for Flex. I'm the CIO of Flex. I've been with the company for 19 years now. I took over as CIO the last six years, actually six years almost to the day right now. I play several roles with the company, both in IT and out. I'm going to give you a quick overview of Flex, where we are, how we operate, tell you a little bit about the complexity and why supply chain is one of our really bread and butter. This is what we do for a living, and this is extremely important for us and I'll talk a little bit about that.
Just quickly about Flex, for those of you that don't know the company, we're about CAD 25-plus billion in revenue, 200,000 employees. We also have 3,000 design engineers around the world. We have obviously quite a lot of manufacturing footprint around the world. Just to give you a flavor of where we operate. This is actually one of our competitive advantages. We operate in 35-plus countries around the world. With the world changing over the last several years, really moving more towards regionalization. I think Anne talked about that customers want their products more customized to their needs. This has played a big role for us with the tariffs. The trade wars really that have been going on, that's even increased even more. We're seeing a lot of activity there. This helps us out quite a bit.
We operate in all 16 so-called industries, we're CAD 1 billion or more in 12 of them. You can see the leverage we have in terms of data and the insights we actually get in terms of data. Healthcare, automotive are two of our fastest-growing industries. Healthcare has been on the rise, obviously, connected devices, and so on and so forth. Automotive, even though the holistic automotive industry is slowing down, the autonomous vehicle is obviously on the rise, not just here, but also in China. We do a lot of work in that space. Then, all the other industries, obviously, we operate in. Networking, enterprise compute, and telecom are some of our biggest customers. Those industries are three of our biggest industries that we play in, with customers like Cisco and Juniper and all the other guys.
You have the 4G, 5G going out strong with Ericsson and Nokia and others. That's the space we operate in quite a bit. Lots of data in that space. The other thing about this that really helped us out is you're seeing a lot of convergence in the industry. When I say convergence, I mean, in order to win an autonomous auto deal, you really have to rely on your enterprise compute folks to kind of help you land that deal, and that's what we've seen. You want to win an industrial deal these days, you have to rely heavily on the networking folks to do that because they're all converging. The industrial guys need networking equipment. The auto guys have servers running in their cars and so on and so forth. That's been really, really effective for us.
Our design engineers, 3,000 of them, we decided we wanted to focus on certain areas and go real deep and have domain expertise in certain areas so that we can actually work with our customers early on in the supply chain. With a company like Flex, most of you know our margins are 7% gross margins, not very high. Obviously, the CAD 25 billion, most of it is COGS. Enterprise revenue is about CAD 75 billion-CAD 100 billion for our customers. When you operate at 7% gross, you have to do things different. You have to do things really efficient. We've decided if we can focus, get in real deep in certain areas that we operate at large scale in design, we can actually help our customers quite a bit, and that's been proven to help us out quite a bit.
We get in early, we help them with certain design, we design in the right components that we can get and have better relationships with because of our scale, and that really helps our customers. Obviously, cloud, autonomous, 5G, I've spoken about IoT, everybody knows that. You can see supply chain is another unique advantage that we have. We see ourselves as a supply chain company, and that's really how we operate. I'll talk a little bit about that here in a second. Just before I get into that, just to give you the complexity and the scale of my organization, IT, we've got about 3,200 employees globally. 1,200 of those are scattered in those sites that you saw on that map, and then the 2,000 are centralized.
We're pretty centralized, pretty standardized, that's one thing we use as an advantage, especially when it comes to data analytics, and then from there, applying machine learning. I think that's effective. You can see the amount of data we store. We're hybrid. We run on the cloud and on-prem. We see that as an advantage. I don't think we'll ever go either way. I think you're going to always need on-prem for mission-critical stuff, and you're going to use the cloud where it's effective and fast. We use that pretty effectively, but I think we have the right balance. We have 140,000 suppliers, 75 billion MRP records running on a regular basis. That's how we operate.
As I said earlier, increasing regionalization is becoming really top priority for our customers, particularly in the consumer space, but now we're seeing it in the other spaces as well. Our customers want to get closer to their customers. That's really important for them. In the past, it was all about labor arbitrage. Everything shifted to China or Asia for lower labor costs. Now that's completely changed. It's more important for customers to be closer to their customers and deliver their products faster. Life cycles of products are getting shorter. That was really key. Then, like I said earlier, with the trade wars that are going on, it's really opened the eyes of some of our customers, and they've decided to shift their supply chain. Lead times are becoming really tough. Specifically last year, as most of you know, we've had the records amount of shortages, certain components.
Again, a lot of that was driven by the autonomous cars, things like capacitors, MLCCs were very short in the market. When you have shortages like this, planning becomes super important. Number one thing you need to do is plan effectively. I think that's helped us out quite a bit. The rest I've talked about. Basically, for us, advanced planning is what we use RapidResponse Kinaxis for. It's integrated in our entire ecosystem. I'll talk a little bit about it in a second. It's very well tightly integrated with our ERP. We use it for fast MRP what-if calculations. We use it for clear to build. We use it for engineering change orders. It gives us visibility, flexibility, velocity, accuracy. This is super important. I think Anne talked about that. That'll allow you to get to machine learning.
If you don't have the right data or accurate data, your machine learning algorithms aren't going to be as effective. This is something we've been using for a while. As John mentioned early, we were an early customer, and then we've grown with the company and we've scaled out, and now we have it very tightly integrated, and we've created a platform we call Pulse, which I'll talk about next. Before I talk about it, let me just quickly talk about Kinaxis. We have about 12 operational groups, obviously using it, 450+ customer planning analysis done on it. We've got over 5,000 automated weekly scenarios, and we have 1,300 user-simulated scenarios going on. What it's done for us is really it's improved our MRP. It's reduced our forecast by 25%.
When I say that, if you think about our customers, we have over 1,000 customers all giving us forecast data. Believe it or not, I think they'll tell you the same, they can't predict their forecast. They always overdrive their suppliers. Some of it's for flexibility, but a lot of it's just because they can't really predict. You look at the customers that sell through channels and so on, their demand is really all over the place. What we've been working on with them lately is to try and help them predict their demand a lot better with the use of some of the AI capabilities and some of the other tools we have. It's really been very effective for us. We have it deployed globally, like I said, 81 sites around the world and still going. We add sites.
On average, we'll probably add 5 to 10 sites a year as part of doing business, and we'll probably even take out probably the same amount. There's constantly a team going out there and deploying the product. You can see the scope, 27 sites in the Americas, 19 in Europe, and 35 in Asia, which is our biggest piece, of course. We generally go out and because we're such a big company, huge scale, like I said, standardization is key. My team has to support several, about 80 different applications we support that we standardize across the company. We send out surveys on a regular basis to make sure, one, they're satisfied, and two, it's actually providing value, and if not, we'll work very closely with the business, figure out what we need to do if we need to replace a certain tool.
You can see, well, the numbers aren't showing here, but it's over 60% in the first two and over 50 in the second. I'm not sure why it's not showing, efficiency, response time, and accuracy is what the users, the planners, the master schedulers, are primarily getting out of this tool, and that's exactly what we envisioned when we implemented this and decided to partner with Kinaxis and deploy it. We've digitized our supply chain about three and a half years ago. July will be four. What we did is we've decided to take data in real time from all our sites globally, Kinaxis being one of them. It's a vital part of our Pulse ecosystem, is what we call it.
What Pulse is basically, it's real-time supply chain data for over 5,200 users around the company that do nothing but look at that data on a daily basis. That's all they do. They can log into it from Most of them obviously do it from their laptops or their mobile phone, but they look for anomalies in the supply chain. Any spikes, any things that are abnormal. As soon as they see that, they'll start working with the site to try and change that, push something out. If a buyer in Austin put out a PO for a component that the lead time on is far away and so on and so forth. We have 5,200 supply chain folks that operate off this Pulse platform, of which Kinaxis is an integral part of it.
It's not just Kinaxis, it's other tools as well, Kinaxis plays a key part of that. The platform's available on their mobile as well, and it's actually pretty effective. This we launched about three and a half years ago, and what it's done for us, really, is it focuses on a specific issue, it removes friction from the supply chain, and increases asset velocity for us, which is one of our most important KPIs. If you think about our end-to-end supply chain on average across the 1,000 plus customers we have, from when we procure the components until we actually build the product, about on average, 60, 65 days. Every day we improve that is about CAD 60 million-CAD 70 million of free cash flow for us, because that's inventory we're sitting on, and it's cash, like John and others said earlier. That's really, really important.
We've taken about 10 days off that supply chain. It's helped us quite a bit. It frees up cash flow for our shareholders, for our investment community. It allows us to invest that money in other places, so on and so forth. We continuously work to improve that. Obviously, those 10 days we took out came back last year because of a lot of shortages and stuff, but we're diligently working to bring that down because there were some scenarios that were out of our control in certain areas. Real time, mobility, collaboration. I think Anne talked about that as well. Collaboration is super key for us. Collaborating not just internally within Flex, but also across with our customers.
We started sharing some of the analysis we do when our customers send in the forecast together with them, I think that's really helped remove a lot of the overdrive that they send us. Once they get comfortable that you're not going to dip into their safety stock, you can turn on ROP, reorder points automatically. The system will tell you when you need to build and so on and so forth. They'll actually start really feeling comfortable taking out all that overdrive. They'll still drive you more for flexibility because they want that, I think that's really helped reduce our inventory quite a bit. That's really important, I think Kinaxis, again, Andrew and others talked about it, the in-memory calculations that they have, I think are superior. We haven't seen anything like it.
I think the calculations, the speed of the calculations is really what caught us at the beginning and really allowed us to go there. When you have so many alternate parts, so many alternate suppliers, that speed becomes really, really important and effective. Other areas in future things we're working on with Kinaxis. They spoke a lot about AI and machine learning. We're doing that with Kinaxis, we're also doing it on our own as well because we feel we've got enough data there, we can apply some of the algorithms there and work with our customers on certain Help them predict stuff, we're also doing it in other areas in production. Preventive maintenance for equipment and so on and so forth, where machine learning is much more mature than other areas. Production scheduling, we saw Andrew talk about it today.
That's really exciting for us because that's an area that's super important when you have You've solved your demand management piece. You need to solve your production scheduling piece because that allows you to utilize your equipment to the max. We need scheduling down to the minute, that we can actually reschedule different products on the same line. We can manage that real effective. This is something we've been trying to look for and trying to figure out for a while now. If you look at most of our sites around the world, or probably any manufacturer out there, because it's all mathematical algorithms, really. The best success we've seen is working with universities, R&D departments, and stuff like that. I think this is an area that's really going to help us go to the next level. We'll be working closely with Kinaxis.
The services segment is also something important. Out of our CAD 25-plus billion of revenue, there's about CAD 600 million, CAD 700 million of that is services, which means it's repair and distribution. When you're trying to plan for the repair business, you rely heavily on historical data, which means you need to have large sets of data. Andrew talked about some of the things they're going to be releasing there. When you're in-memory, obviously, there's a limitation on how much data you can load on there. That's something, I think, an area that'll add a lot of value for us as well. Yeah, that's it. This is just a picture from our Pulse. Pulse is basically, we've got them running nine sites, touch screens. That's mainly where we hold workshops between our different supply chain folks around the world.
It's like three in the Americas, three in EMEA, and I think three in Europe, Asia. Then the actual system is available to everyone depending on your role, by mobile device or on your laptop or computer. That's it. Thank you. Open to questions. Yep. Want to wait for the mic, or?
Can you just elaborate on AI and machine learning, just in terms of its applicability to Kinaxis or where you delineate between using Kinaxis? I don't know if you looked at the self-learning.
Yeah. Obviously, for demand planning, we're working with Kinaxis. We haven't really. They just released it, right? On our operations, like preventive maintenance for our equipment and stuff, that's separate from Kinaxis. That's really getting data from the machines and the equipment, the SMT equipment. Rather than having scheduled maintenance, we can figure out when we need to actually do maintenance on the machines before something breaks. We've applied that. We're also doing it on our cost efficiency. When we go out and look for pricing on components, we have an engine that we built there that actually goes out and looks at certain paid libraries you have to subscribe for, and what's out there on the public internet, to see if we've actually got competitive pricing or not for components.
We've got a pretty good engine there that works. Yeah, it's a mix. We're trying to use machine learning and apply it in production in many different areas.
Maybe you can tell me if I misread this. I think you said 450 customers are touching Kinaxis in some way?
Well, Yeah. 450, yeah.
Can you see a situation where all of your customers could eventually be using Kinaxis, or are there things about some customers that make it not well-disposed to using Kinaxis?
Well, no. In our business, some of our customers, for many reasons, want to dual source or they have multiple suppliers. They'll use Jabil, Flex, Foxconn, whatever, for security. In some of these cases, they want to dictate what they use, and they'll just dump something on you. A lot of our customers that we actually have leverage over that are single sourced and others, we actually collaborate with them over Kinaxis and start showing them a lot of our-
I guess the other side of that question, if 450 customers is more than Kinaxis has customers now, why is it that those 450 people that are using Kinaxis successfully now with you, why aren't they buying Kinaxis themselves?
Well, we're working with Paul on that. There are a few that we've worked together with Kinaxis on and showed them the value. Some of the others, when you're running SAP or Oracle or whatever, they're always going to try and sell you something that they have. The sell there is the integration piece, but that's obviously not true. We've seen that. We don't run either of those ERPs. I think with the world of APIs today, integrations come easier than ever. It's just natural. I think there's a couple of products out there, but I think Kinaxis has a lot to offer, and I think a lot of the customers that are seeing it when they come visit Pulse are giving Paul a call. Many reasons for Yep.
I think you talked about adding, I think, five or 10 sites per year.
Could you just sort of give us some perspective over the last three years as to how much spend you've had with Kinaxis and the growth rate there in terms of spend?
I don't think it's appropriate to talk about spend because of the relationship we have and the type of licensing we have with them. Remember, when we add five to 10, we also take out five to 10, because we're always consolidating. It takes us about, right now, because of how quickly we roll this out, probably 10 to 13 weeks to get a site up and running on Kinaxis and the rest. We have a good working relationship with them, kind of up and down, but can't really talk much about the spend. Yep.
Do you guys get any added benefit when your external customers or suppliers use RapidResponse?
Absolutely, Yeah.
What's the potential for that or the barriers to sharing and getting a network effect here?
Yeah, we do. It makes our life a lot easier once they give us the feeds directly out of RapidResponse. It's just easier for our teams to understand, but some customers take that seriously. It's really different across. There are some customers that take that data very seriously and are very thick about it, because it's their demand data. They don't want it shared with anyone or any entity. Lots of NDAs obviously going on. There are others that are much more collaborative. It ranges, really.
Flex has an in-house platform, Elementum. I think it would be helpful to get a sense of what is it that Kinaxis does that-
Yep
Elementum doesn't do and how the systems interface with each other.
Elementum is external. It's a company that we kind of spun out years ago. What we're using them for right now is really more about geopolitical events around the world and if there's any disruptions around the world in our supply chain. They have our supply chain kind of mapped out, and if there's hurricanes, earthquakes, so on and so forth, we'll get alerts, but it doesn't do any transactional. They don't do any transactions. Kinaxis is very transactional in calculation, and we issue out POs once we get the data back to our suppliers. It's very critical. Elementum is more outside looking in, just kind of a risk, just a supply chain risk tool that we use.
Related to that question, which modules do you use of Kinaxis? The supply and operations planning, capacity planning, demand planning, inventory-
We use all of them except S&OP because we don't have that as a process in our company. We have a different planning process. The what-ifs, the forecasting, the clear to build, the E&O, we use them all. One more, we'll end it. I think it's time.
I think you mentioned that you've got over 5,000 Pulse users, 2,200 RapidResponse users. Can you just talk about why that might be? Do you see that increasing? How do you see traction being built over users?
Yeah. Our buyers are on there, the planners, schedulers. It's like a larger group that are looking at load versus commit. Some are looking at component pricing and so on and so forth. We've got a completely different span. 2,200 of them for sure use Pulse. There are other job functions there that don't require actual planning, so they don't access the All right. Great. Thank you very much. Appreciate it.
Am I on? Yes, I am. Yeah. My name is Ronan Stephens. I'm very happy to talk to you today, and I'm going to talk to you about quite a different story. My story's more going to be about what Ipsen does as a company to fulfill our mission of helping sick people, and how we partner with Kinaxis in order to do that mission better. I'm Ronan Stephens. I'm Senior Vice President of Supply Chain and External Manufacturing for Ipsen. Ipsen's a pharmaceutical company. I'm based in Paris. We have two other headquarters in London and in Cambridge, Massachusetts as well. I'm giving away my age. I have 25 years leading supply chain and manufacturing operations and leading transformation supply chain and manufacturing operations as well. I was inspired listening to the speakers earlier when we were talking about how supply chain has changed.
If I go back to the beginning of my career 25 years ago, and I think about supply chain at that point in time, I actually remember a story about an individual called Jean-Jacques, who worked in one of my teams in the Paris office. Jean-Jacques was a recycled commercial executive, and he was given a job up to retirement of running forecasts. Jean-Jacques was a chain smoker. Jean-Jacques used to sit in his office. He had a closed office because he used to chain smoke, and he'd puff away, puff, puff. There was billows of smoke everywhere. He was excellent at forecasting. If you wanted to find out what was going to happen, all you had to do was go to Jean-Jacques' office and ask him for the forecast.
This, 25 years ago, is the first example of forecast in the cloud. You can see some of the companies I've worked in, and you can see underneath, I just summarized the industry segments. I actually have a lot of experience in different industry segments. Today I'm in Ipsen. Ipsen is a pharmaceutical company, and I want to talk to you about what's important in Ipsen. Who we are. We are a biopharmaceutical company, and we're specialized and we're focused on specialty care. Specialty care means that we are focused on bringing new therapeutic alternatives to people who have life-threatening or debilitating disease. It's a mission that we take extremely seriously, and we recognize that the patients with these diseases, very often they do not have alternatives. They actually get a new treatment, or they have no alternative.
We believe that the agility and the speed with which we work is actually the critical mission that we actually perform. You can see on the right over here, our ambition, therefore, as a company, is to launch one new product or indication every year, which means we will continue to bring new products, new therapeutic alternatives to people who are sick. Our areas within oncology, that doesn't need translation for anybody, neuroscience, and rare disease. In all of these areas, they are patient-critical. Just some key numbers. Ipsen is a CAD 2.25 billion company. We crossed the CAD 2 billion mark in 2018, so we're all very proud of that. Again, we had a 20% growth versus the previous year. Obviously, we invest heavily in order to do that. We invest about 14% of our sales back into R&D.
On top of this, we also invest heavily in acquisitions. Four weeks ago, we announced our biggest acquisition to date inside the company for just over CAD 1 billion. We're quite proud of that as well, and that will feed into our rare disease franchise. We have 20 drugs at the moment in over 115 countries, and that number is growing fast. We have 5,700 employees worldwide. Two years ago, we were 4,500, just to give you an idea of our growth. We have R&D hubs around the world, and we have five molecules in late clinical studies, which means that the launches we're currently doing are going to accelerate yet again. We have eight manufacturing sites, and we'll see a bit more about that in a few minutes. We're focused on specialty care, as I said earlier.
What I'd like to do is focus your attention on the right-hand side on the graph. You can see we have 68% of our business in oncology, which is a life-critical franchise for us. Neuroscience is 16%. Neuroscience is really about curing debilitating disease, such as people with spasticity, often after a stroke. We can give people back freedom of movement again and enable them to be mobile again. We have a double-digit growth rate in neuroscience. We have a strong but very small footprint today in rare disease. With the acquisition we've just completed, that footprint will actually grow and become solid very quickly. What's interesting about the rare disease, for the purpose of this conversation, is while it's not exclusively, it is heavily focused on pediatric. Children are involved.
Through the efforts we're doing in this area, we can help children grow up and live a normal life, which is important. We believe very strongly in this. Everything I've spoken about so far is our specialty care business, which is mission-critical. We do not have the right to fail. We must never, ever fail to give a patient his medicine, and we must always be very fast to get new product into patients as fast as possible because they can't wait. This 13%, which I haven't talked about, in turn, this 13% is actually the part of the company that Ipsen was built on very originally, which is our consumer healthcare business, our over-the-counter business. While 87% of our business is on the specialty care, 13% of our revenue is not. That 13% actually represents close to 90% of our volume.
From the point of view of supply chain, we've got two supply chains running off the same platform. To John's point earlier about having a platform which can support different supply chains. Our RapidResponse solution is actually supporting both today. Very different businesses. Just a little bit about our supply chain and what it actually is. Our supply chain in numbers. Eight production sites plus 25 contract manufacturers provide us with the product that we ultimately bring to our patients. We do this by distributing through two global distribution hubs. We have 35 affiliates with 55 distribution centers, and we have 7,300 distributors and wholesalers in hospitals in 115 countries. That's our supply chain. It's not as complex as some of the other ones that you may have seen, but we can't fail anywhere along the line in that supply chain.
We have this thing called growth, and growth is great, right? We've been very successful. I showed you at the beginning, we've grown our sales by 20%. The previous year, we grew our sales by 20% as well. We're on a high ground. We've just completed a new acquisition. We are growing very quickly, and that's a really good problem to have, but it is a problem that needs to be solved. As a supply chain, we recognize that, and we understood we would have to adapt to that because in 2018 alone, we had over 100 market launches. The rate of creation of new references has doubled versus previous years, and the rate of creation and onboarding of external partners has tripled over the same period of time, which is great.
We have a problem, because before we had RapidResponse, we actually measured the length of time it took from the moment we had a demand signal or a spike in our demand, some sort of signal in our demand that had to be responded to the moment there was a corresponding answer in our production sites, and that time was two months. Pretty far from concurrent planning. We recognized that, and we knew we had to do something about that. We started with this. We started with a very, very simple statement. We started with, "Patients can't wait." What does that mean for us? We sat down as a team, and we tried to figure out. This was about two years ago.
We figured out what do we actually have to do given that patients can't wait, given this growth, given we've been successful to date when we've had a few products over a certain number of markets. We know we can't continue to do things manually. We can't continue to do things with smaller, less professional systems, which are now 10 years old, coupled with Excel spreadsheets, coupled with a few other bespoke interfaces and things. It wasn't good enough anymore. We had to do a reassess. What we did is we actually came up with three promises, first of all. We promised ourselves, our company, and indirectly our patients, that we would do three things. Number one, as a supply chain team, we promised that we would never stock out.
That was a fundamental game changer in terms of the way we were thinking as a team, because we used to think in terms of, we've got 99% OTIF, let's try and go to 99.2% OTIF. It's incremental thinking. When you turn around and just say, "We will never stock out," then you actually fundamentally ask yourself, in order to never stock out, what do I have to change? What do I have to do? You start thinking in terms of game changers. We also said that we would launch our products on approval. The moment we have a regulatory approval on a product, we would make that available to market. Didn't quite know how to do it, but we knew it required a lot of agility on one side in order to be able to do it.
We also understood that a product which is just launched in market does not have a history, so you don't have a good forecast. We also knew it would have to have the agility to follow that product during its initial life, its early life, and make sure that we could actually always supply it perfectly, going back to promise one, never stock out. Right? The last thing we said, "Well, that's not enough." As a supply chain team, we consume cash. That cash is cash that could be used to go and repeat the cycle. Ipsen the company, would actually like to take that cash and put it back into acquisitions and development and repeat the cycle, because we believe we actually do the process of getting new therapeutic solutions to market faster than other people.
We also said when we're doing this, we're also going to give back cash. We're going to give back cash to the company. We had 3 promises, and we asked ourselves, in order to do those 3 promises, what do we need to do? We came up with 3 programs. One of them will be the focus of today. First program, we realized our distribution infrastructure is not up to speed and not up to scratch for what we need to do as a growing company. We decided to externalize our distribution infrastructure. That's done. The second thing we realized that our actual manufacturing infrastructure was not agile enough because of traditional pharma manufacturing, and all of that is buried into regulatory papers and into licenses which we have in country. You can't change it. You manufacture a certain way, and you cannot change it.
We wanted to introduce, at the end of manufacturing, a late differentiation. That's the second initiative we put in place, give ourselves agility through late differentiation. The third thing, we needed something to pull it all together. We needed to have agile planning, and that's the focus of today's meeting. The agile planning is this. What we did is we took our promises. You find them on the top of the page. Never stock out. The perfect launch, as we call it. Also to make sure that we're also building into this a constant review of what we're doing to review our net working capital requirements in terms of inventory. By the way, we're also driving this in other areas. That's net working capital in terms of inventory.
Our visibility on our procurement spend over time, our strategic procurement over time also will allow us to work on things like our payment terms over time. I don't even include in here the effect we have on COGS by being able to drive economic order quantities with some of our external manufacturers. There's lots of things we're doing to give a lot more value than just the 20 days that are in here in terms of giving back cash. These are the things we're doing. The on time when pulled at 99.7%, we've actually already achieved this, but what we want to do is maintain it. We actually have an extremely good perfect order in the company today. It's thanks to some excellent men and women who are working every day to get their job done.
As we grow our company, we know that's not sustainable, and that's why we're putting RapidResponse in place. Our story for the planning part is actually on the bottom of the page, it kind of starts with getting basics right. Segmentation, one version of the truth. This one is something that's very close to my heart because one version of the truth, which is very well supported by RapidResponse, by the way, is simply the idea of we have one forecast and just one forecast for running the company. Our financial team use the same forecast as the supply chain use for running manufacturing and as the strategic office uses for running the strategy over time. So our budgeting is one budget, one strategic plan, and one forecast for running the company. They are all actually sitting in the RapidResponse tool today.
Setting our inventory policies in a collaborative manner, we're doing end-to-end network planning, and we understand how our inventory policies fit together. Up to now, we didn't have visibility on our inventory policies even end to end. This is giving us a different paradigm. Of course, all of that then allows us to empower our affiliates and fuel our weekly planning process and to fuel our monthly planning process, as well as allowing for punctual, immediate decision-making every time a signal pops up, which needs to be responded to. It's really getting the basics right, the backbone for going forward. Once the S&OP process is now firmly embedded, our focus is now going on to the center of excellence, because we are new to this. I didn't give our timeline, actually. We went live in RapidResponse in November of last year.
We're still into our first few months of RapidResponse. We're still learning from it, and we're still rolling out some of the supply side in RapidResponse. We have 90% of our demand covered under the system today, we have about 70% of our manufacturing covered under RapidResponse. By the middle of this year, we'll have 100% across the board completed. As we go forward, we still have I showed 55 distribution centers run across the world. Not all of those are connected on a daily basis and on a real-time basis, we'll continue to connect them. It's mundane, we have to do it if we want to get the full benefit from the system. It will take some time, it'll probably take a couple of years while we redo the contracts with those partners.
The last one is our people are upskilled. People need to be upskilled. We have good people who are running the business today, but we've just changed something fundamental for them. I know that Anne talked about change management when she was talking. What we've just done is we've just taken a Porsche 911, and we've parked it in the driveway of every supply chain professional we have. Now we have to go and teach them how to drive a Porsche 911 to its full utility. That's what we're going to focus on going forward. We have a program called Career Pathways in supply chain, which we're using to drive that. That program has currently been rolled out and will be the focus for 2019 and early 2020.
I'm guessing the people in the room would like to know why we choose RapidResponse and how we got there. Without mentioning names, when we realized we needed to do this piece of work, we actually identified six partners who we thought could potentially help us with this piece of work. In around mid-2017, we issued a functional requirement, about 200 functional requirements, that we needed to have covered and user requirements. We started getting answers back. Some companies responded quite well, some companies responded not so well. We got six responses back in total. When we actually analyzed them and went through them, the RapidResponse answers were actually really, really, really good.
They were also, by the way, accompanied by very, very good demos with no, and this is quoting my team, no, "We'll get back to you later on your question." Everything was fully understood. They were able to answer every question. We just felt very, very reassured. There was some stiff competition. By the time we went through the process, we actually had two candidates. When we looked at the two candidates, both could have done the job, to be quite honest. It started coming down to preferences. One of the things we did during the process, we actually opened up the process to our supply chain community. A lot of people connected at a distance into some of the demo calls that we're actually organizing.
Because it was part of the change management, was getting people to actually involvement themselves in the choice of the tool as well. What came back from that was two things, collaboration on one side, people said the tool was extremely collaborative. On the other side was the calculation power. Another little story from my past, going back 25 years. Going back a little more than 25 years, actually. It goes back to when I was actually an IT guy, and I was working in an automobile manufacturing site. On a Friday afternoon, we used to go to the COBOL-driven manufacturing planning system. Tentatively we would kick off the requirements planning process on a Friday early afternoon, and then we wouldn't touch the computer anymore.
We'd go home for the weekend, and we'd cross our fingers and just hope that by the time we came in on Monday morning, it was still running, because if it wasn't running, it fell over, and we'd have to start again. The Did I just go backwards? Yes, I did. The calculation power in Kinaxis is we have yet to try and get any calculation that would take more than 10 seconds. That was something that was very, very impressive for our team. It was kind of myself, so I chimed in. I'm not a very imaginative guy, I wanted to just kind of feel reassured because I knew at the end of the day, I was going to be accountable for our choices. One was reputation and trust.
As I go to LogiPharma, and I circulate and I go around, and I see literature, and I see lots of other things, Kinaxis has a presence, and that's kind of reassuring. It's reassuring to see the name in different places all the time. That was actually something that actually set Kinaxis aside a little bit from the other contender that was left, who had less of a presence. We also have a Gartner contract, like many companies have. We talked to Gartner, and Gartner also further reinforced that and reassured us. I felt good about that. The last thing was. We're specialized in innovation, but we don't have to innovate everywhere. John was talking about having a lighthouse in an industry sector and establishing that lighthouse, and other business will follow.
Well, that's exactly what happened for us, because what we did is when we looked around who was in life sciences and who was in pharma, and who was in pharma, not just in the U.S., but also in Europe, where you have the more, the greater complexity of more SKUs. We wanted to understand. Don't know why it does that. We wanted to understand who was in there. There, Kinaxis one hands down, because there's an excellent presence in the life science business for Kinaxis. That was very reassuring for me as a head of supply chain to see that. That's how we made our choice. I should probably talk a little bit about where it fits in the company, just to give you an idea. You can see SAP is basically the transactional system of record.
It's also from the pharmaceutical point of view, it's also the qualified system. SAP is basically our front end to our markets. Our sales orders are managed through SAP. Our cash cycle is managed through SAP. On the production side, the line scheduling. It says production scheduling. That should really be line scheduling is managed through SAP. The master production schedule is handed over by Kinaxis. Everything in red here now is Kinaxis. You can see Kinaxis is really driving the drumbeat or the heartbeat of the organization, starting with the forecasting process and running right back through the production planning for drug product, for active pharma ingredient, which is down upstream from the drug product, and also to our collaboration with our external manufacturing partners. We've got 25 of those at the moment, and that's a growing number as well.
That's where Kinaxis sits. I just call out here analytics MicroStrategy on top. I did talk about one version of truth, and this is very important because the analytics and MicroStrategy is really where our finance tools fit. It's a perfect match because we're using just one version of truth. The Kinaxis system is actually the basis which is feeding into the analytics and MicroStrategy, too. That's just a little bit about the architecture. This is my last slide, and I just thought I'd share back. Two months after going live, this is in February, we asked the same user community, about 60 people, how they actually felt and what they thought about the tool. The three comments on the bottom, we took at random from the list, but there was more comments than that.
The scale, I think, for me, is pretty impressive. Ergonomy out of 10 was 8.3. Forecasting is 7.8, and I think forecast will be higher a little bit later on. I think people are learning to drive the Porsche 911. Data management is 8.6. Reliability, 8.4. It is really positive. That's my last slide. I just want to thank you for listening to me while I explained what we're doing and how RapidResponse is an integral part of doing it better as we go forward. I think we have a few minutes for questions. Yes, sir. Yes. Yes and yes. The cost of the Kinaxis solution is many times more than the actual cost of the existing solution, which we are now putting away, which was a fully bought software package, and therefore amortized.
The return on the Kinaxis system, this is why I put in deliberately the return, just even the 20 days of inventory, which would be reduced, pays for the investment many times over in terms of freeing up cash. The cost is definitely a factor. When we looked at Kinaxis versus the partners, we were actually comparing the cost between them. Kinaxis was not the cheapest solution, but out of the two surviving candidates, cost was not the factor that helped us decide. It was the other factors I described. Yes, sir.
On that last slide, on all the different use cases that you use Kinaxis for, where did that start two years ago versus what was sort of pinkish two years ago versus pinkish today?
You mean on the slider 1 with the score?
Yeah. The one before that, I'm sorry. Two ago.
Oh, okay.
The strategy for Kinaxis seems to be get a beachhead and then expand, land and expand. I was just curious what for you in particular that looked like two years ago versus today, and what could turn pinker?
There was a product from an editor called DynaSys, which was sitting in there, which is basically a forecasting process. There were multiple Excel spreadsheets, especially on the manufacturing end. There were also multiple spreadsheets which are off the scope of this page in the finance area, which have also been put to bed permanently because the finance people are actually buying into this big time, and they're actually realizing they can almost run a virtual P&L of the information which is in here. It would have been a multicolored slide with lots of bits and pieces across the board. SAP, where SAP used to cut off from the planning system was actually different depending on the manufacturing site. Sometimes bridged with Excel, sometimes not bridged with Excel. Some sites were attempting to use SAP production planning, others were not. It was really a hodgepodge.
It would have been very difficult to draw, actually, to be quite honest. Yes, sir.
You said that you started this process mid-2017 and implemented November of last year, right?
That's correct.
Call it 17 months. Why does it take so long? Is there anything that Kinaxis could have done to shorten the decision-making?
Well, actually, it was about making sure we had the right strategy first. When we kicked off the processes around the strategy, we actually engaged Kinaxis in about March of 2018. That's when we signed the contract. From March of 2018 to basically now, we have initiated a project, got it running the project. We've got 90% of our revenue managed under the RapidResponse system, and we have 70% of our manufacturing planning managed under the RapidResponse system. I think actually it's really, really fast. Yeah.
As far as the deployment process, were there any hiccups, anything unexpected, or did it all proceed as you would have hoped?
On time, on schedule, and on cost, with just one exception, which was driven by Brexit.
You mentioned earlier that some of your growth is being driven through acquisition. What type of role do you see RapidResponse playing into when you look to integrate and onboard these acquisitions? Was that a factor in your selection process?
The complexity of trying to manage integrating new products, new launches, as I said, was very, very much a factor in there. When you have a new SKU, you don't have reliable, stable history. Where we came from in the past, Ipsen used to have three major products which were driving the vast majority of the revenue, and they were old products. We knew them by heart. We knew exactly. We didn't even need to forecast them. You could just do an extrapolation over time. When you have new products coming in, you don't have a forecast history, and in the absence of a forecast history, you have to have agility. Agility means that you have to sense changes in demand, which you didn't expect very, very quickly on one side, which is in the scope of this conversation.
On the other side, which is one of the other initiatives I mentioned, was creating later manufacturing agility. You need to bring a late differentiation so you can also respond. The combination of the two. This is a key part, but you can't be successful with just one part. You need to have the two parts. This is absolutely key to doing that. I would add, as we're talking to potential partners for integrating parts of their business. I talked about acquisitions. We also do some license agreements with partners. Partners actually get quite excited because typically the partners we work with or the integrations we do are people who are smaller and less mature or less ready for commercialization than we are ourselves. That's why they work with us.
What happens is it creates a buzz, actually, when they actually see what we're doing, and they get a kick out of it because they realize they're getting access to something that they didn't have before. It's also good to show them during the acquisition process. It's good to be able to show them, saying, "We know really, really well how to commercialize your product, so you should work with us." All set? Great. Again, thank you very much.
Thank you, Ronan, Gus, and Regina, for sharing your time and your insights. That was extremely helpful. I'm going to be bringing the management team up. John, Anne, Andrew, and David. We'll have time for some general Q&A. If you just give us a second here for some logistics. Let me give you that. Actually, while we're setting up, questions. Thanos.
Hi. Historically, you've targeted mid-20% growth. If we were to factor in your on-premise business, the blended recurring revenue guidance is probably maybe 20% or high teens. Can you maybe clarify why that's the case, why there's been a little bit of deceleration in growth relative to your history when you have all these partners coming on board, all these new regions lighting up? Is that just a function of timing? Is there anything else you'd highlight in that regard?
I don't know if that characterization is correct, in that we've always talked about subscription revenue, and so really, SaaS, so the cloud being the engine of the company, and it's growing. That says the guidance right now is 22%-24%. That's where we've started the year. We do have other subscriptions, so on-premise subscriptions, and you've heard from some of those customers, and we have a history with them. IFRS has certainly clouded the issue. It has not impacted cash, but it has impacted the timing of revenue, including from our early adoption, the CAD 21 million of revenue that would've been flowing into 2018 and 2019 and other years, that's not coming in. So Thanos, it does sort of pull it in and bring it in.
We are growing, and we've talked about the long-term growth expectations, but we've also talked about it really being long term. So you're going to see this, as you have seen the consistency, not only on the revenue growth, but also on the bottom line performance, as John mentioned. So we're very, very excited, especially our new relationship with EY and growing. The reality is, what we do is fundamentally different, and it is about an 18-month sales cycle. You see these investments, and now you're seeing the return on them. You're seeing the return on our investment in Europe, and in terms of customer collaboration such as Ipsen and so on. We're very confident to and we believe in our guidance, we are providing that accelerated growth. Deepak, maybe. Oh, sorry.
Okay. Thank you. I guess, John, Richard, a question for you on the mid-market. I know we've talked about this and asked about it quite some time. When we look at competitors like Anaplan or ERP vendors like OneStream that are up and coming, growing 50%-100% a year, customer counts of 1,000, when do you start to target this market? How big is it today? How big do you see it in three to five years? Thank you.
Yeah. I can answer that question. First, we are hyper-focused in our sales and marketing strategy. We do talk about targeting six verticals, three geographies, companies that are billion and above. That's kind of the TAM that we talk about. If you're watching though, you look at every single announcement that we've made about every single customer that we've won, some of them are under CAD 2 billion. Frankly, some of them are under a billion. Some of them are under CAD 500 million. It does a couple of things. It proves that the value we deliver fits the mid-market. It may not necessarily mean we're purposely targeting it. Again, I would say it's a matter of when, not if, you would see a measured marketing and sales campaign towards the mid-market. Again, we've got proven cases where this fits.
As it relates to some of these other vendors that you've launched, frankly, we just haven't seen the competitive threat from those areas. At least in the engagements, the very few engagements we've seen them. They may be tackling the problem from a different angle than we are. We're not necessarily seeing a competitive threat in the current target areas that we're focused on, CAD 2 billion and above, six segments of the three geographies. That's how I would describe it. I think, part of our strategy for growth would quite obviously be, going to the mid-market functions or the mid-market manufacturers, especially in the verticals that we're in and the geographies that we're in. It's a matter of when, not if.
I think Rob was-
Rob, yeah.
Oh.
Sorry. Nick.
Sorry. Just to summarize a little bit of what we heard last year and this year. Last year, you guys talked about increasing or accelerating the spend on sales and marketing, go more global into Europe, into Asia. At the time, you had a TAM around 2,000 companies. This year, now we're hearing acceleration on the R&D side to drive the platform. I'm just trying to understand why now, as far as investing on the R&D side, as opposed to waiting a few years. Is it something as a result of competition within the existing markets you're currently in? Is it a function of the partners you're bringing to the table? As we heard from EY, there's other verticals that they want to possibly see you in, or is it just part of your strategy and the initiative you guys are just taking on your own?
Is it a combination of all the above?
Yeah, Nick, people don't always realize how much effort, how much time, how much investment goes into serving the current markets that we're in. When Andrew talked about this next rendition of the engine, okay, we have a code name for this. We're, I gotta say, 4 years into this. Now we're starting to talk about it. 4 years ago, we realized that in order to satisfy machine learning technology, we're going to have to be able to scale to the tens of billions of records. At the time, we didn't have an engine that can do that. The thing about in-memory technologies, while they needed to be seeded, right? You start with a giant lake of data, and you need to ingest it all into memory. It can often take hours to do that.
With billions of records, you're waiting hours to ingest data into an in-memory environment. That's gonna go down to seconds, okay? It takes 4 years to produce that. When we're making investments, we are thinking about long term, also. I would say that, much of what we're talking about now that's coming out, those are investment decisions made 3 to 4 years ago. The investments we're making now on platform and driving the potential for third parties to produce their own intellectual property. We're seeing the benefits of that will manifest not imminently, but the benefits of that, we believe, will manifest in the very, I'll say midterm. All right. Yeah.
Hey, John.
Hey.
Good to see that you guys are having good involvement with your partners, like EY, who seems to be in the planning process. Would you say that you're seeing the vast majority of the opportunities out there, given your broader partner network now? What would you say your hit rate is in winning these opportunities, and what are the main reasons why you would lose some of those?
Yeah, the hit rate, obviously getting partners involved is pretty critical for us. We are seeing the majority of net new wins where we have direct partners engaged and working with us. We're still obviously involved because we deliver the solution. We have the SaaS environment in the background. We have the data center. The solution is delivered. You heard from David how deployments happen even with partners. It's still very collaborative. Okay. I'd say the hit rate's very strong. Companies like EY have privilege where we don't, and they have pedigree where we don't. You saw the incredible list of services. That takes years to develop that kind of service strength. We feel like the combination of what we bring to the table and what our partners bring to the table is a one plus one equals three equation. We really do.
Now, I'd be naive to say we win everything. That would be naive. We don't. We still have individuals, we still have companies out there that believe in their existing techniques, and they're not necessarily bought in to concurrency. Okay? I scratch my head when I see that. I liken it to people who still prefer to take a boat from New York City to London for business. Like, okay, see you in six days. I'm taking a plane. Okay? We still encounter that. We don't give our solution away. Okay? We respect the women and men that produce it. We respect our shareholders, and we respect the customers who pay for it. We're not going to engage in pricing warfare. Sometimes that will be a factor.
We don't win everything, but I would say we're winning sufficiently to drive the growth agenda that we've shared with you. Our confidence is high enough to be investing. We know that we have runway. You call me the hype machine or whatever. I can really hype this up because I'm just so excited by it. He calls me the hype machine. When Andrew joined the company, he said, "I have to tell you, it's real." The technology is actually quite astounding. I feel confident. I really do. I feel like there's a terrific runway there for us in terms of the growth strategy. I'm hyper excited about offering companies like EY and the other partners that we have the ability to build their own IP. Oh my goodness. This is what Benioff imagined when he invented Force.com, right? What happens? Great things, right?
I'm not going to pick the next adjacency. The partners will. I just have to enable them. It's wildly exciting. Rob.
Maybe I was hoping you can give a little bit of context on two things that you said earlier in the presentation. I'm just going to build on Daniel's questions around the growth guidance. The first thing, you were talking about the funnel. The funnel is very healthy. Maybe if you could talk about the shape of the funnel. Is there a lot at the front end that's not necessarily falling into 2019? The second was a comment from David Kelly around the volume of revenue flowing through the professional services line that your partners are seeing. I think you said five times. I imagine they're taking a lot of change management that Kinaxis wouldn't.
How do I put the 5x increase in professional services and the strength of the funnel in context with the guidance? Maybe I'd like to see a little higher growth now.
Yeah. I would say the current state of the funnel, significantly larger than 12 months ago, and I see it reflecting the investments we made 12 months ago. I would say that the funnel as it relates to Europe and Asia, significantly higher than it was 12 months ago, again, reflective of the investments we've made in those two regions. I'd say to give some color on the funnel, as I said before, it's remarkably more balanced than I've ever seen it. I'm expecting to see life sciences. I'm expecting to see some automotive and the more emergent, and CPG. Then I start to see, wait a minute. There's this resurgence of aerospace and defense opportunities emerging. That gives me great confidence that we're seeing, I won't call it an inflection point because it won't happen Monday, as I often say. It's happening.
It's not like some day, you wake up in the morning and say it's happened. These are good early indicators, and the strength of our opening remarks at the beginning of the year in terms of guidance is based on what we currently see. Every quarter, we'll describe as it matures and as things fall in or out, again, we don't win everything, but as things fall in or out, we'll provide everyone here with updates as it progresses. Maybe I'll have David comment on the professional services question.
Yes, I would say that 5x number, that's kind of a speculative number on my part, but I would look at it as the total amount of services that companies are contracting these partners for.
Everything from the stuff that you and I talked about and the upfront planning, don't forget about all of the ongoing support/sustainment services that go on. There's a lot of activity there that these partners are driving. I think it's indicative of what we've done in the past from a selling perspective. I think it's going to continue to ramp and continue to grow overall in the marketplace as these partners continue to expand their offerings and capabilities.
A question for Andrew. When you're talking about the solution for RapidResponse, you mentioned the versioning capabilities and the ability to make an exact copy of the database. How unique is this amongst competing solutions, and why is it so important to the end user?
I can't speak to all the solutions out there in the market, we have done a fairly exhaustive search, both with startups building different types of databases. It seems a lot of the startups are focusing a little more on big data type problems that can power other types of calculations, like machine learning. Our engine supports techniques that calculate in 10 seconds or less, as Ipsen said.
If you look at the types of calculations that, if you want to figure out from a big change in demand, how that's going to impact all of your various parts that are required to fulfill that demand, you want to do it instantly, you want to run scenarios and compare whether you should be expediting because of some problem, or you want to get a second supplier, all of that, and playing with that in real time, has a phenomenal impact. I think, to speak to it really was great to hear Ronan talk about how his planners now can play with those scenarios in real time. Instead of waiting for a weekend to try and figure out what should my plan be, they can play with scenarios and try these things, what-if scenarios, in real time. That's the power of it.
I really don't think there are companies out there focusing on such a targeted technology as we have. The versioning in-memory database and the tight coupling to our math is fairly unique, I believe. We do keep watching it, though.
I just want to add one thing that Gus mentioned. I haven't seen all that material, but he talked about the number of active scenarios that are going on. I think it was 1,200 or something like that.
Yeah.
It was a big number. Think about having 1,300 instances of the entire data set. It's a computer science problem. If you had 5 billion records and you say, "I need 1,300 versions of that," that's a computer science problem, not a supply chain problem at all. What it does for the supply chain, though, is you can test a theory, okay, before execution of that theory. If you asked anybody in business, would you prefer to guess, execute something in real time in production, and then see how it goes, or would you prefer to simulate that change beforehand and see what the impact would be before you make the decision? Everyone would say, "I'd rather simulate the decision." If that's true, we describe this to practitioners, you're eliminating the, "I didn't know" excuse.
It takes three one-hundredths of a second to create one of these things. If it's 5 billion records or 50 billion records, it's three one-hundredths of a second. Now you have a sandbox in which you can test any theory you want, any decision you want. That's the business value now, is you're eliminating the, "I didn't know" excuse. You can test a theory before you go. The versioning technology from a computer science perspective is quite unique. To give you some context, this technique and the approach and the base technology was invented in 1994. I'll tell you, it requires thinking of the problem before you've written a single line of code. As Andrew said, there are other in-memory environments, but they weren't thinking of this problem before they wrote a single line of code. They were thinking of a different problem.
Being a computer scientist myself, I believe this is near impossible or very difficult to retrofit after the fact. You have to know you need this before you've written a single line of code. Think of it as kernel code. Line one, you better know you need this. This is one of the reasons why it's giving us the advantage it is today.
Sorry, I don't want to jump ahead. A question for John and perhaps Anne. You guys have, presumably, some insight into global supply chain. Most of your customers are in there. We hear about Brexit, security issues, trade wars. What do you see as a macro risk that might affect your business? Where are we in the industrial cycle? What inning? How do you plan for that over the next three years?
I have an opinion, and I'll pass it off to Anne. First, yes, we do have a lot of major companies on RapidResponse, we do not collate all of that information to derive any kind of industry knowledge. The customer's data belongs to the customer. We don't actually use it and start learning from all of the pharma data, for example. I do think, people have asked me, "Well, is there a use for RapidResponse under the current conditions of Brexit and uncertainty and so on?" I'm like, "Yeah." The reasons are different. Efficiency becomes the issue when they're looking at all of the, even as it relates to some of the things going on in the U.S. and where you manufacture.
Now you need to be able to simulate changing where you're going to manufacture your goods to assess what kind of impact that has on margin. Call it the tariff management problem. Okay. Tariffs are one way today. If they change tomorrow, let me tell you, everyone cares about what that does to margin. You're dealing with the margin erosion problem. In good times, it's about market dominance, right. I want to win every account on time and full, as Ronan talks about. OTIF, on time and full, is about never losing a customer. There's a fit for our solution in both equations. Anne, I'll let you add.
I'll preface this by saying this is week eight for me, so take it with that in mind. Looking at the broader market, sort of what I referenced before. The growing complexity, velocity in technology, and the culmination of those three are what's sort of stirring up the supply chains around the world. I think that's more opportunity for us than anything else, honestly, at this point. It's just staying ahead of the curve, and hearing Andrew and others speak, I feel confident that we're positioned there.
Just how it impacts from our business perspective. We have seen whereby if the level of change and uncertainty is so high, that may sometimes defer decisions to move to RapidResponse. If you recall, our agreements are fixed determinable, and so it's a step function. Once we're in, we're working with a customer, it's not really predicated on their business volumes and so on. It's about providing that overall solution. That's where we provide that confidence in terms of longer-term growth and the revenue stream.
Hey, what are the most notable bottlenecks on growth? Is it you need more salespeople in Europe or Asia? Is it that more people need to be trained at the partner level? You're growing great, but just what is that incremental 5 points, 10 points to growth? What are those bottlenecks that prevent that?
Yeah. We do look at a lot of leading indicators in the markets that we serve. The markets and geographies that we serve. When I go back and I said, well, a year ago, it's a multiple larger. Okay? I take that as a market leading indicator that there's by the way, when we say These aren't just suspects, these are names we're touching. Okay? This is very important. When we prospect and we identify a pipeline, it means we are touching this customer. We are engaged, there's conversations, there's relationships forming, and it's a multiple larger, and I'll look at that as a bit of a leading indicator of the maturity of the market.
I love Regina's comment about the market, in general, is in a position to rethink and reorient and adapt new technologies in this space in a more deliberate way than perhaps three or four years ago. Maybe some of this is thanks to some decisions that ERP companies are making. They're forcing a decision on their customers, that means those customers could say, "Well, instead of just doing whatever our ERP vendors are telling us to do, we're going to open this up and open the hood," as she put it. Let's see what best in breed is. What's the right business decision to make? That's how I look at the one thing that we're pushing against, is the maturity of the market to move.
The thing about RapidResponse and the thing about solving problems that relate to supply chain, you saw this with Gus's presentation, you saw it with Ronan's presentation, this becomes business fabric. This isn't one of these experiments you run because it's fun. You're going to affect the business fabric of these organizations. That's one of the reasons why it's this nine to 18-month kind of a cycle, because they're very serious decisions. I feel like there's a momentum building.
Early adopters.
Yeah.
Thought leaders, early adopters.
Exactly. It's manifesting in things like this pipeline. The other area that, I think I've talked about this during, I know I've talked about it during earnings call, it's the unsolicited inbound leads that come in. These are people ringing our doorbell that we've done nothing to invite them. There's not like some mark. There's people ringing our doorbell saying, "Can I come in?" It has been on a steady increase, I want to say, for the last seven quarters. It's undeniable. I can just see the lines, those are leading indicators of a maturing market. Doesn't mean we're going to win them all, like I said. It doesn't mean that, but that's one of the growth vectors that we see in our space. Yeah.
It also means maybe you don't have enough salespeople who are making the outbound. Do you mind just helping maybe us gain comfort that you have enough resources to get the word out?
No, I think there's two sides to it. I'm going to point back to the partner ecosystem in that, I think I mentioned earlier, I don't believe we can scale organically fast enough to meet the demands we foresee, the demands that we're expecting to see in the future. Part of it isn't just about having our own sales reps at the ready. We have significantly invested over the last 12 months in our own field, and it's been a reflection of what we see in the market. We're equally investing in the partner community, because for every sales rep that we hire, there's 100 out there in the ecosystem. I'm not going to win that math equation, I'm perfectly happy to share to make sure that we don't get crushed by success.
We'd rather share with the partners. We also recognize they bring something that we can't. There's a pedigree, there's a trust, there's all of those things. That's the way we're taking it.
John, at this point, to what extent is services implementation delivery a constraint on growth? Obviously, David's been doing some good work building out the delivery capability internally, even ramping up and training partners. This is very complex software, obviously. We're in a tight labor market in some regions. To what extent is that a limiting factor in terms of the amount of new business you'd be able to deploy if it were to come into you tomorrow?
It's a zero limiting factor. The reason I would say that is because of the partners. As David said, it's a guess, we do track.
Well, we have indications.
Yeah, we have other indications. We know there's a significant multiple of individuals certified on deploying RapidResponse than actually carry a Kinaxis badge. We count those. We don't disclose them because they'll say, "Well, which partner has the most?" And da, da. It's a very large community of certified implementers that don't work for Kinaxis. We've also said this, that we're seeing a significant increase in partner-led deployments. We're happy to let that happen. It would be absolutely foolish for us to stick our hands into EY's pocket to take some money out of them. That's just a crazy thing to do. We want EY and all of our partners to be successful. We're doing everything possible to make sure we provide all of the support needed for the partners to be reliable and capable of delivering.
I don't see that at all as a friction point or a limiting factor. Brian.
Andrew, I just wanted to ask, how ready are the partners to innovate on the platform that you're building? For John, I just wanted to ask, how does that change the lighthouse dynamic for new verticals when you have some of the IP outside of your four walls, as it were?
I think the partners are phenomenally ready. The two characteristics that you want from a partner is someone who knows the space really well, the conversations we have with some of the spaces that they're in that we would love to get in really blow my product management team's minds. They're very excited about helping, being led into some of these spaces. The other aspect is having someone who can realize the intellectual property, that skill's not as hard to get. Some of the things we're going to do to allow them to extend intellectual property is really going to be very simple coding techniques, SDK, those types of things. I'm not worried at all. Our partners have huge back offices in all sorts of places, the coding skill, not an issue. Having great domain knowledge, they have it. I'm pretty comfortable.
Yeah, just to follow up, we're doing this on purpose, eyes wide open. We're not inventing this approach. I use the Benioff example a lot. Someone invented Force.com for a reason, right? They said, "We're not going to pick the next adjacency. We'll let the market pick the adjacency. We'll let the experts pick the adjacent." They're in every market that matters. They're in every geography that matters. I'm not going to outpace the entire ecosystem. Our job is to produce the platform to accelerate the creation of value. There's no way. I just couldn't do it organically fast enough. We're doing this eyes wide open.
Yeah, I was wondering if you could elaborate on the partner strategy a little bit. Is your goal to get to, I don't know, 30 partners or 100? Just give us some perspective on that from a strategy standpoint.
I think that the partners we have there today is going to remain mostly steady for this year. Not a huge change there, I think that what you'll see is really the adoption by the partners to be able to do more deployments and to partner collectively with us to drive more opportunity. We have some new names up there that you saw. EY obviously being here today is one, but it's continuing to build that collaboration and to build those skills within those partners to support us across our ecosystem, which is not just me, but you talk to Andrew and many other aspects of the overall business. It's an evolving development, I guess, with those partners.
Richard, just to add to that statement. We've said this before as well, there are a lot more partners that want their logo on our webpage than we allow. The model we take is very much like what Regina described. They're signing up to build a practice. They're investing in their people. It's not like, "Well, I have this opportunity. Please say I'm a partner so I can win this business." No, that's not the way it works. When we sign up with strategic partners, because we've established a common motive, and that they're serious about building a practice to serve their customers, it's not just a marketing 'Put my logo on the website' kind of thing. We're cautious about that. There's far more partners just saying, "Please can I put my logo next to EY's?
Could you talk a little bit about the partners and how they're helping you in the sales effort? Are they getting engaged after a prospect comes to the decision that they want to use Kinaxis, or are they wrapping Kinaxis into a managed services offering? Are they helping prospects come to the conclusion that they should use Kinaxis? I think one of the big worries is that there are some very large companies like SAP who dominate a lot of some of your partners' business, and going against them would be maybe difficult for them. Talk about how that's maybe developed over the last couple of years, where they are now.
Rob, it's a great question. I would say the after the fact, that's how it started. Very much so. If I go back 5, 6 years ago, when David started, of course, Japan, we had partners because in Japan, that's how the companies would deploy software, through partnership. We wouldn't have been able to talk about EY or Deloitte or Accenture or any of those large firms. It started by us winning business in their diamond accounts or whatever they want to call them, and they said, "We better learn how to do this." The business was making the decision, right? I put it this way, it's rare if not impossible to see what I call IT bigotry, okay, in business. You might see it more in IT, but in business, there's a focus for value and solutions that work.
They don't care about the color of the bits and the bytes and what the logo is. They need it to work. Today, we're seeing a lot of activity where our partners are bringing us in. There's an active engagement already, and it's somewhere where we don't have the privilege. That's why I use that term. EY will have privilege where we do not. I could wax poetic about the value of RapidResponse, but I won't be as believable, if you will, as an EY, where there's already a trusted relationship with management. We're definitely seeing partners leading, bringing us into their accounts because they know there's a business problem and there's a practitioner at the back of it. Sorry.
Go.
Yeah. Last point. I would say the managed service one is very nascent. Some people have said to me this is a natural evolution of where contract manufacturing will go. I've subcontracted out my build, I've subcontracted out my design, I've subcontracted out distribution. You buy products, and it shows up in a Flex box. Like, wow, it was packaged and delivered and all this. It may be a natural evolutionary step for companies like this to outsource supply chain planning functions. I'd say it's nascent right now. There's no real burst, I'd say, in that space.
Yeah. I know we're a little over time, I think we'll wrap it up there. We do appreciate your participation and your support, look forward to seeing everyone next year. Thank you.