Epicor’s Epic Journey

An Epic Journey

What a difference a year makes! The Activant/Epicor merger under their private equity company Apax Partners looks like a mega success.

CEO Pervez Qureshi is a refreshing change for the leadership of a big software firm. Avoiding the tech conference hype and double speak, Pervez launched Insights, Epicor Customer Conference 2012, with his ‘promises.’ Quality was a core message I heard repeatedly from Mr. Qureshi and his technology leadership team. The new Epicor company sits on top of ~$850M+ in revenue, which is plenty of money to do extraordinary things! Thus far in 2012, they have hired over 500 people and have plans to grow a lot more. They plan to increase revenue, with goals to double in size over the next five years within their sights.

But why the grandiose title of ‘epic journey’ for Epicor? The successful merger of two companies within one year is no small feat. Preserving and elevating what is best about both companies, keeping employees secure and motivated through these changes and avoiding the ‘we/them’ elements in these situations is critical. In addition, the new Epicor has implemented radical changes in how they work, the processes they use, the metrics they use to measure and the technology products they sell. I think that is epic. I have seen some pretty good mergers in the software world over the years, but this is outstanding.

Epicor is the home for such popular solutions as Eclipse, Epicor ERP, Prophet 21, Prelude, Vista, Vantage and other solutions.

There were strategic messages as well as technology messages that are worth sharing.

Epicor’s Strategic Direction

Epicor’s overarching strategy is to protect, extend and converge their many software products. Not unlike other large software firms that have multiple assets, Epicor and their customers are faced with the issue of time. Customers of Epicor and other multi-product ERP firms are very long term customers. Many software purchases are once-in-a-lifetime buys. The problem is that over time, new technologies come along that add great value and are cheaper to operate. Many customers upgrade infrequently, eschewing the disruption of upgrades. However, it becomes more burdensome over time for the software firm to support so many versions of the software. It also becomes more difficult for users to operate older versions of the technology.¹ But smaller firms are unlikely to change — they simply can’t afford it. They want their initial investment protected.

But no one — large or small — wants to be left behind. Epicor has a diverse mix of customers — from the small to the billion-dollar companies — and they are demanding and craving more. And Epicor will give it to them, but they must address the issue of integrating the components in a way that reflects the latest thinking in technology and extends the value of the past investments.

In this situation, large software firms like Epicor, Oracle, SAP and Infor are in constant investment mode, with 15% to 30% of their annual budget spent on development. Replicating or duplicating functionality across that portfolio doesn’t seem like progress, so these software firms would love for their customers to move onto the new solutions. However, users don’t want to lose what they already own and buy new solutions willy-nilly. Thus, the convergence issue. How could Epicor ensure that the converged software preserved all the best functionality and practices of the past, provided a smooth path for customers to move onto these new platforms, resulted in a net gain of functionality — and was not just new code for the sake of new code?

The key to extending and convergence is ICE, Internet Component Environment architecture. This service-oriented architecture allows the older applications to access the other modules and newer solutions from Epicor (or partners).

Epicor’s key message throughout was ‘process’ — their process for product definition, development, and easier implementation for their customers. The six sigma culture of Activant and the use of agile development is the core to this approach.

Epicor’s Product Direction

The Epicor customer base looks at the global economy — from top retail brands, wholesale distributors, industrial manufacturing to tiny distributors. Creating a product portfolio that continues to please is no small task. You want to provide vision, but also practicality for the customer. Although many users appear to be demanding more, better and faster, the average user deploys less than 50% of any package they buy. Some firms much less. Paul Farrell, Executive Vice President, Worldwide Research and Development at Epicor often used the phrase consumerizing the ERP. I took this to mean adopting the ease of use and openness of consumer applications such as touch UI, social, and search, to name a few. These also have applicability and practicality in the enterprise domain.

So let’s look at some foundation elements across industries and then look at some industry specifics.

Search everything and everywhere — This was one of the more powerful discussions. Having the ability to bypass traditional navigation methods and specific user views and role definitions to access features and data, to browse, and to find and define reports using the search paradigm is critical to today’s business. (In this issue you can read, “Is Social, Mobile and Search the New Core of the Enterprise Solution?”)

Besides gaining the ability to browse and build meaningful connections and collections of data, infrequent users don’t have to go through the traditional navigation with menus that they are not trained to use.

This is not generic search like Google or Bing; it provides users more functionality while eschewing the typical ‘functionality baggage.’ (With more functions, users usually wind up with more difficult navigation.) The multiple search index allows you to build an index (just as with a database). But here, it can be done on the fly, creating multiple indices, filters, and retention of this search for later on. Pretty neat stuff!

Knowledge enablement: no manuals for complex applications — Providing search capability, plus a dedicated team for education and content who insert help features and elearning modules everywhere, allows optimum use of applications and allows novice users to advance through the applications and perform more complex tasks.

Mobility — But of course! Mobile is a very big topic and not an easy class of technology to support. It needs to be a companion to the broader software solutions and databases that might be provided on the mobile platform. This is not just shrinking the displays and reports, but rethinking how users want to engage on this platform, what they might do, and how the application can be best represented. Epicor has a lot of legacy here from the service and supply chain applications, as well as its retail store operations. In addition, the CRM/sales modules which challenge enterprise mobile application users most are all being ‘modernized’ with new UIs and deeper integration to a broader set of applications.

Analytics — Today’s analytics need to reflect the broader context of business activities — not just reports with summaries of past performance — but inclusive of social data, and more predictive. As Kevin Roach, Executive Vice President and General Manager, stated, “Its real-time BI on mobile.” But in order to do that, the underlying architecture of analytical solutions needs to be able to host it. Epicor offers several versions of their analytics, from modest usage which offers more ‘canned’ reporting to the ‘create your own data warehouse’ power environments with cross-functional and cross-application data.

Epicor Social Enterprise — This is the heart of the collaborative elements of Epicor 9, the major ERP product from Epicor. It will be rolled out to other ERPs from Epicor, as well. Besides basic subscriber/chat-type functions that consumers are used to seeing in social networking, the Epicor social enterprise supports search, business process managing, and security and monitoring.

Retail

Ian Rawlins, VP Product Marketing, discussed the future of Epicor’s retail solutions, the essence of which is customer engagement across all channels and platforms. Although many of the tech companies are providing mobile or social, they are not integrated to the retailer’s inventory or customer databases. Therefore the road to the ‘omni-channel’ remains a real challenge for brick and mortar retailers who have all selling channels, since the back office needs to be in sync with the web and mobile front-ends. That is true cohesion. And for technology providers that sell and support many solutions, it is not so easy to deliver. Epicor’s retail roadmap intends to do just that. Calling it multichannel execution, Epicor has a path to ensure that all the software assets provide a multidimensional, omni-channel picture of the business.

Another key product is the customer profit analyzer,² an innovative and important capability. We often have a hunch that certain customers are costing more than others. Now there is a system to demonstrate it. Sales people are often quite willing to put more on the table to close a deal. And customers will always ask for more. The question is should companies be offering these extras without customers paying for them? Customers’ behavior can be modified to produce more margins: if they really need these extra services, they will pay.

Having a tool that allows companies to understand costs and how certain activities and customers induce more cost can help them manage their processes and bring costs under control. At a strategic level, companies can think about which customer groups are more profitable, and who they want to sell to, or not.

Manufacturing

Long known for strong manufacturing and warehouse management, Epicor has a huge install base in many vertical industries. But there is always more to do.

Take, for example, carbon accounting. Although slowly growing in acceptance, the idea of carbon accounting is steadily becoming a more important element of the supply chain. From engineering firms who want to reduce part counts, to transportation companies who want to reduce miles on the round trip (reducing petro spend, green house gases and wear and tear on assets), to waste reduction programs and carbon ‘trades,’ the greening of the supply chain saves companies dollars as well as being environmentally friendly.

Other important areas are compliance to various global standards and implementing serial number/batch/lot tracking. Serialization has grown in importance as regulations increase and product quality, safety and accountability (recall management) are expected. And there are many nuances in how to get this right. From automotive to high tech, food and beverage to life sciences, industries all need some form of greater granularity, visibility and product accountability. Epicor has been enhancing their manufacturing and supply chain capabilities to ensure, over time, that their customers will be in compliance with industry-specific standards and international regulations.

Services

The IAP Supplier Network, was purchased by Epicor in April, 2012. With over 18,000 members, this network is the leading automotive aftermarket open service network. Its acquisition blends in with Epicor’s (Activant’s) already strong solutions for automotive which include sourcing, electronic cataloguing, supply chain analytics, data and network connectivity services and, of course, an ERP. It also brings the customer base to 27,000. I don’t think Epicor has gotten the credit it deserves in the service market for the depth and breadth of their customer base and solutions.

It’s in the Cloud

Epicor sees on premise vs. cloud as a delivery issue. We might differ a bit on that point. However, the main announcement is that Epicor plans to leverage Azure from Microsoft to provide on-demand ERP. Azure is a bonus for service providers and end-users looking for elasticity in their business solution, removing the issues associated with planning and sizing data. The ICE version 3.0 to be released will provide platform as a service (PaaS) and infrastructure as a service (IaaS) offerings using Windows Azure.

Conclusions

Epicor announced their quarterly financial results, post Insights. Challenges remain, with license software growth a bit disappointing: it declined about 14%, due mostly to softer retail sales (in EMEA). However, most of the other elements of the businesses are growing. Asian sales are growing; ERP grew; consulting is growing, and other product areas have had modest growth. Customer retention is high — over 90%. This bodes well for their services revenue which has increased since last year, as have software license upgrades and new module sales. And Epicor has given their customers motivators to buy.

For a firm of Epicor’s size, there is a lot of action (hundreds of updates occur annually) to cover in one article. However, one of the most important elements of the new Epicor is not just the software, but changes in the process that allow customers to implement new releases more easily, more quickly, and with a better engagement process. Almost anyone can write software, but to tackle implementability is where the action is at these days. Epicor is not just focusing on the process. They are hiring many new consultants to address the project challenges, providing rich online help within the software and on-demand training. All this helps the customer to stand on their own much faster, reducing the time to value, increasing customer loyalty and reducing total cost of ownership.

References and Reading

SaaS ERP for the Smallest Manufacturers

ERP for the SMB

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