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Epicor Influencer Summit 2016: A Focus on Business Fundamentals
TEC principal analyst PJ Jakovljevic was at the recent Epicor Influencer Summit 2016, and got the low-down on the customer-focused ERP vendor’s recent and current developments, including UX modernization, a focus on professional services, and an expanding partner ecosystem.
Contents
When it comes to leading mid-market enterprise resource planning (ERP) software vendor Epicor’s products, Joe Cowan, Epicor president and CEO, is upbeat, and with good reason. At the company’s recent Epicor Influencer Summit 2016 in Scottsdale, Arizona, he talked about the company’s feature-rich industry focus, cloud-first new product development approach, and global scale, all part of Epicor’s strategy for 2016, 2017, and beyond. In his opening remarks at the conference, Cowan said that he also feels good about Epicor’s financial stability. Austin, Texas-based Epicor currently has over 3,800 employees, over 20,000 customers, and more than $800 million (USD) in revenue. With only 20% of that revenue coming from international markets, Epicor has a significant growth opportunity through international expansion that it is hoping to cash in on in the coming years. The company does have a sizeable debt, but Cowan indicated that it can be serviced and paid off comfortably via the current cash flow.
Epicor caters to a wide range of company sizes—from small companies of only 10 employees all the way to large global enterprise organizations. The company has narrowed its industry focus, however, with good results—from once opportunistically chasing deals in a plethora of industries (including service industries), Epicor is focusing its mid-market ERP software for the manufacturing, distribution, and retail industries.
Figure 1. Epicor over the decades (click for larger images)
As of August 2016, global investment firm KKR has owned Epicor after buying it from Apax Partners (which took the former public Epicor Software Corp. private in 2011, and which still owns Aptos). The private equity is committed to a multi-year investment in Epicor. During the recent buying due diligence process, KKR reportedly ascertained that Epicor has a significant growth potential both with worldwide expansion and within its ecosystem.
After the acquisition, Joe Cowan was asked by KKR to remain at the helm along with his management team. In his address to the partners and market influencers at the Epicor Influencer Summit 2016, Cowan pointed out that the customer-first culture (embedded within the EpicCare customer experience program), backed up by a world-class infrastructure (e.g., using ServiceNow for customer service management), remains the imperative and guiding principle for the company. While the Epicor of several years ago (prior to Activant) was more focused on developing products with the latest bells and whistles (at the expense of product quality and customer service and support), Cowan has been relentlessly focused on operational excellence (i.e., product development and quality, consolidated data centers and security, and notification systems). In fact, virtually everyone’s salary at Epicor is dependent on customer satisfaction measurements such as net promoter score (NPS).
Epicor has lately begun to emphasize offering compelling partner programs for both sales partners and technology partners. Sales partners can be self-sufficient resellers, solution extension partners, and unbiased referral partners. Currently, Epicor has over 300 sales partners after some recent housecleaning and pruning, but the aim is to now recruit a number of viable partners worldwide. For their part, technology partners can be alliance partners and development partners.
As mentioned earlier, the new owners at KKR insist on Epicor working more with partners and expanding business that way too. For example, Epicor is working on enabling its product platform to be easily leveraged by partners to develop their own solutions and intellectual property. Down the track, some acquisitions of that expected new intellectual property and partners are likely.
McCollum is well aware of the fact that moving to the cloud, mobility, and e-commerce capabilities is disruptive for partners, as well as the recent NetSuite acquisition by Oracle or the advent of Microsoft Dynamics 365. Epicor will try to ease those disruptive factors for its existing partners as well as recruit some worthwhile disgruntled partners from competitors’ ecosystems.
Palsule noted that ERP is a resilient enterprise software category, going strong in spite of several pronouncements of its death by pundits in last 15 years or so. Companies are still evaluating ERP software for various reasons (i.e., global requirements, lowering costs, risk management, supply chain visibility, etc.). ERP software is perhaps getting a bit commoditized, but the trends of digitalization and big data coming from ERP transactions are becoming a new differentiation. 2016 was quite a busy year at Epicor, with 72 total product releases, 10 major releases for core mid-market ERP software products, and 27 add-on releases and integrations to the core, with 75% of those 72 releases for the global markets (see figure 2).
Figure 2. Major Epicor ERP releases in 2016
As for developing brand new products and add-ons, the critical acceptance criteria are being cloud ready, able to be used across Epicor (over multiple ERP software product lines), and savvy in terms of application programing interface (API) and software development kit (SDK). As for API developments, REST-based API services are coming to major Epicor ERP product lines as well as connectors to the Epicor Commerce Connect, Epicor Service Connect, and Epicor BPM (business process management) components. API bulk reports will also be much faster than they have been thus far. Comprehensive product development quality focus is on the entire product lifecycle in terms of performance, release cadence, testing, user acceptance, and support. In order to accommodate expected global expansion, there is a focus on global legislative compliance and on new and enhanced country-specific functionality solutions.
User experience modernization is also coming to many major Epicor ERP products to abide by the millennial impact and the Amazon consumer-like experience effect. The next version release of Epicor Prophet 21 will feature a new HTML5-based user interface (UI), and is slated to be available in late 2017. The upcoming 3.1 release of Epicor iScala, quite functional and template-based ERP software but traditionally plagued by a poor UI, will have similar UX traits. The next version 10.x release of the flagship Epicor ERP suite, slated for early 2017, will have dynamic tiles (as opposed to the static tiles now), see figure 3.
An example of a solution that can be used across multiple product lines would be the aforementioned Epicor Commerce Connect, done in partnership with Magento. As for other products that could be used across multiple product lines, there is Epicor Mobile Framework (EMF), given that about 80% of employees today are no longer tethered to their desks. There has been a limited use of the EMF by partners to build their own apps, but that should change in the future due to Epicor offering more openness and extensibility via an SDK. The upcoming Epicor Data Analytics (EDA) solution for business intelligence (BI), based on AngularJS and an embedded partner BI solution, will also be applicable across several Epicor ERP software products. In the future, the vendor plans to continually deliver big data packs for various ERP software users.
Figure 3. Upcoming Epicor ERP 10 look and feel
For manufacturing markets (where Epicor still makes about 70% of its revenues), Epicor offers its flagship Epicor ERP suite, which is modern (using social, mobile, analytics, and cloud, making it SMAC-ready), well-rounded, and applicable for a number of discrete manufacturing environments globally. Think of aerospace and defense, automotive, capital equipment, hi-tech, fabrication, industrial machining, medical devices, rubber and plastics, furniture and fixtures, and other similar companies. Built-in product configurator (from engineering to sales), engineer to order (ETO), and regulated industries are typical order winners. In North America, for some automotive suppliers in need of Materials Management Operations Guidelines/Logistics Evaluation (MMOG/LE) compliance, strong Electronic Data Interchange (EDI), and Mattec manufacturing execution system (MES) capabilities, Epicor offers Epicor CMS ERP (from former Solarsoft).
Also via Solarsoft, Epicor now owns process manufacturing ERP software Tropos with a sound install base in the UK and Europe, the Middle East, and Africa (EMEA), but the product’s expansion outside those local regions will depend on the ability to find suitable partners to sell it. Epicor ERP is a very global ERP software platform, while iScala is quite international with a solid presence in the EMEA and Asia-Pacific regions. Other products are still quite regional.
There are many factors to consider in order to decide the best deployment option for an organization, and the matrix in figure 4 seems quite helpful. In a true multitenant cloud subscription, it is solely Epicor that decides on automatic upgrades and there is no SDK given to customers to extend the system. Only Epicor ERP 10 offers all five deployment options in the manufacturing space. This includes Epicor HCM (human capital management, from the Spectrum HR acquisition), which is sold both standalone and as an embedded companion solution within Epicor ERP.
Figure 4. Epicor ERP deployment choices
Currently, there are about 550 cloud Epicor ERP customers globally, out of about 4,000 Epicor ERP customers in total (including former Vantage and Vista customers). On the other hand, Prophet 21, Eagle, and iScala offer only three deployment options (on-premises, infrastructure as a service (IaaS), and managed (hosted) cloud) for their distribution and retail customers, whereby only the managed cloud comes with subscriptions.
Epicor is making a major investment in its professional services (about 1,000 worldwide consultants and 400 partners) as was revealed at Epicor Influencer Summit 2016, including development of the Signature implementation methodology, training, certifications, project management office (PMO) governance, etc. The update on global delivery centers and support initiatives is that both will be improved, with 16 support centers operating in 21 languages, and communication via phone, portal, and email.
The Epicor Learning Center (ELC) is a website with a blended learning experience, while Epicor University has 55 employees and over 100 embedded and recurring live courses that can be instructor-led, self-paced, or delivered via documentation. All of the programs are aimed at increasing customer satisfaction, reducing service costs, streamlining workflows, improving service levels, and increasing quality and growth.
Helping customers migrate more smoothly to the latest product releases is also in tune with improved customer experience. This is critically important for Epicor, given that Cowan wants many more than the about 100 customers that are currently being upgraded per year; ideally, he wants all customers migrated to the latest versions in a few years. To that end, Epicor Labs now offers a site analyzer for identifying customizations and informing customers how to handle them during migrations. The offering stems from the recent acquisition of the UK implementation partner Dot Net IT. On the other hand, there is not yet an official end of life (EOL) date for several Epicor distribution ERP products such as Prelude, so those customers will not feel the pressure to move.
Figure 5. Epicor execs Q&A
Epicor seems to be in a good place, with committed new owners, seasoned executives, and functional products. In spite of fierce mid-market ERP competition, the company’s outlined global and ecosystem expansion seems plausible, and it is up to Epicor to execute on these plans. The Epicor Insights 2017 conference in May 2017 will be a great opportunity for the vendor to provide some proofs of concept, and we should also expect a bevy of new product announcements at that time.
ERP Improvement in the Cloud with Epicor
Epicor’s Global ERP Software to Further Company’s New Customer-centric Approach
TEC 2016 Cloud ERP Buyer's Guide for Manufacturing
Epicor caters to a wide range of company sizes—from small companies of only 10 employees all the way to large global enterprise organizations. The company has narrowed its industry focus, however, with good results—from once opportunistically chasing deals in a plethora of industries (including service industries), Epicor is focusing its mid-market ERP software for the manufacturing, distribution, and retail industries.
Epicor’s Evolution
Since 1972, when it was founded as former Triad Systems, Epicor (the current company name was assumed in 1999) has had its fair share of changes in terms of acquisitions, divestitures, and ownership changes (see figure 1). Over those decades, some more prominent events have been the acquisitions of Scala in 2004, Spectrum Human Resource Systems Corp. in 2010, and Solarsoft in 2012; the mega merger with Activant in 2011; and the spin-off of Aptos (formerly Epicor Retail) in 2015.
Figure 1. Epicor over the decades (click for larger images)
As of August 2016, global investment firm KKR has owned Epicor after buying it from Apax Partners (which took the former public Epicor Software Corp. private in 2011, and which still owns Aptos). The private equity is committed to a multi-year investment in Epicor. During the recent buying due diligence process, KKR reportedly ascertained that Epicor has a significant growth potential both with worldwide expansion and within its ecosystem.
After the acquisition, Joe Cowan was asked by KKR to remain at the helm along with his management team. In his address to the partners and market influencers at the Epicor Influencer Summit 2016, Cowan pointed out that the customer-first culture (embedded within the EpicCare customer experience program), backed up by a world-class infrastructure (e.g., using ServiceNow for customer service management), remains the imperative and guiding principle for the company. While the Epicor of several years ago (prior to Activant) was more focused on developing products with the latest bells and whistles (at the expense of product quality and customer service and support), Cowan has been relentlessly focused on operational excellence (i.e., product development and quality, consolidated data centers and security, and notification systems). In fact, virtually everyone’s salary at Epicor is dependent on customer satisfaction measurements such as net promoter score (NPS).
Expanding Partner Ecosystem—an Imperative
Craig McCollum, EVP, Americas, then took the stage to talk about Epicor’s recent partner initiatives and programs. Having spent years at Lawson Software, Sage, and Microsoft Dynamics before Epicor, McCollum was admittedly surprised by how little revenue Epicor gets via partners in comparison with these competitor companies. In the United States, Epicor sells mostly directly with some blended partner sales, whereas in Canada and Latin America the products are sold solely via reseller partners.Epicor has lately begun to emphasize offering compelling partner programs for both sales partners and technology partners. Sales partners can be self-sufficient resellers, solution extension partners, and unbiased referral partners. Currently, Epicor has over 300 sales partners after some recent housecleaning and pruning, but the aim is to now recruit a number of viable partners worldwide. For their part, technology partners can be alliance partners and development partners.
As mentioned earlier, the new owners at KKR insist on Epicor working more with partners and expanding business that way too. For example, Epicor is working on enabling its product platform to be easily leveraged by partners to develop their own solutions and intellectual property. Down the track, some acquisitions of that expected new intellectual property and partners are likely.
McCollum is well aware of the fact that moving to the cloud, mobility, and e-commerce capabilities is disruptive for partners, as well as the recent NetSuite acquisition by Oracle or the advent of Microsoft Dynamics 365. Epicor will try to ease those disruptive factors for its existing partners as well as recruit some worthwhile disgruntled partners from competitors’ ecosystems.
Epicor ERP Software Rejuvenation
Himanshu Palsule, Epicor chief product and technology officer, talked to the attendees at Epicor Influencer Summit 2016 about Epicor’s current product and technology vision. Palsule spent nearly two decades at Sage prior to Epicor, and it is interesting to note the similarities between the two prominent mid-market ERP software companies. Each have a next-generation cloud ERP product, but also a number of aged legacy mid-market ERP software solutions too. But Palsule pointed out Epicor’s much sharper industry focus and the ability to go upmarket, vs. Sage’s largely horizontal nature and more down-market direction. He also favors Epicor’s customizable ERP platform, user experience (UX), and interoperability.Palsule noted that ERP is a resilient enterprise software category, going strong in spite of several pronouncements of its death by pundits in last 15 years or so. Companies are still evaluating ERP software for various reasons (i.e., global requirements, lowering costs, risk management, supply chain visibility, etc.). ERP software is perhaps getting a bit commoditized, but the trends of digitalization and big data coming from ERP transactions are becoming a new differentiation. 2016 was quite a busy year at Epicor, with 72 total product releases, 10 major releases for core mid-market ERP software products, and 27 add-on releases and integrations to the core, with 75% of those 72 releases for the global markets (see figure 2).
Figure 2. Major Epicor ERP releases in 2016
As for developing brand new products and add-ons, the critical acceptance criteria are being cloud ready, able to be used across Epicor (over multiple ERP software product lines), and savvy in terms of application programing interface (API) and software development kit (SDK). As for API developments, REST-based API services are coming to major Epicor ERP product lines as well as connectors to the Epicor Commerce Connect, Epicor Service Connect, and Epicor BPM (business process management) components. API bulk reports will also be much faster than they have been thus far. Comprehensive product development quality focus is on the entire product lifecycle in terms of performance, release cadence, testing, user acceptance, and support. In order to accommodate expected global expansion, there is a focus on global legislative compliance and on new and enhanced country-specific functionality solutions.
User experience modernization is also coming to many major Epicor ERP products to abide by the millennial impact and the Amazon consumer-like experience effect. The next version release of Epicor Prophet 21 will feature a new HTML5-based user interface (UI), and is slated to be available in late 2017. The upcoming 3.1 release of Epicor iScala, quite functional and template-based ERP software but traditionally plagued by a poor UI, will have similar UX traits. The next version 10.x release of the flagship Epicor ERP suite, slated for early 2017, will have dynamic tiles (as opposed to the static tiles now), see figure 3.
An example of a solution that can be used across multiple product lines would be the aforementioned Epicor Commerce Connect, done in partnership with Magento. As for other products that could be used across multiple product lines, there is Epicor Mobile Framework (EMF), given that about 80% of employees today are no longer tethered to their desks. There has been a limited use of the EMF by partners to build their own apps, but that should change in the future due to Epicor offering more openness and extensibility via an SDK. The upcoming Epicor Data Analytics (EDA) solution for business intelligence (BI), based on AngularJS and an embedded partner BI solution, will also be applicable across several Epicor ERP software products. In the future, the vendor plans to continually deliver big data packs for various ERP software users.
Figure 3. Upcoming Epicor ERP 10 look and feel
Major Epicor Markets
Bearing in mind that the lines between manufacturing, distribution, and e-commerce are increasingly blurring, for distribution Epicor offers Prophet 21 to industrial, fastener, janitorial-sanitary, tiles, paper-packaging, and similar distributors. The product is still sold primarily in the US, but has been equipped with multiple languages and currency support, and is expected to have an international expansion. Once built on the esoteric PowerBuilder platform, it has been gradually moved to Microsoft .NET, and can be hosted in a managed cloud. For its part, Epicor Eclipse is offered in some plumbing, electrical, and HVAC distribution markets in North America. The product is written in Java on a Rocket UniVerse MultiValue (non-relational) database platform.For manufacturing markets (where Epicor still makes about 70% of its revenues), Epicor offers its flagship Epicor ERP suite, which is modern (using social, mobile, analytics, and cloud, making it SMAC-ready), well-rounded, and applicable for a number of discrete manufacturing environments globally. Think of aerospace and defense, automotive, capital equipment, hi-tech, fabrication, industrial machining, medical devices, rubber and plastics, furniture and fixtures, and other similar companies. Built-in product configurator (from engineering to sales), engineer to order (ETO), and regulated industries are typical order winners. In North America, for some automotive suppliers in need of Materials Management Operations Guidelines/Logistics Evaluation (MMOG/LE) compliance, strong Electronic Data Interchange (EDI), and Mattec manufacturing execution system (MES) capabilities, Epicor offers Epicor CMS ERP (from former Solarsoft).
Also via Solarsoft, Epicor now owns process manufacturing ERP software Tropos with a sound install base in the UK and Europe, the Middle East, and Africa (EMEA), but the product’s expansion outside those local regions will depend on the ability to find suitable partners to sell it. Epicor ERP is a very global ERP software platform, while iScala is quite international with a solid presence in the EMEA and Asia-Pacific regions. Other products are still quite regional.
Cloud ERP Software Update
One of the last presentations before the group executive Q&A session at the Epicor Influencer Summit 2016 was on cloud. During the session Epicor pointed out an increasing demand by previously skittish and conservative manufacturing customers for cloud- and subscription-based ERP software deployments. To cater to differing customer needs, Epicor solutions can be deployed across the following five methods: on-premises, infrastructure as a service (IaaS), managed (hosted) cloud, single-tenant cloud, and multi-tenant cloud. The first two options include perpetual licensing, while the latter three deployment options are subscription-based.There are many factors to consider in order to decide the best deployment option for an organization, and the matrix in figure 4 seems quite helpful. In a true multitenant cloud subscription, it is solely Epicor that decides on automatic upgrades and there is no SDK given to customers to extend the system. Only Epicor ERP 10 offers all five deployment options in the manufacturing space. This includes Epicor HCM (human capital management, from the Spectrum HR acquisition), which is sold both standalone and as an embedded companion solution within Epicor ERP.
Figure 4. Epicor ERP deployment choices
Currently, there are about 550 cloud Epicor ERP customers globally, out of about 4,000 Epicor ERP customers in total (including former Vantage and Vista customers). On the other hand, Prophet 21, Eagle, and iScala offer only three deployment options (on-premises, infrastructure as a service (IaaS), and managed (hosted) cloud) for their distribution and retail customers, whereby only the managed cloud comes with subscriptions.
Epicor is making a major investment in its professional services (about 1,000 worldwide consultants and 400 partners) as was revealed at Epicor Influencer Summit 2016, including development of the Signature implementation methodology, training, certifications, project management office (PMO) governance, etc. The update on global delivery centers and support initiatives is that both will be improved, with 16 support centers operating in 21 languages, and communication via phone, portal, and email.
The Epicor Learning Center (ELC) is a website with a blended learning experience, while Epicor University has 55 employees and over 100 embedded and recurring live courses that can be instructor-led, self-paced, or delivered via documentation. All of the programs are aimed at increasing customer satisfaction, reducing service costs, streamlining workflows, improving service levels, and increasing quality and growth.
Helping customers migrate more smoothly to the latest product releases is also in tune with improved customer experience. This is critically important for Epicor, given that Cowan wants many more than the about 100 customers that are currently being upgraded per year; ideally, he wants all customers migrated to the latest versions in a few years. To that end, Epicor Labs now offers a site analyzer for identifying customizations and informing customers how to handle them during migrations. The offering stems from the recent acquisition of the UK implementation partner Dot Net IT. On the other hand, there is not yet an official end of life (EOL) date for several Epicor distribution ERP products such as Prelude, so those customers will not feel the pressure to move.
What Lies Ahead for Epicor
The day ended with a very candid Q&A session with the presenters and the Epicor leadership team (figure 5). They revealed that field service management (FSM), equipment rental management, and advanced warehousing management system (WMS) capabilities could be possible future acquisitions and expansion opportunities. Epicor does have some legacy customer relationship management (CRM) software (Clientele) and some CRM capabilities within Epicor ERP, but its global CRM strategy is admittedly under consideration. After all, Epicor itself is using its own Epicor ERP system to run its global business, but Salesforce is its corporate CRM system.
Figure 5. Epicor execs Q&A
Epicor seems to be in a good place, with committed new owners, seasoned executives, and functional products. In spite of fierce mid-market ERP competition, the company’s outlined global and ecosystem expansion seems plausible, and it is up to Epicor to execute on these plans. The Epicor Insights 2017 conference in May 2017 will be a great opportunity for the vendor to provide some proofs of concept, and we should also expect a bevy of new product announcements at that time.
Related Reading
Epicor Insights 2014–Raising the ERP GameERP Improvement in the Cloud with Epicor
Epicor’s Global ERP Software to Further Company’s New Customer-centric Approach
TEC 2016 Cloud ERP Buyer's Guide for Manufacturing
About the Author
Predrag Jakovljevic | Principal Analyst
Predrag (PJ) Jakovljevic focuses on the enterprise applications market. He has over 20 years of industrial experience within the discrete manufacturing sector, including the machinery and equipment, automotive, construction and engineering, and electronics ...