Epicor Insights 2014: Epicor Responds to Trends in ERP

Epicor Software held its annual user conference this week. True to its name, Insights 2014 did just that… provided insight into recent innovations and roadmaps for the future. Epicor experienced some management changes this year, bringing in a new CEO, Chief Product Officer (CPO) and new General Managers (GMs) for the Americas for both its ERP and Retail businesses. But there were some familiar faces in the executive ranks as well, some with tenures between 15 and 20 years with the company, striking a nice balance between old and new blood, so to speak. The goal of these management changes is to raise the game in terms of technology-enabled products that turn customers into “raving fans for life.”

Throughout the conference, attendees heard reference to what have emerged as the top trends in the enterprise software industry: cloud, mobile, “big data” and social. In addition I believe Epicor addressed the different components that I have been touting as characteristics of “next generation” ERP: providing better ways to engage with ERP in order to encourage more and better use, focus on configuration to replace customization, more innovation and better integration.

Towards that end, Epicor made four announcements:

  • The availability of Epicor ERP version 10, redesigned for device mobility, deployment choice, accelerated performance and social collaboration
  • Support for SQL Server 2014: Not only is Epicor ERP version 10 fully optimized for SQL Server 2014, but Epicor has “purified the technology stack.” That means it only runs on SQL Server in a Microsoft .Net environment.
  • The introduction of the Commerce Connect Platform, fully integrated with Epicor ERP Version 10, to drive rich B2B and B2C online experiences for consumers, customers and suppliers, supporting mobile access and secure PCI-compliant payments
  • New Epicor Windows Phone 8 touch-optimized apps for time and expense tracking, supporting multiple devices and “bring your own device (BYOD)” strategies

Amidst these announcements and as a result of speaking with both Epicor executives and customers, here are my key take-aways from the event.

Protect, Extend Converge Lives On

This has been Epicor’s mantra for many years: promising investment protection and continued innovation that will extend the footprint of its customers’ solutions, while also converging multiple product lines acquired through the years. The “protect” and “extend” part isn’t unique. Many vendors promise the same, although some do a better job of delivering than others. However, Epicor is unique in having delivered on a convergence strategy. The result was Epicor ERP version 9, originally called Epicor 9, reflecting that it was the result of converged functionality of nine different ERP products. The “9” has now become “10,” but that is not because it has merged a 10th product, but is more reflective of a traditional “version” level.

With the merger of Epicor with Activant a few years back you might have expected Epicor to bring those new products into the fold, so to speak. Yet instead it appeared to diverge a bit from this convergence strategy. The lion’s share of Epicor’s ERP products target manufacturing, and to a lesser degree distribution, largely due to the overlap of the two industries. Manufacturers often distribute their own products and more and more distributors might engage in some form of light manufacturing. But I would call Epicor ERP a multi-purpose ERP. Activant brought multiple products to the party but each was focused squarely on distribution. Not only were Activant products purpose-built for distribution, but also over time each has become even more focused and fine-tuned to specific segments of wholesale distribution.

So it seemed to me at the time that Epicor was diverging from its convergence strategy. Rather than bringing a new ERP to wholesale distributors, instead Epicor began to converge them on a technology level, bringing its ICE technology to the distribution party. This seemed to me to be a smart move. Don’t get me wrong; I applaud Epicor’s convergence strategy. Back in 2012 I wrote:

Thus far Epicor has been not only first, but also unique in promising (and then delivering) a single rationalized ERP solution. Other ERP companies have toyed with the idea and even announced such plans, but then either pulled back upon encountering resistance from their installed base of customers or subsequently decided against such a strategy. While at first glance these decisions may have seemed to be in the best interest of their customers, these ERP solution providers may in fact have done customers a disservice in tacitly encouraging them to remain on old, outdated technology that simply cannot serve them well in today’s fast-moving and connected world.

And yet, the resistance from customers was typically not resistance to new technology (like Epicor ICE), but resistance against a perceived, or real forced march to a new product. Each customer wants to move forward and/or make a change at its own pace and on its own terms. And if its current ERP is not perceived to be “broken” the customer is not in any rush and procrastination is the result. At times this procrastination is the product of an older generation of IT professionals who would be content to manage familiar solutions right up until retirement. In fact many of them would benefit from a gentle push.

While Epicor has never forced anyone to move, by boldly declaring Epicor ERP as the future, it provided more incentive to consider moving to it, encouraging those stuck in the past to replace solutions with aging, legacy architectures. Most saw the value in re-implementing rather than carrying forward decisions that had been constrained by limitations of applications and technology in the past. Instead of a mass revolt, as feared by others, many customers embraced this and saw it as an opportunity to justify moving forward.

I still strongly believe in what they are doing with Epicor ERP and in fact Epicor executives still say they have a long-term convergence strategy that includes distribution and the Activant products. But I am not sure they need to bring the two together into a single ERP for two reasons:

  • Epicor is big enough and strong enough to manage two product lines, particularly if they are supported by the same underlying technological architecture (ICE)
  • ICE provides a framework whereby development efforts can be shared across product lines

There will be features and functions shared by all companies, some shared by distributors (or manufacturers) only and some required for niche markets or micro-verticals. For like needs, the Service Oriented Architecture (SOA) and Web 2.0 capabilities of ICE allow Epicor to build once and deploy across multiple solutions, freeing up resources that would otherwise be required to satisfy those requirements in each product line – freeing them up to work on more targeted functionality which has the potential of helping its customers in wholesale distribution (and possibly other markets) achieve a measure of competitive differentiation. This could also help Epicor reach into more narrow micro-verticals that might require more specialized features and functions. But (at least for now) Epicor will leave that opportunity to partners.

Developing “shared” components is the top priority for Epicor right now, not only to share across manufacturing and distribution, but also to add more value to its suite of solutions for retail. An example might be using the ERP functions to strengthen financial management options for retail. You will hear Epicor talk in terms of developing more “granular” functionality and other vendors and influencers will talk about “loosely coupled.” Regardless of the terminology, the net effect is to allow customers to add more features and functions on top of what they already have (with less disruption) and to allow vendors like Epicor to build features and functions once and re-use them across different products and customer bases.

Why is this so important? The obvious answer: to deliver more innovation.

Accelerating Innovation

I’ve written a lot about “next generation” ERP over the past year and I have also written a lot about cloud and SaaS. When it comes to more innovation, the two are connected. First of all the increased pace of innovation is supported through the use of web-based services, object-oriented data models and component architecture. All these combine to support more rapid development of new features and functions, which are more easily consumed as needed. ICE is a key factor in helping Epicor keep pace. So how does SaaS fit in?

A vendor that delivers a product exclusively in a multi-tenant SaaS environment has a clear advantage in delivering enhancements. Solution providers that deliver on-premise solutions are forced to maintain multiple versions of the software. Very often the software is offered on a choice of platforms and databases, and the vendor must support multiple release levels determined by its customers’ ability to keep pace with upgrades. For every person-day vendors spend on innovation, they spend another multiple of that day making sure it works across multiple environments. So if the vendor only delivers innovation in a pure, multi-tenant SaaS solution it needs only support and develop a single line of code. This means it can spend more time on pure innovation and that raises the bar for all vendors.

Epicor’s convergence strategy has helped it compete, but it does support both on-premise licenses and SaaS deployments and until now has offered its converged ERP on multiple platforms. Purifying the stack and limiting the solution to a SQL Server based Microsoft .Net environment reduces development efforts and allows Epicor to optimize for this environment, which adds (2X) speed and (4X) scalability. So while it doesn’t enjoy the same economy of scale as a provider of a pure multi-tenant SaaS solution, it has helped stack the deck for improved development productivity. In addition, it has honed its skills in rapid application (agile) development. And in case you are wondering how this will be received by existing customers, I am told that 90% of Epicor ERP customers are already running on the Microsoft stack. As a result, I expect user resistance to be low, particularly with the demonstrated improved performance.

So I would expect the rate of innovation to start to accelerate from here, at least in terms of Epicor ERP 10. To effect further gains, it will have to carry this strategy over to the distribution side of the house, or it will need to complete the convergence to include the Activant products.

In the meantime Epicor is leveraging the ICE technology to bring more “next generational” characteristics to all its products. Bringing its Epicor Business Activity Query (BAQ) tool to Prophet 21 (an Activant product) is an example. New features of Epicor ERP 10 like…

  • a social collaboration framework that lets users collaborate with one another and “follow” business activities and events
  • a live-tile-style browser interface that’s touch-enabled for any tablet

are enabled by ICE and therefore it is likely these features will be also made available to other Epicor ICE-enabled products as well.

So while Epicor doesn’t enjoy the luxury of maintaining a single code base, it is positioning itself to more rapidly replicate functionality across those different sets of code, thereby accelerating the delivery of new user experiences, better configuration replacing the need for customization and easier integration… all hallmarks of next generation ERP. Time will tell whether customers will turn into “raving fans for life” but if the mood and tone of Insights 2014 is any indication, Epicor has a clear runway ahead to achieve its goals.



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Epicor to Acquire Solarsoft: Expanding its ERP Portfolio While Adding MES and EMI

Last month Epicor announced its agreement to acquire privately held Solarsoft Business Systems from Marlin Equity Partners. Solarsoft itself is a product of acquisitions, with a portfolio of enterprise resource planning (ERP) for manufacturing and distribution, as well as offerings that extend deeper into manufacturing execution. These include a Manufacturing Execution System (MES) and Enterprise Manufacturing Intelligence (EMI). While there is certainly some overlap with Epicor’s existing product offerings, Solarsoft will expand Epicor’s reach to include process manufacturing, push it deeper into manufacturing operations and strengthen its print, publishing and packaging offerings developed by Kodak.

OH NO! More ERP Solutions?

That might be the initial knee jerk reaction to this further consolidation of the ERP market. After all, Epicor already has a whole bevy of ERP solutions. However Epicor stands out in the field of acquisitive companies as the first major ERP solution provider to deliver on a promise of convergence, while also extending functionality and modernizing the underlying technical architecture.

That modern technical architecture is Epicor ICE, which combines a second-generation Service-Oriented Architecture (SOA) with Web 2.0 technologies. This technology provided a good framework for the convergence of nine different ERP solutions, (originally called Epicor 9, now known as Epicor ERP) but its continued evolution has also resulted in the evolution of Epicor’s product strategy.

With the acquisition of Activant last year, a company dedicated to serving wholesale distribution, the focus on converging multiple ERP solutions shifted slightly. In the short term it is now focused on convergence of technology and bringing the benefits of ICE to a broader portfolio of solutions, including the products acquired with Activant (including Prophet 21, Eclipse and Prelude and several other legacy applications). While Epicor ERP is a multi-purpose solution, these products will continue to serve more specific micro-verticals in the wholesale distribution industry, verticals such as distributors of fasteners, ceramic tile, electrical supplies, etc. as separate products for the near term.

However, Epicor didn’t just wake up one day and change its mind (and its strategy) with the acquisition of Activant last year. The evolution of ICE was also a significant factor in evolving the overall Epicor strategy. Over the past several years, ICE has been further strengthened to allow Epicor to build new features, functions and applications on a modular basis without touching the core of ERP. This means Epicor can continue to add new (converged) functionality or supplement or replace existing features without requiring its customers to implement an entirely new ERP.

ICE provides a bridge that connects the existing application with new, modular functionality. And it allows Epicor to “build once” and deploy across multiple solutions, freeing up resources that would otherwise be required to satisfy those requirements in each product line – freeing them up to work on more targeted functionality which has the potential of helping its customers in select industries achieve a measure of competitive differentiation.

So how do the Solarsoft products fit into this strategy? First of all, Tropos, its solution for process manufacturers, allows Epicor to address a whole new segment of the manufacturing market. While discrete manufacturers typically manage components and production in discrete, numeric quantities, process manufacturers often must handle ingredients and produce batches by weight or volume. Discrete manufacturers create bills of material. Process manufacturers deal with recipes and formulas and quite often have specific requirements for material traceability and regulatory reporting. These special requirements typically require special features and functions.

So the sequence of events that must occur to determine exactly how Tropos will fit into the convergence strategy is one of the decisions that will be required once the acquisition is complete. Yet even in the meantime, there are certain features and functions that are common across all sectors. Once the Tropos solution has been enhanced to work with ICE, the investments Epicor has made in evolving ICE should also ensure that Tropos customers have earlier access to much more innovation than Solarsoft itself could have delivered.

Other niche markets covered by Solarsoft such as retail packaging and corrugated manufacturing will reap the same type of benefits and further expand Epicor’s addressable markets. The addition of aVP and bVP, both serving the packaging industries will also further strengthen Epicor’s partnership with Kodak (announced in 2010) to better serve the print, publishing and packaging industry.

Manufacturing Operations

In addition to broadening its market, the Solarsoft acquisition also strengthens the depth of manufacturing operational functionality Epicor can bring to manufacturers in many different industries. Prior to the announced acquisition by Epicor, Solarsoft itself had made two strategic acquisitions: Mattec and Informance.

Mattec MES – Production Control

Mattec provides real-time production and process monitoring allowing manufacturers to gain control of their shop floor and achieve significant improvements in efficiency and product quality. It includes:

  • Real-time production monitoring
  • Process control
  • Dynamic Job Scheduling
  • Statistical Process Control
  • Scrap and downtime monitoring
  • Preventive maintenance management
  • Operator tracking
  • Real-time alarms and alerts
  • Open communications and machine interface

Because its primary role is to control the shop floor, there is of course some overlap and contention with the shop floor control (SFC) functionality already available in some of the ERP solutions Epicor (and even Solarsoft) offers. Yet this kind of overlap between MES and the SFC module within ERP is quite common. MES tends to provide an added level of “real-time” over SFC, as well as a higher degree of interoperability with machine and process automation. So each manufacturer (including Epicor and Solarsoft customers) must make its own decision as to its own specific requirements. And indeed Mattec may be quite a welcome addition to some existing customers, like those running Epicor iScala, which has nothing to compare or compete, or other customers for which SFC provides only a good start to a complete manufacturing operations solution.

Informance EMI – Enterprise Manufacturing Intelligence

The Informance product previously acquired by Solarsoft may in fact be more universally appealing across a broader spectrum of the Epicor and Solarsoft customer base.  The Informance product can be categorized either as EMI (Enterprise Manufacturing Intelligence) or MPM (manufacturing Performance Management). Whichever way you look at it, the overriding goal is to improve the performance of manufacturing operations. In fact, using the Informance software, along with the permission of its customers, Solarsoft has been able to benchmark performance of these operations and determine “best-of-class” standards. It publishes a number of benchmarking studies each year to demonstrate how best practices impact manufacturing performance.

Unlike MES, which adds a level of shop floor control, EMI serves to aggregate data from a variety of sources (man, machine and software applications) and provide a level of analytics and intelligence that cannot be gleaned from any single source.  As such, it does not replace any ERP functionality, but complements it. Today there is nothing in the Epicor product portfolio that competes in terms of this type of functionality, so this part of the acquisition should be entirely accretive.

Conclusions and Key Takeaways

What’s the bottom line here? Epicor expands its addressable market to include process manufacturers and strengthens its position in print, publishing and packaging. Epicor manufacturing customers benefit from added solutions that dive deeper into their operations. Solarsoft customers will benefit from ICE and the “Build once, deploy everywhere” philosophy behind it.

Yes, there is soon to be one less ERP solution provider, but the solutions themselves aren’t going anywhere except forward.

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Plex Systems Announces Pending Acquisition by Francisco Partners

Yesterday  (June 6, 2012) Francisco Partners announced the pending acquisition of Plex Systems, one of only a very few SaaS-only ERP solution providers and the one that offers the deepest and broadest offering for manufacturers. If you look at Francisco Partners’ website you see the company describes who it is and what it does as follows: “Francisco Partners (FP) provides transformational capital to technology companies facing strategic or operational inflection points.”

It is pretty clear that SaaS ERP is at one of those strategic inflection points. While a short 5 years ago only about 10% of manufacturers would even consider a SaaS ERP solution, my research indicates that percentage had grown to 45% in 2011 and I expect to see another jump this year. While in the past I have called ERP the last bastion of resistance to SaaS, that resistance is fading and more and more ERP vendors are jumping on the bandwagon, which only increases the acceptance and the hype. But Plex is not following that trend; it is leading the way.

Unlike many other ERP solution providers that are new to SaaS, Plex has been offering SaaS ERP (exclusively) to manufacturers for the past 12 years. For years, deals were often won largely because of functionality and in spite of being SaaS. More recently SaaS has also been a key selling point. I would agree with Petri Oksanen, a principal at Francisco Partners who is quoted as saying,  “We believe that Plex Systems has the potential to lead the transition to cloud ERP for manufacturers, and that this will be as transformative as the adoption of cloud solutions has been to sales, marketing, and human capital management.”

As a result of this acquisition, Francisco Partners will own 100% of all existing shares of Plex. This is also a divestiture of shares by Apax Partners, which happens to have recently acquired Epicor and Activant and merged the two companies as Epicor Software. Mark Symonds, CEO of Plex called the sale of Apax shares “a natural course of events.”  Apax had invested for six years and this is a logical exit strategy for them.  However, unlike the Apax/Epicor/Activant deal, this acquisition is not a mash up of multiple solutions or solution providers.

Which means few, if any, strategic and operational changes for Plex. That is good news for employees and customers, both of which are extraordinarily loyal and engaged. Plex was recognized by the Detroit Free Press as one of the top workplaces in Michigan in 2011. I believe at least one of the reasons customers remain happy is because of the relatively instant gratification they get from Plex’s approach to rapid application development and opt-in enhancements. Unlike the traditional on-premise approach where customers request enhancements, which get put into 12-18 month planning/development cycles (and then those same customers often delay upgrading for another year), Plex updates software frequently, sometimes on a daily basis.

Mark indicates Plex will largely continue along the same path it has been on for the past several years, but Francisco Partners will bring added resources and possible relationships.  This might open doors to Systems Integrators that might have remained closed to a company of Plex’s size and I have to think it might also attract new channel partners. Plex will continue to serve the automotive, aerospace and defense, food and beverage and electronics industries and will also continue to seek to stretch the boundaries of those sectors to expand incrementally.

Plex and Francisco Partners see the market entering into a period of increasing replacement cycles. My research indicates one in four companies surveyed are planning to purchase a new ERP within the next three years and another one (in four) are still undecided. Of those planning a purchase, three out of five will be replacements, while one will be a new purchase for the entire enterprise and one will be a purchase for a new site not currently supported by ERP. Clearly there is lots of opportunity in the niche Francisco Partners calls “Manufacturing ERP.”

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Epicor Brings Lean Six Sigma to Software Development

Lean and Six Sigma are initiatives that were born from the pursuit of operational excellence within manufacturing companies. While Lean serves to eliminate waste, Six Sigma reduces process variability in striving for perfection. And yet even though both have been around a long time, Six Sigma in particular is often under-appreciated and misunderstood, especially outside the world of manufacturing.

Evidence of this was apparent when my Tweet during the recent Epicor Insights 2012 event sparked what one Epicor employee called a “Twitter war.” While I wouldn’t go so far as to call it a war, several comments ensued that made me think my fellow enterprise application industry observers were hardly up to speed on Six Sigma.

I tweeted something along the lines of: “Kudos to Epicor for combining Lean Six Sigma and Agile development. Unique in the software industry.”

I will paraphrase some of the reactions:

Agile development not that unique.” True, but combining the rapid application development process with Lean Six Sigma is that unique.

Does that mean developers remove the clutter from their desks?

Margins in the software industry are large enough that it is not an issue.”

What??? Someone is missing the whole point of Six Sigma.

Understanding Six Sigma

The label “six sigma” itself implies a level of rigor not usually associated with the software industry, considering many software developers today still view what they do as an art, rather than a science. If you don’t believe that, just ask a developer how long it will take to complete a project.

Literally six sigma is a statistical measure that refers to the number of standard deviations away from the mean (or average) point in a bell-shaped curve. Achieving six sigma quality translates to producing no more than 3.4 defects per one million – or in other words, 99.99966% good quality. That might mean 3.4 bugs in a million lines of code. While defect rates are important, Six Sigma is much more than that. It is a rigorous process and a business management strategy with the goal of delivering measurable financial results. In fact to achieve Black Belt certification traditionally the candidate needs to lead a Six Sigma project that has produced significant financial results (e.g. one project that saved at least $500,000 or two projects totaling that cost savings.)

But there are still doubters in terms of its relevance to software. Fellow industry observer P. J. Jakovljevic wrote

While more rigor and analysis cannot hurt, Six Sigma processes can extend the time to market. If one is not careful, one can spend too much time investigating possible risks, since for each issue, you have four levels of analysis in the so-called house of quality, which can become taxing. But if done right, Six Sigma can create sold test plans.

Yes you need to be careful to do it right. As a methodology that uses a structured problem-solving approach, Six Sigma seeks to identify and remove the causes of defects and errors in any process, which is why it makes a nice complement to the Agile development process. But it is not only about quality of the product (in this case the software code) produced, but also the process of developing the product. So it extends far beyond test plans.

Six Sigma is a rigorous program requiring formal training and a special infrastructure of people within the organization who are experts in these methods.  As it is being introduced into the enterprise there might be some risk of introducing delays, since there will be a learning curve, but in the long run, it should have just the opposite effect.

Agile and Six Sigma are new to the original Epicor side of the business.  Kevin Roach, Executive Vice President and General Manager of ERP for the Americas brought both methodologies with him through the merger of Activant with Epicor. I’ve known Kevin for many years and watched him bring them first to the Software division of Rockwell Automation and then to Activant. A Six Sigma Black Belt himself (dating back to his days at GE), he brings the deep understanding of, experience with and commitment to Six Sigma necessary to effectively marry it to the Agile development process.

Indeed, in spite of both Agile and Six Sigma being new to the Epicor side of the business I saw evidence of it producing results already.  While Epicor has struggled with bringing quality releases to the market in the past, the latest “700 release” of Epicor ERP Vs 9 (previously known as Epicor 9) seems to have resolved many of those issues. At the time of Insights 2012 (May 7-9, 2012), six early adopter customers had gone live and another three were scheduled to do so immediately after the event.

What Customers Say

I think it is best to let those early adopters speak for themselves. Here are some general comments from these customers:

“Upgrading [from version 6.07] was so easy. We had trouble doing installs on prior releases, but this time it was effortless. The conversion and schema change ran fast. Because we were already on a later release, the new release was visually similar. Customization and workflows took less than an hour of effort to convert. We especially like the new upgrade utility. From certain releases, it will be effortless.”

“Getting up and running on the new release was like getting a new car – everything is crisper, cleaner, good quality. I have now been out of the office for a week and haven’t gotten a single call or email with an issue.  I actually called in to make sure everyone was still there. We run MRP every night. A full regen went from 90 minutes to 15 minutes. Now we can run ‘what ifs’ and try other options to tune our production.”

“On the prior release, we had 16 known issues that we were living with. We know from testing that 14 are resolved and the other two aren’t re-creatable.”

“We did a fresh install, starting from scratch. We felt this would provide us with the most opportunity to improve our implementation. We simply upgraded our database when we went live. We went live April 23, 2012 and I can tell you the first month-end close was the cleanest and easiest we have ever done.”

“We have 300 employees across 7 plants. We engineer to order a custom built product. Every customer wants something different. We started on Epicor 3 years ago (version 6.04.) Problems we had with performance and quality were immediately resolved in this release.  We have ticked off all but two issues and those are about enhancements. We went through a 14-hour conversion process. It was seamless and achieved over the weekend.”

“We’ve been an Epicor customer for 20 years running the Vantage product. We bought source code and over the years heavily customized it to the point where we stopped doing upgrades. When Epicor 9 came out its ability to customize without customizing was enormous. We upgraded last week. Actually we [line of business] went home early on Friday and IT [Information Technology] upgraded us over the weekend. It was a very seamless process. The IT guys came in Monday morning in a good mood. We were in a good mood.”

“Our upgrade was fast and clean. After a couple of crossword puzzles it was in and clean. The next day we had users asking, ‘Is it supposed to be this fast? What’s wrong? What is it not doing? What did you do to Epicor?” The only complaints we hear now are based on users not being able to enter data incorrectly. We’ve been trying since I have been here to get the users to enter the data correctly. Now it won’t allow them to do otherwise. They ask, ‘Why can’t I do this now?’ We tell them, because you were never supposed to be able to do that to begin with.”

“We’re finding new functionality we didn’t know was there. People are like kids in a playground finding new things to play with – different ways of getting data and answers.”

“We are a 12-year customer, having migrated from Vantage to Epicor 9. We tend to stay current. Sometimes upgrade is a bad word. We have to convince users it is worth it. This time we cut people loose and challenged them to try to break it. After a couple of days they came to us and said, ‘Can we stop now? We can’t get it to fail.’ We do have one minor issue in pricing but it’s not Epicor’s fault. We do things differently. But Epicor resolved it.  This is a smooth, smooth conversion.”

In Conclusion…

In summary, I would repeat my first impression: Kudos to Epicor for bringing a level of rigor to the process of software development. While more and more software developers are embracing Agile, you almost never hear the phrase “Six Sigma” being uttered in relation to developing enterprise applications.

Of course only time will tell, but the combination of the rapid development methodologies of “Agile” and the rigors of Six Sigma should bode well for Epicor customers willing to go through the upgrade process.

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Epicor University: Adds Activant and new Rigor to Processes

Yesterday at Epicor Insights 2012 I got an update from Louise Keppel, VP and Amy Melton, Director, both with Worldwide Epicor University. It has been a little over a year since Epicor announced the launch of a its new university for customers, partners and employees to address the challenge of delivering consistent high-quality training worldwide, and to expand the range of Epicor’s education deliverables. The past year has seen a lot of change for the team with the addition of the Activant training group added to Louise’s worldwide responsibilities. Fortunately the Activant folks brought with them an extensive complement of training materials of their own. They were not created with the same set of robust tools that Epicor University has developed over the past few years, but the Activant team also brought with them added rigor to the development process, including a focus on Six Sigma process improvement.

As soon as it was announced, I was a fan of the University approach. Last year I wrote:

So why is a University needed? After all, user interfaces have become so much more intuitive and software has become easier to use. Navigation through an enterprise application is no longer cumbersome and confusing. And when was the last time you read the instructions for any kind of software anyway? If you can’t figure it out easily it just doesn’t get used.

Exactly! That’s one of the reasons that education and training often gets ignored. Sure the user interface is intuitive. Sure it is easy to navigate through the various functions. But these are potentially complex business processes that are being modeled through an ERP. Are those business processes efficient? Are they standardized and repeatable? Do they produce a clean audit trail? Can they be easily audited? Do they put you in a position of competitive strength or hold you back from realizing your full potential? Most importantly, are you getting the most value out of your investment? Why do you think one company fails miserably while another succeeds beyond all expectations while they both use the same software?

Since then the Mint Jutras 2011 ERP Solution Study gathered evidence to corroborate this sentiment. We captured the top goals of ERP, along with the challenges encountered in achieving those goals. Topping the list of goals (62% of respondents) was that of improving internal efficiencies. Stumbling around in search of the necessary features and functions, in the proper sequence and workflow is certainly not the way to achieve efficiency. Three out of the top five challenges included difficulty in managing change, user frustration with the system and user resistance to new processes. And what was the action most often taken to address these challenges? Provide additional training.

A recent change in the Epicor approach is to bundle access to on-line educational courses into every sale. This is a smart move. Because of the intuitive nature of navigation and all the reasons stated above, companies may be tempted to shave cost by skimping on or even eliminating training when it is purchased a la carte. Embedding it in the deal takes the decision-making out of the equation and insures every user has access to all the necessary courses and materials. Just seeing all the possible courses for all the different available functions could lead companies to take better advantage of the solutions they purchased.

In fact under-utilization of ERP is quite common. The Mint Jutras ERP Solution Study measured ERP usage on a scale of 1 to 100 where a score of 100 indicates all modules relevant to the company were fully implemented. We found the average score was about 65, indicating a lot of relevant functionality is being left on the table. Perhaps because the users don’t even know it is there? Of course the trick will be to condition the users to go looking for added functionality, rather than assume it is not there just because it doesn’t jump right off the screen and grab them. Putting all the materials at their fingertips is certainly a start, and on-line help goes a long way. But making a series of potentially quick (i.e. short) courses available on demand is equally important.

Prior to 2011, all Epicor training classes were classroom based. Today many of them can be delivered virtually. In a world where budgets are still tight and everyone seems to be doing the job of at least 1.3 people, this is a big plus. Companies need not pull key employees out of the office, insert them into an artificial environment and pay for travel and expenses only to have them forget half of what they learned when they get back to the office. Of course the downside is that managers and even the employees themselves may think because they never leave the office they can still accomplish their “day job” during the training, only to have the training suffer. And many of the online courses are 8 hours – often too long to hold someone’s attention well enough for the training to “stick.” But the Epicor University team is working on breaking the courses into smaller chunks that are more easily digested and more easily fit in with busy schedules.

I learned two other facts worth noting yesterday.

First: The Epicor University team is also responsible for putting together the demo databases that the field sales and presales teams use during the sale process. Why? Because these demo databases are also used in all the workshops in the courses. At least some members of the customer’s selection team will be the earliest participants in training. This way, what they see in a training class looks familiar, after having seen the same features, functions and data in the demos.

Second: While usually training reports up through the support organization, this team reports into the development organization. Louise reports to Paul Farrell, EVP of Worldwide R&D. Again you might ask why this matters. There are certainly several different schools of thought on this organizational structure, but Epicor feels the key advantage is in the coordination of product development with the development of documentation and training materials. By making the latter necessary steps in the delivery of a product, when the product goes GA (generally available), you can be sure that the all the course, help and training materials are also ready.

A comment from one early adopter of Epicor’s latest 700 release of Epicor ERP (Epicor 9) summed up the value quite succinctly, “We’ve been finding new functionality we didn’t know was there. People are like kids in a playground finding new things to play with – different ways of getting data and answers.”

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My initial take on Epicor, Activant and Apax Partners

Yesterday Epicor announced it had agreed to be acquired by Apax Partners. While I am not personally familiar with Apax, its website tells me it is an independent global private equity advisory firm and holding company for the worldwide Apax partnership which is the lead investment adviser to the most recent Apax Funds. Apax Funds buy both majority and minority stakes in large companies that have strong, established market positions and the potential to expand. It has a strong heritage of technology investment.
At the same time, it was announced that Apax would also acquire Activant Solutions and merge the two companies. The combined entity will operate under the name of Epicor Software Corporation and become a privately held company. Of course it is too early to tell exactly how the merger will be executed, but Epicor itself has a history of acquisition and is the only ERP company that has grown through acquisition and successfully executed a product convergence/consolidation strategy. Epicor 9, released in December 2009, is built on Epicor Internet Component Environment (ICE) 2.0, a second-generation Service-Oriented Architecture (SOA) and Web 2.0 technologies and is generally recognized for its visionary architecture. But just as importantly, Epicor 9 merges capabilities of nine different products (hence the “9” in the name).  If Epicor remains true to past strategies, I would expect it to treat the Activant products similarly.
But then again….maybe not. Activant serves some very specific vertical industries including:
·         automotive aftermarket
·         farm-home
·         hardware and home centers
·         heavy duty truck and trailer
·         lawn, garden and nursery
·         lumber and building materials
·         painting and decorating
·         pharmacy retail
·         specialty retail
·         wholesale/distribution
While Epicor also serves retail and distribution sectors, Epicor also has products which complement ERP in support of a retail environment, and has never been that “niche” oriented.  It remains to be seen whether these industries are best served by separate product lines or whether Epicor will decide to continue the convergence and turn Epicor 9 into Epicor 10, or maybe even Epicor 11 or 12.
For now it is safe to assume the transaction will be good for Epicor and allow it to fuel more aggressive growth in the market. As for Activant, customers should take comfort in knowing that Epicor’s strategy has been very customer-centric with a motto of “Protect, Extend and Converge.” Whether convergence is in the future or not, I have a lot of confidence in the resultant management team preserving the part about protect and extend.
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Activant announces new Business Rules Engine

Last Thursday I questioned whether IT spoke the language of business. In that short commentary, I used a couple of examples. One of them was “abstraction.” I mentioned that, “if you tell a business person you can set up rules that will govern processes once, and those rules will be enforced by all your business systems, then you have introduced the concept of abstraction without having ever said the word.”
Today I read that Activant has introduced a Business Rule Engine for Distributors.  This is exactly the type of feature I was talking about – one that takes the solution beyond the traditional transaction and reporting ERP of old. The Business Rule Engine provides Prophet 21 users with the ability to insert their own business logic into the Prophet 21 code base without altering the application code itself.
Some examples provided by Kevin Roach, executive vice president and general manager of Activant’s Wholesale Distribution Division included:
·         Conversion rules that auto-populate some fields based on others –  like the town or city and state based on zip code? These are the types of “smart” features we have become accustomed to through our own personal online shopping experiences. Heck, I was a catalogue shopper long before the Internet and even back in those days I had customer service reps automatically filling in my town and state based on my zip code. But I didn’t see the same intelligence in business applications. This is a very simple example, but there are scores of ways to use this kind of functionality.   Like certain compliance requirements based on type of product.  Activant suggests an item entered with a product group of Pharmaceuticals could automatically set the Pedigree Tracking Checkbox to be checked. Or food and beverage for nutritional labeling, etc.  As new requirements are added, new rules reflect the changes with far less disruption than mucking around in code.
·         Validation Rules:  Another Activant example, Customer A can only buy items with Item Class 1 set to “No Restrictions.” The system will provide an error message if an item without that Item Class is entered on an order for Customer A. These validations basically allow for the creation of warnings and error messages based on rules being met or not met.
·         Asynchronous Workflows. A third Activant example… a distributor could set up a workflow so that a purchase order placed in the amount of $5,000-$10,000 triggers an alert to an authorizing manager for signoff, while an order over $10,000 triggers an alert for the CFO’s signoff. When the inserted trigger is activated in the Prophet 21 software, the rules included in that workflow will be executed in the sequence indicated.  Those are the rules today, but perhaps during a downturn in business, you need to (temporarily?) reduce those authorization levels or require the CFO to additionally review all purchases. Perhaps the rules tomorrow will add the type of purchase. Maybe a requisition generated for direct materials will be handled differently than indirect materials.
Why are these features and these examples (which appear to be so simple) so important? Because these business rules are subject to change. And if they are embedded within the logic of the application then changes to your business either require changes to your application (think source code and programming) or prevent your business from adapting.
If you are using older, outdated technology, and looking to upgrade or replace…perhaps this type of requirement is not top of mind. But all ERP users should be clamoring for this type of logic to be extracted (or abstracted) from the underlying code so that it puts the power of change in the hands of the business user.
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