Insights 2015

Epicor Reevaluates Its Strategy

A year ago at Epicor Insights 2014 the Epicor community was introduced to some new management. The owners, private equity investment group Apax Partners, had brought in a new CEO (Joe Cowan), who in turn brought along a new Chief Product Officer (Janie West) and new General Managers (GMs) for the Americas for both its ERP and Retail businesses. But all in all, not much had really changed. And the promise of “Protect, Extend, Converge” was still center stage.

This has been Epicor’s mantra for many years: promising investment protection and continued innovation that would extend the footprint of its customers’ solutions, while also converging multiple product lines acquired through the years. As I wrote last year,

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.

However, even last year it appeared Epicor was diverging a bit from this convergence strategy, primarily as a result of the merger of (the original) Epicor and Activant, which focused exclusively on the wholesale distribution market.

A Little Background

The lion’s share of Epicor’s ERP products target manufacturing. While these products have some distribution, capabilities, this was 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 Epicor ERP is a multi-purpose ERP, focused primarily on manufacturing, and more specifically discrete manufacturing.

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.

And then there was the SolarSoft, which Epicor acquired back in 2012. This acquisition brought along an ERP which focused on more process-oriented industries, and also a “best of breed” manufacturing execution system (MES).

And finally there is Epicor’s retail business, which has actually been kept quite separate.

Moving Forward: More Than A Few Changes

So given this state of affairs, Epicor’s CEO, Joe Cowan, has made some changes. The underlying message throughout is that the company is “totally focused on the customer.”

The company has undergone a major reorganization, including spinning off the retail business. This group tended to address a smaller number of larger customers that were very different from the rest of the Epicor customer base. This provided no real synergies and the timing was good given other changes Mr. Cowan wanted to make. Even spun off, it will remain an Apax company and as Paula Rosenblum (@paula_rosenblum) from independent research firm Retail Systems Research (RSR) notes, this is really a “win-win.”

In addition, Mr. Cowan has simplified the remaining organizational structure and centralized key functional areas. The “old” Epicor tended to be organized around products, resulting in silos within the company, along with some redundancies. For example, support systems across different products used different policies and processes. Under the new organization, they will all be moved to a common support structure headed by Ian Ashby who came to Epicor with the Solarsoft acquisition.. The reorg also consolidates more than 20 data centers down to 8. And it has brought in some new talent, including new CTO, Jeff Kissling, only 40 days into the job as of the event.

But the changes most relevant and important to customers are the changes in product strategy. While “converge” was the mantra before, Janie West told me that moving forward, Epicor will “not be a slave to consolidation.”

One slide up on the main stage seems to have summarized the new approach:

  • Converge where we can
  • Build where we should
  • Partner beyond our core
  • Acquire as required

Of course the advantage of convergence was to remove any redundancies in development. Despite serving different markets, there are core elements Epicor needs to deliver to all its customer bases. For these functions, Epicor will favor the development of external components, which can be used across different product lines. For those products using Epicor’s advanced technology architecture (ICE) this is simply a no-brainer… which is why there had been a push to get all product lines on this new architecture. But Epicor now realizes this may not be a requirement in order to share the results of development efforts to deliver web portals, dashboards, mobile apps and other new features. So it will only re-architect where necessary, and not just for the sake of re-architecting.

While I believe the convergence to Epicor 9 (which is now Epicor 10) was the right approach at the time, I would agree with this new strategy. Where future acquisitions might simply expand the customer base in markets where Epicor plays, convergence makes sense. Where acquisitions (like Activant and Solarsoft) bring Epicor into new markets, it doesn’t. Where products are limited by older technology, it makes sense to replace the underpinnings with new architecture (like ICE) but where they are already technology-enabled, it makes sense to leverage what already exists.

The prior convergence efforts, coupled with more recent acquisitions leaves Epicor in a good position, with a manageable number of product lines – enough to specialize, few enough to maintain focus…on the customer.

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