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.
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.