Prophet 21

Epicor Announces It Will Grow Business, Not Software

Epicor has a new tag line: “[We] grow business, not software.” The declaration is not quite as radical as it would first appear. In fact it appears to me to be much more evolutionary than revolutionary.

Epicor’s mantra for years was “Protect, Extend, Converge.” As in:

  • Protect its customers
  • Extend its solutions
  • Converge its product lines

However, in 2014 it appeared Epicor was diverging a bit from the convergence strategy, primarily as a result of the merger of (the original) Epicor and Activant. Both had grown through acquisition, but while Epicor’s ERP solutions were multi-purpose ERP (focused primarily on discrete manufacturing) and therefore ripe for rationalization, each of Activant’s products was purpose-built for distribution, and over time each had become even more focused and fine-tuned to specific segments of wholesale distribution. And then there was the SolarSoft acquisition (2012), which brought along an ERP which focused on more process-oriented industries, and also a “best of breed” manufacturing execution system (MES). And finally there was Epicor’s retail business, which was actually spun off last year.

So while the “Protect” and “Extend” sentiments of the message are still very much alive, convergence gave way to a new message. Last year, Epicor’s (new) CEO, Joe Cowan declared the company would be “totally focused on the customer.” This year’s tag line seems to me to be a simple extension of that customer focus. Software is not the end goal. The goal is to help Epicor customers grow their businesses. It just so happens Epicor will develop software and provide services to make that happen. And a lot of the software will be delivered as a service, as evidenced by the appearance of a fluffy white cloud in the middle of the tag line.

Epicor tag line

Of course in having a tag line like this, Epicor needs to be careful not to make the message itself too fluffy. And in promising to help customers grow, Epicor will have to execute a delicate balancing act, balancing what the customers say they want and what Epicor knows they need. This is particularly true of those customers still running older legacy solutions. Epicor has promised not to sunset those products. And yet if you really understand the demands and opportunities of the new global, digital economy, you know you can’t be competitive without modern, advanced technologies.

Customers running legacy solutions won’t benefit as much from the latest and greatest development, but that’s not to say they won’t benefit at all. Epicor has been a bit quiet on the technology front for the past few years, but that is not the result of lack of attention. In fact it has been doing a lot, sometimes at the expense of new features and functions. Its advanced technology architecture (ICE), visionary at the time of its initial release circa 2009, has undergone a technology refresh of its own, and it also paves the way forward for both strategic products like Epicor 10, Prophet 21 and others, as well as legacy solutions like Vista and Vantage,  etc.

Now that that refresh is complete (for now… after all, technology continues to advance at an ever-accelerating pace), you’ll see more aggressive development of features and functions. Epicor is picking up the cadence of releases, shooting for twice a year (spring and fall) for its strategic products, which of course will garner more of its resources. But even legacy solutions will benefit from the development of external components, which can be used across different product lines. Prime examples include web portals, dashboards, self-service functions, mobile apps and other new features. And developing these components as web-based services (delivered through the cloud) will have the dual purpose of extending solutions and gently pushing those running primarily (or exclusively) on-premise towards the cloud.

I agree with Epicor’s new CTO, Himanshu Palsule, who called the transition to the cloud “inevitable.” But it won’t happen overnight (Figure 1). Part of the reason for this slower, yet steady growth is the fact that there are so many on-premise solutions in production today. And many remain reluctant to simply rip and replace solutions that are essentially getting the job done.

Figure 1: What percentage of your business software is deployed as SaaS?

Fig 1 EpicorSource: Mint Jutras 2016 Enterprise Solution Study

In his main stage keynote, Himanshu also (very astutely) observed that for a topic that is so widely discussed, “cloud” is still misunderstood and means different things to different people. My research supports his observation. While many use the terms cloud and SaaS interchangeably (I find myself guilty of this at times), they are not the same. While all SaaS is cloud, not all cloud is SaaS. While only a small percentage (12%) in 2015 didn’t know how they preferred cloud to be delivered, that percentage didn’t shrink in 2016 (Figure 2). There is still some education to be done. If you count yourself among those that “don’t know,” don’t be afraid to ask. You’re not alone.

Figure 2: How would you prefer cloud to be delivered?

Fig 2 EpicorSource: Mint Jutras 2016 Enterprise Solution Study

I’ve written extensively about the anticipated appeal of SaaS, along with the benefits actually realized. But I wouldn’t disagree with Himanshu’s conclusions about what cloud should stand for:

  • Choice
  • Convenience
  • Cost Control
  • Customization
  • Collaboration

However, I would qualify two of his bullet points. A few years back, my survey participants placed a high value on choice of deployment options. They seemed to like the idea of portability and the ability to move from on-premise to SaaS and from SaaS back to on-premise. Today many are looking for a path that helps them move from on-premise to SaaS, but once they move to SaaS, they almost never go back unless forced to (e.g. they get acquired by a company running a licensed, on-premise solution). So having multiple deployment options available is no longer such a high priority. Prospects simply pre-qualify those solution providers based on the deployment option they prefer.

I agree that choice is important. But it is more important to Epicor as the solution provider than to its customers and prospects. There are still some environments where a real multi-tenant SaaS solution might not be the best choice – at least not right now. These might be heavily regulated industries that require solutions to be certified, and re-certified when they change. Or a heavily customized solution may be required. And customization is the other bullet from Himanshu’s list that needs to be well-qualified.

Not all customizations are created equal. First of all, some simply aren’t needed. They might be left over from an implementation of a solution with far fewer capabilities than available today. Or they might have resulted from a “that’s the way we’ve always done it” mentality. If customization does not differentiate you in your market, I would seriously question whether it is justified.

Furthermore, customizations can be implemented in a variety of ways. Invasive code changes and SaaS don’t make for a good combination. But if customizations can be added as external components and linked back to ERP through Web APIs, or if they can be implemented through configuring the software without mucking around in the code, they may be perfectly compatible.

So Epicor’s announcement this week of its “cloud-first focus to support digital transformation of wholesale distributors is spot on”. The Mint Jutras 2016 Enterprise Solution Study found wholesale distributors lagging behind other industries in preference for and adoption of SaaS solutions. We also found 47% to 73% still relying heavily on paper for their operational and transactional system of record (customer and purchase orders, expense management, payments, etc.). They lag behind other industries in spite of the fact that ecommerce and their proximity to consumers puts them at a higher risk of disruption from the digital economy. Perhaps this “cloud-first” focus will be the gentle push wholesale distributors might need to start down the path of digital transformation.

Indeed, Epicor says it will be “…doubling-down on helping distributors adapt to these shifting dynamics of the marketplace—with an added focus to ushering customers’ journey to leverage the power of cloud-based solutions to drive increased productivity and achieve a differentiated customer experience to grow their business.”

Indeed wholesale distributors aren’t the only Epicor customers that will benefit from this “doubling-down.” I heard similar plans from the Epicor 10 side of the house, including planned features and functionality, along with efforts to improve simplification and usability. Yes, it’s about the overall user experience, but those driving the products seem to understand it’s not just about the “pretty software” you hear so much about today. As business models change, as technology advances and as new innovative products come to market, Epicor’s product must be easy to use, easy to install, easy to manage, and easy to change when the need arises.

Epicor “gets” it. We’ll be watching to see if it delivers.

 

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