Epicor held its annual Insights user conference this week in Las Vegas. This was the first gathering for customers of both Epicor and Activant since the two firms merged last year. As such, it was a good opportunity for the firm's executives to introduce what they are calling the "New Epicor" to 4000 conference attendees.
Three Elements of Strategy
Although Epicor made many announcements, in this blog post I prefer to focus on three elements of Epicor's strategy, along with my point of view.
- Blending of Two Cultures. CEO Pervez Qureshi and other presenters made a point of emphasizing the new Epicor as a blending of the best of "heritage Epicor" and "heritage Activant." (In the enterprise IT world, the word heritage is preferred to legacy.) Qureshi characterized heritage Epicor as having been a global company, technology-oriented,
entrepreneurial, and top-line focused. Heritage Activant, he said, was oriented more toward service, process excellence, and profitability. The new Epicor blends the best of these two cultures, he claimed.
- Protect, Extend, Converge. The second element is Epicor's strategy and vision to protect, extend, and converge the product portfolio. "Protect" means to continue investment in the current products in its portfolio. "Extend" means to introduce new applications and infrastructure capabilities that deliver additional value across current products. Finally, "converge" implies a gradual evolution of current products with new technologies.
- Azure as the Cloud Platform. The third element is Epicor's evolving cloud strategy. Prior to the conference, Epicor's cloud strategy was limited to a small business cloud version of its Epicor ERP product ("Epicor Express") along with some hosted solutions for functions such as HCM and retail merchandising. However, the strategic direction announced at Insights went much further. Wading through the dense language of the press release, I see the Azure announcement as having three sub-parts: (a) Epicor will allow its Epicor ERP product to be deployed on Microsoft's Azure cloud platform, planned for Q3, 2013, (b) Epicor will also use Azure to provide interoperability between on-premises Epicor systems and Epicor point solutions deployed on Azure. (c) A new version of Epicor's SOA middleware ("ICE") will also be deployed on Azure to provide a PaaS offering, facilitate mobility apps, and satisfy other integration needs between Epicor and third-party products.
Epicor executives were upbeat in presenting these and other elements of the new Epicor. But how differentiated is Epicor's strategy, and what does it mean for Epicor customers? Here's my take.
The Azure Strategy is a Winner
Taking these three elements in reverse sequence: although I do not see the Azure strategy as unique, I do see it as attractive. In fact, it is more attractive because
it is not unique. Epicor is at least the fourth major enterprise software vendor in the past three months that has announced plans to deploy ERP in the Azure cloud. The first, of course, is Microsoft Dynamics, which in March announced its plans to deploy Dynamics GP and Dynamics NAV on Azure
by the end of 2012.Then, earlier this month, Sage announced similar plans. And now, Epicor.
I have no doubt that others will follow, making Microsoft Azure a first choice for delivery of cloud-based enterprise applications. I have long felt that, just as on-premises database management systems have been standardized on just a few popular products, so also cloud platforms should be standardized. By way of analogy, very few on-premises vendors today write their own DBMSs, with Oracle being the exception that makes the rule. Why then should SaaS providers build their own cloud infrastructure? Salesforce.com did it. NetSuite did it. Workday did it. But how many more can or should roll their own IaaS and PaaS platforms? There is a tremendous amount of cost and effort involved in doing so, not to mention the economies of scale that can only be realized by having thousands of customers. Epicor, Sage, and others are making the right choice by building on an established public cloud infrastructure provider.
Why didn't this happen earlier? Essentially, because Azure (specifically, SQL Azure database capabilities) has not been robust enough to support ERP-class applications. But in speaking with Microsoft earlier this year, it appears that these limitations are now being overcome, which explains why Microsoft Dynamics, Sage, and Epicor are all moving to Azure at about the same time.
There is one more advantage to the Azure strategy. The current Epicor Express offering is limited to customers with under 20 users. I do not believe Epicor's current infrastructure architecture allows customers to scale beyond that point in a multi-tenant environment. Moving to Azure frees Epicor from that limitation, allowing it to sell cloud ERP to larger customers, though I suspect in practice it will still be most attractive to small and midsize businesses.
Finally, moving to Azure immediately allows Epicor to offer cloud ERP in a number of geographies where it does not have partner data centers. Epicor ERP has good international capabilities. Now customers in international locations will also be able to choose cloud deployment in their own geographies to meet regulatory or performance requirements.
Strategy of "Protect, Extend, Converge" Is a No-Brainer
The protect/extend/converge message has two things going for it: it's easy to remember and and it's customer-friendly. It also happens to be the only product strategy that makes any sense for a vendor such as Epicor. Epicor's growth strategy, like Infor's and Oracle's, has been to acquire or roll up a number of smaller vendors to build a large customer base with a diverse portfolio of products. The benefits of such a strategy is clear: growth. The downside of such a strategy is the diverse portfolio. But with a certain level of attention paid to customer support, the large number of existing customers will continue to pay maintenance revenues (the mother's milk of enterprise software) and will also be candidates for cross-selling other Epicor products.
It is interesting, therefore, to compare Epicor to Oracle and Infor and to see the similarities. All three have large customer bases. All three have diverse portfolios. All three have some sort of middleware offering to connect all the solutions: Oracle has Fusion middleware, Infor has ION, and Epicor has ICE. All three have customer programs to "protect" existing customer investments: Oracle has its "Applications Unlimited" program, Infor made its promise to "never sunset" a product, and Epicor has its strategy of "protect." Likewise, all have their strategies to "extend," such as Oracle with its continued point releases of J.D. Edwards, PeopleSoft, Siebel and others; and Infor, with its continued investments in its portfolio. Finally, all have some sort of convergence strategy, such as Oracle with its Fusion Applications, Infor with its development of ION, common user interface, and other common functions.
In other words, Epicor's strategy is the only rational way to deal with a large and diverse installed base built through acquisition. Qureshi's plan to continue aggressively with new acquisitions means that successfully protecting, extending, and converging its product portfolio will become even more important.
The Culture Message Has a Subtext
I found Qureshi's keynote regarding the blending of the Activant and Epicor cultures to be interesting, if not unusual for a customer conference. It would be the sort of thing one would expect to be presented internally, in an "all hands" meeting, for employee consumption. Delivering this message to customers, however, also sends an implicit message: heritage Epicor needed improvement in product quality and customer service.
Perhaps this subtext is so well understood by the majority of Epicor customers that there was little risk in sending this message. Still, if Activant's strength--in contrast with Epicor's--was (among other things) process excellence and customer service, what does that say about heritage Epicor?
It didn't end with the keynote. Later in the day, there was a session on
the product roadmap for Epicor ERP. The presenters were proud of
reports from early adopters of the most recent point release (ERP 9.05.700). But
in touting the quality of the release, they were, in effect, reminding Epicor customers of their past experiences. One customer quote was damning with faint praise, referring to the new version as:
A more solid product than we've seen before.
If my wife makes me a nice dinner, the last thing I would tell her is, "This is a more delicious dinner than you've made me in the past."
But, if Epicor customers are all-too-familiar with product quality and service delivery problems in the past, perhaps Qureshi's approach is best: to tacitly acknowledge the problem. Key
executives in the new Epicor come from Activant, starting with Pervez Quereshi (CEO), Kevin Roach (EVP and GM, ERP Americas), and Paul Salsigiver (EVP and GM, Retail), sending the message that Activant's focus on software quality and service delivery processes will prevail in the new Epicor.
My question, however, is this: are customers seeing an actual improvement in Epicor's product quality and customer service? Or, is it too early to tell?
I invite Epicor customers and partners to send me an email, or leave a comment on this post. As always, confidentiality is assured.
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Labels: Azure, cloud, Epicor, ERP, Infor, Microsoft