Last time it was my raw impressions of Epicor’s messaging. Now it’s time to get the other side of the story.
In my analysis of manufacturing ERP vendor Epicor’s positioning, messaging and technology story, I was a little, ahem, critical. As I saw it, Epicor was channeling the same strategy that I saw almost a decade ago from Microsoft and Intuit among others – talking cloud, but not really doing it. That was a pretty harsh summation and based upon an admittedly limited exposure to the company at their recent customer event in Nashville.
Subsequent to that post, I spent some time speaking with Epicor’s Chief Software Architect Erik Johnson and their CTO, Himanshu Palsule. Palsule started by setting the scene for me – Epicor is, you see, only mid-way (if that) on its cloud journey. The company has recently been acquired by private equity firm KKR and is bedding in its new strategy. Part of this stems from a relatively new CEO, Joe Cowan, and a huge number of changes among the executive team. The push to the cloud has, according to Palsule been going on over the last 12-18 months and is now starting to see significant acceleration – both from net new customers going “cloud first” and existing customers want to move to the cloud.
But the adoption curve is unevenly distributed and certain sectors and geographies are further along in this transformation. The Middle East and Australia/New Zealand are early adopters and increasingly demonstrating a recurring trait – that of existing customers looking to move to the latest versions of Epicor’s software and, in doing so, being keen (and being encouraged by Epicor themselves) to move to the cloud. To this end, Epicor has been investing in creating conversion tools to offer “full fidelity” conversions between on-premises and cloud versions. Project Cirrus, as this suite of tools is called, offers a comparison between existing solutions and cloud ones and details steps that need to be taken to help the move to the cloud. As Palsule puts it, “Cloud is beyond just moving an ERP to a new delivery mechanism. It includes all the services that have been built around the ERP.” To this end, the recent acquisition of DocStar, a content management offering, is a central thrust to encourage cloud transition. He was also keen to point out that other offerings – data analytics, payment gateways etc. – are cloud-native and there is an internal mandate to build new solutions in the cloud.
Interestingly, Palsule was formerly at Sage, another company that has had to navigate a path to the cloud. In parallel with Epicor, I’d characterize Sage’s progress as far too slow until very recently, with a marked acceleration over the past year or two (in Sage’s case, this is via deep partnerships on the development and go to market front, with Salesforce).
Justifying that cloud moniker.
I then challenged Johnson about Epicor’s labeling itself a cloud provider. Is Epicor a real cloud vendor or one which simply does enough to be able to talk a cloud story? Johnson pointed out that retail is a strong cloud sector for the company and in the retail sector, Epicor has customers who have been doing mission critical work in the cloud for five or more years. Alas, not of these retail customers were at the summit. Johnson points to Epicor’s own cloud modules, referenced previously by Palsule – in particular, the payment gateway which last year saw some 350 million transactions and over $15 billion worth of commerce handled through it. Johnson went on to explain that Epicor is using the cloud in certain areas – for disaster recovery, backup, and peripheral solutions, for example. He detailed how Epicor’s internal IT teams make decisions about where workloads should be hosted – on-premises or in the cloud. Their payment gateway, an understandably spiky workload, is built on top of AWS for obvious reasons. In other cases, they self-host. A good example was the cloud ERP re-written five years ago on .NET. While built for Azure, they initially hosted it themselves on Rackspace before moving to a co-location approach.
Johnson detailed that costs are the main reasons for these hosting decisions – they like Azure but, at least for the cloud ERP use case, weren’t seeing the performance or economics that they needed. In this Epicor feels like Zynga, the company who famously migrated off of AWS into their own data centers when the scale changed the economic model. of course Zynga has since re-pivoted but that is another conversation altogether. Johnson explained that being private equity owned, there aren’t the same constraints around capital expenditure as for listed companies – if there is a benefit, owners KKR are happy to spend to achieve that benefit. This same flexible approach has been followed in newer markets – in the UK and ANZ they c-locate, but in Singapore and Netherlands, two smaller markets at launch, they leverage the elasticity and smaller on-ramp of the public cloud – not being keen to drop in a massive infrastructure stack – Epicor can start small and grow over time.
Infrastructure doesn’t matter. Much.
I think I led Epicor astray a little bit and gave the impression that my somewhat harsh categorization of them as “not true cloud” was based on an assessment of their own technology approaches. This is not the case – as an example, both Salesforce and NetSuite, two undeniably genuine cloud vendors, host their own applications within their own infrastructure. if it’s the right decision for a vendor, I’m happy with that. More important to me is the messaging and the approach towards building the sort of ecosystems we’ve seen from cloud vendors. Epicor stated a desire to insulate customers from different changes within the infrastructure providers and hence downplays the story of being on one or other public cloud vendor. I get that and don’t have a huge issue with their approach.
The partner issue
Take a walk into an expo hall at Salesforce or NetSuite’s conferences and you see a huge ecosystem of third-party software vendors that have built strong businesses off the back of the platform vendor. These expos tend to downplay the vendor’s own products somewhat and give the third party vendors a chance to shine. And shine they do, the hand-waving and Kool-Aid on offer from the third party vendors at these events is incredible.
The expo at Epicor’s summit felt, with respect, like a mortuary. There were copious numbers of tables all displaying different Epicor banners, and right in the middle, seemingly as far from attendees as possible, were a handful of third party vendors valiantly trying to fight the good fight. Epicor’s approach is to “pick winners” and in various categories identify the best partners and sell those partners’ solutions directly to customers. This doesn’t at all feel like a vibrant ecosystem to me.
Epicor seems to be early on their ecosystem journey. Architecturally they have realized that they need to make changes and externalize code so that third parties can modify the applications and build their own offerings. Alongside this exists a requirement to ensure the APIs are mature, robust and easy to use 9documentation, sample code etc.). Again Epicor’s approach seems to be quite centralized – they have, for example, a global tax relationship with Avalara, that sees that vendor as the chosen tax offering that Epicor sells to its customers.
So my question to Epicor was, would I see over time a vibrant ecosystem or more examples of a chosen few vendors? The answer was, as expected, complex with a prediction that the ecosystem will be segmented – at the top tier would be partners who are invited to work with Epicor. These would be strategic relationships – OEM or white label – and would address a white space or secondary market. Another tier would see ISVs who want to business with Epicor. Palsule did point out that Epicor does have an ISV program today, but that it needs to be enhanced. The bottom line, however, is that in Epicor’s eyes, the ecosystem is quality over quantity. That said, there was some hedging bets with Palsule explaining that they do understand that there exists another tier, a broader group who have bespoke apps, and want to find a place to attach. The bottom line: next year the tent will be broader with a far more structured ISV program.
The messaging
Finally, I got to my old bug-bear, that of messaging. I always wince when I hear vendors claim to be “all-in” on the cloud, only to follow up a second later explaining that cloud isn’t actually the right thing for a significant majority of their customers. With less than 1,000 cloud customers among their total 20,000 customer base, I understand the sensitivities here, but still believe that Epicor’s own survival, and that of its customers, relies on understanding and embarking on a broader cloud journey – both technology, and when it comes to the way they think about their business.
My final question, then: will Epicor change the “all in on the cloud, but” messaging? Palsule agreed that, at least to an extent, they need to do this. He noted that in certain regions, the “cloud is necessary for survival” message resonates. In ANZ for example, the message works, he told me that on a sales call, the sales teams are leading with a cloud first pitch. Outside of ANZ, in MENA, Asia – Epicor knows that the inflection point has hit, but countered that slightly with the assertion that there is a nuance here – the more specialized customers are in terms of verticals etc., the more resistant they get in terms of adopting cloud. Epicor’s conversion offering, Project Cirrus helps but when it comes to new customers it is an all out cloud message.
Palsule reflected on his 30-year career during which he has seen lots of transformation – he feels that Epicor needs outliers challenging the company to move faster. The world has changed – and is continuing to change very quickly: “We are transforming our products and technology, we have the attitude and gumption to drive. The product and tech are there, and we have KKR standing behind us.”
