July 9, Epicor Software Corporation (NASDAQ: EPIC), announced
that it has completed the acquisition of ROI Systems, a privately
held competing ERP provider of manufacturing software solutions for approximately
$20.7 million in an all cash transaction. And, on July 15, in a fashion similar
to its fierce competitors, Microsoft Business Solutions and
Best Software, Epicor announced the acquisition of a strategic
suite of warehouse management solutions (WMS) from TDC Solutions,
a long-time, successful independent software vendor (ISV) partner of Epicor
focused on the wholesale distribution industry
remains dubious how this acquisition can, at least in a short term, mitigate
the fact that MANAGE 2000 exhibits inferior product technology
and multi-national capabilities, and that it supports only English. Moreover,
some MANAGE 2000 modules do not offer distinguishing intrinsic functionality
(although there have been a number of readily available interfaces to third-party
specialist products such as Agile Software, RSS,
Demand Solutions, or Frango) even within the
"native" discrete manufacturing areas (e.g., complex project management & accounting,
multi-national financial consolidation, quality management, forecasting, warehouse
management, sales & purchase contracts, and contact management & marketing campaigns).
In particular, the financial management modules are best suited for North American rather than multinational enterprises due to very few localization capabilities. This situation might hold also for the native HR and payroll modules. While Epicor might gladly fill many of these gaps with its arsenal of products, it will not happen overnight, plus, some ROI customers will not that gladly opt for replacing e.g., OEM-ed Frango multi-currency module that has been working well, just for some equivalent solution suggested by Epicor.
MANAGE 2000 is not technologically the most exciting product either. Its original
user interface has been less than compelling, and ROI had to create its proprietary
software called Personal Workstation Software (PWS)
to enable MANAGE 2000 to run on a rich Windows client. The vendor was recently
developing a Microsoft ASP.NET thin client presentation layer for almost the
entire suite, while a number of new portals are slated for the upcoming 7.1
release at the end of 2003. Another technological pitfall has been that standard
application programming interfaces (APIs) were mainly limited to manufacturing
functions, thereby requiring ROI and users to, in the past, hard-code the integration
with other third-party applications such as financial applications or warehousing.
ROI has long provided Object Linking and Embedding (OLE) and Dynamic Data Exchange
(DDE) integration at the desktop thereby enabling links to computer-aided design
and PDM applications. In the new release, however, Universal XML is used throughout
on its hand, has its own idiosyncrasies and proprietary development tools. Thus,
while the long awaited porting of Epicor's flagship products onto Microsoft
SQL Server as well as continued focus on .NET framework should significantly
relieve the company's R&D burden and improve its general competitiveness, the
remaining work of delivering single .NET compliant application framework remains
colossal. The existing 6,500 manufacturing customers, will sooner or later have
to migrate from the current non-.NET application, although Epicor is committed
to supporting these customers indefinitely, which will draw on its duplicated
R&D and support resources. One should imagine the magnitude of the effort when
the Avant and MANAGE 2000 instances, some with extensive customer bases on
non-Microsoft technologies, should follow the path. Executing these initiatives
without significantly increasing its top line will be a notable challenge.
Despite notable functional and technological initiatives, the challenge for Epicor and its affiliate channel also remains the management of multiple ERP product lines. Also, while the products may have their separate niches, they will in many more instances be similar enough to confuse former separate Epicor and ROI Systems' direct sales reps and value-added resellers (VARs) in selling the combined portfolio. Although ROI's nascent channel has performed really well lately, Epicor will still have to demonstrate substantial progress in developing an indirect channel to supplement ROI's direct sales and product implementation force, since, without it, its growth and international expansion will be hampered.
is Part Three of a three-part note.
One detailed the event.
Two discussed the Market Impact.
The management team will further have to determine a narrow range of key go-to-markets for each product, clarify the positioning, and segment and target the sales channels. It is still likely that the sales channel will face some conflict in terms of market overlaps, as well as traditional association with a certain product line regardless whether it is the best fit for a certain opportunity. The positive news is also that using the applications such as portals as Web Services (e.g., the pricing, inventory, supplier performance, order management, and catalog components within SRM) on top of all ERP products' foundations via a Web Services interface layer should result in synergies, despite the downside that it cannot be done within the core ERP products owing to a notable gap between the products' technologies and functional capabilities.
Moreover, limited financial resources to adequately fund multiple key strategic initiatives including multiple products' assimilation, brand marketing, undeveloped global channel and brand recognition, and formidable competition within the market of Epicor are the challenges the company has yet to overcome. Indeed, Epicor might still be burdened by its past baggage and lingering issues, and the job of gaining traction will by no means be easy for the vendor still being long in a conundrum of down-spiraling revenues.
as well as its divisions, have had a rough history that it now must get beyond
to gain traction in the market. First DCD, then DataWorks
and then Epicor's Manufacturing Solutions Group, the reborn manufacturing division
must remind its customers and the marketplace of its historic success and forget
about so many years of financial pressures which have nearly sunken it into
oblivion. Since the late-90's this business has been less visible to the market,
and customers and the marketplace may have forgotten who Epicor Manufacturing
is and what it stands for.
Also, given its other two relatively unrelated divisions (i.e., CRM and service-oriented divisions), Epicor may mean different things to different people, which does not really help mind share creation in particular segments of interest. The manufacturing division must communicate its successes and strategy to the marketplace, and must aggressively invest in customer satisfaction, marketing and sales. Epicor must convince customers and prospects that it is here to stay; while the functionally rich and technologically rejuvenated products are great advantages, many other considerations make some customers and prospects perceive these solutions a risk. Until the market perceives that Epicor is completely regained its financial health, its products might be overlooked, despite their appeal.
despite cultural similarity between ROI Systems and Epicor Manufacturing division,
there might be cultural difference with the parent company. Namely, while ROI
Systems has always been focused on profits, without layoffs and less on technology,
until recently, it has been all but opposite on the Epicor side. If nothing
else, Epicor has embraced .NET even more zealously than its creator Microsoft,
often leaving Microsoft staffers in their development labs with their dropped
jaws (see Epicor
Claims The Forefront Of CRM.NET-ification). Additionally, the remaining
wealth of product names and a still somewhat unwieldy slew of products, presents
sales and marketing confusion for the company, both internally and externally
across the globe. Therefore, as Epicor has a myriad of products in its portfolio
that could benefit from integration with, e.g., Clarus, Clientele CRM.NET, or
with any third-party application, it must clearly articulate its plans and the
timeline for integration for each of its products. Otherwise or it may face
confusion and/or anxiety amongst both its current and potential customers as
well as within its VARs. That would be the music to its direct competitors'
ears, some of which have better viability and revenue momentum at this stage.
the competition remains fierce. In addition to an army of solid mid-market vendors
with sharp focus on particular industries, like PeopleSoft/J.D. Edwards,
MAPICS, QAD, IFS, Made2Manage,
SYSPRO, Lilly Software, Intuitive
Manufacturing Systems, to name only some, one should not discount the
Oracle's recent aggressive online offerings for small business either, with
PeopleSoft and SAP crafting similar offerings down the track
Giants Make Courting A Small Guy Their 'Business One' Priority).
Moreover, the competition is also flying from many directions since the parent company now competes in many diverse markets. Also, the leaner company with a large customer base and a palatable market capitalization of slightly over $250 million remains an attractive acquisition target in this seismically consolidating market. Thus, in addition to helping figure out the roadmap for once seemingly sidelined Avant product, the ROI acquisition for cash and an impending products' merger might also deter the acquisition spotting vultures for the time being.
Epicor's restored financial stability and its ability to enhance its products and its determination on executing product and technology strategies deserves commendation. Current users are advised to follow Epicor's new product introductions and keep an eye on its future product strategy. The positive sign is the company's more manageable and narrower focus, as demonstrated by its most recent results. Mid-market companies with up to $500 million in revenues that are within the parent Epicor's industries of focus and companies with a need for a single-source functionality beyond core ERP scope, should benefit from including Epicor in the short list of potential candidates for the enterprise applications selection.
As for the manufacturing segment, Epicor targets mid-market manufacturers across the board, covering discrete mixed-mode, make to order (MTO), make to stock (MTS), configure to order (CTO), engineer to order (ETO) and project manufacturing. Key vertical industries are capital equipment, fabricated metals, electronics, instruments, aerospace, automotive, furniture/windows/doors, and miscellaneous job shops. Even the users from industries not mentioned above may benefit from evaluating some stand-alone Epicor product components (e.g., CRM, APS, strategic sourcing, and business intelligence application suite) on an opportunity-by-opportunity basis. This as well as obtaining Epicor's implementation guarantee could be leveraged against other vendors in a selection.
Global, multi-site/multi-national mid-market MTO manufacturing enterprises should evaluate Vantage as to fulfill most of their needs including embedded customer relationship management (CRM), embedded supplier relationship management (SRM), advanced planning and scheduling, business intelligence and a complete suite of collaborative eBusiness solutions. Small single-site job shops or MTO enterprises and emote divisions of global enterprises should evaluate Vista, possibly with a view of migrating to Vantage some time in the future.
Enterprises should nevertheless monitor the consistency between the announced strategy and the company's actions in continuing to support all of the former products strategically. Existing users of Epicor products that face stabilization and/or discontinuation may benefit from querying the company's future product migration path, service & support, and/or scalability strategy. As for the newly added and/or anticipated functionality, users are advised to ask for firm assurances on the availability and future upgrades timeframes, and more detailed scope of enhanced product functionality. They should also inquire about any possible impact (or benefits) of migrating towards more advanced offering. Taking stock of current resources Progress, VB and C++ skill sets and assessing the effort to train these into VB.NET and C# is highly recommendable at this stage. Although the path to Sonoma is an evolutionary path, the Sonoma 1.0 release will likely offer functionality that is equivalent to, or a superset of, the functionality in the next releases of the Vista and Vantage products. By release 2.0 and higher only, Sonoma will be equal to, or a superset of, anything customers have in place, including MANAGE 2000, Avant, DataFlo or ManFact, which would be only some time after 2005.
ROI Systems users should ensure to meet the new owners, given the former ROI management, except for the product's creator, will have likely been pursuing other endeavors (or just enjoying a break after a long tenure). Talk with new management and make certain they know your expectations and plans. Measure their commitment to support your technology for a specified time. Keep a close eye on their actions, given that product enhancement and service & support strategy can sometimes change as early as three to six months after the acquisition, although Epicor seems committed to actively selling and enhancing the product at this stage. Also try to understand their product strategy and look for opportunities in their product portfolio. On a more general note, existing and prospective enterprise software users need to understand every vendor's strategy toward them. While you should talk to sales people and vendor executives, also look for more than mere words. Ask about why certain items you think you need are not available as standard offering. Ask about headcount changes, product release schedules, release contents, partnership programs, the future of exiting OEM third-party products, etc.
The companies that would benefit from evaluating ROI Systems product offering are technologically less aggressive and that praise simplicity, manageability and reliability, small to medium (with $10-$500 million in revenue) repetitive/make-to-stock (MTS), configure-to-order (CTO) and make-to-order (MTO) discrete manufacturers in North America and other English speaking countries (or divisions of larger North American and enterprises from these countries), with a need for solid production planning, engineering, finance, sales, service, business intelligence, and collaborative e-commerce functionality.
The industries that would most likely benefit from using MANAGE 2000 are electronics & computer equipment, industrial & transportation equipment, fabricated products, wood & lumber, furniture, rubber & plastics, consumer products, and medical devices. Multi-national corporations with strong corporate level financial consolidation and localization needs, and companies looking for a much broader functionality beyond traditional ERP boundaries (e.g., more intricate CRM, or complex project management/engineer-to-order (ETO) functionality) from a single vendor may benefit from evaluating other products at this stage, including Epicor's arsenal. MANAGE 2000 should be included on a short list in selections within the manufacturing mid-market where configure-to-order (CTO) assembly, repetitive/flow manufacturing, distribution, shop floor execution, and field service modules are the main pillars (bear a high importance) of an enterprise application.
very detailed information about MANAGE 2000, Vantage and e by Epicor products
is contained in the ERP Evaluation Center http://www.erpevaluation.com/