Epicor Reaches Better Vista From This Vantage Point Part Three: Challenges and User Recommendations

Epicor's Manufacturing Solutions

Epicor Software Corporation (NASDAQ: EPIC ), a true mid-market incumbent vendor that has not had much good news for last several years following up on its progenitors' merger and subsequent name change in 1999, seems to finally have been disseminating upbeat news both in terms of its financial performance and of its strategy clarity. Part One of this note presented Epicor's recent financial results and discussed the company strategy. Part Two presented the company background and discusses the Market Impact.

Like within its other two groups, attempting differentiation, Epicor espouses the 'one stop shop' approach to the midsize manufacturing market, and develops most of its own suite and has already moved most of the way to provide the extended enterprise system footprint. The vendor contends that its customers get Tier 1 software capabilities, including the end-to-end, event-driven supply chain aspects, as well as the service & support level, at Tier 2 prices.

Epicor also believes that buyers of enterprise software are much smarter nowadays, since they have been through a few prior generations of enterprise systems, and now they are more aware of what they want and what to expect. They are also becoming more aware of collaborative SCM and CRM solutions and their value. They want quicker implementation and payback from their enterprise systems, and they demand performance from their software suppliers.

While in the past, Epicor would integrate with partner products for best-of-breed solutions to accommodate these requirements, it has lately been expanding the boundaries of traditional ERP by building fully integrated applications that are based on the same technology and toolsets, all from one vendor. There is also still a good deal of vertical manufacturing industry experience, if not quite yet embedded in the products, but at least within its experienced staff.

Epicor competes in two enterprise business applications markets: 1) emerging enterprises and 2) mid-market enterprises. The vendor defines the first as rapidly growing businesses under $25 million in annual revenues, which require solutions that provide a more sophisticated level of functionality to effectively manage their business than can be found in "off-the-shelf" applications. Yet, these businesses require applications that are easy to implement, customize, manage and use as well as being affordable. Further, these enterprises generally lack dedicated information technology (IT) management resources and require solutions that do not require a high level of ongoing maintenance and support for their continued operation. Products in this market are principally sold through value added resellers (VARs) and telesales persons with the purchasing decision often influenced by professionals providing consulting services. Epicor believes that purchases in this market are primarily influenced by functionality, performance, and availability of a Windows-based solution, price and quality.

This is Part Three of a three-part note.

Part One discussed recent announcements.

Part Two covered the Market Impact, company background, and next generation products.

The Market For Vista

To that end, Vista is a Windows-based desktop business management system specifically designed for needs of small job shops and the MTO departments of larger businesses that have less developed infrastructures, lower IT budgets, require a shorter deployment period and seek established, user-friendly products. Vista fully integrates over following 20 core business modules under the following groups: eBusiness (electronic data interchange (EDI), and Customer Connect portal), Sales (Contact Management, Quotes, Orders, and Shipping/Receiving), Production (Jobs, Advanced Bill of Material (BOM), Data Collection, Scheduling, Quality Assurance and Document Management), Material Management (Inventory, Advanced Inventory Management, Purchasing, and Purchasing Request for Quote (RFQ), Financial Modules (Accounts Receivable, Accounts Payable, General Ledger, Payroll and Currency Management), Vista Dashboard, and System Control. More important, Vista 6.0 features the same technology framework as its bigger sibling Vantage, and supports new databases like Microsoft SQL Server and Progress RDBMS. It has also been added over 200 new features to, some of which have already been depicted like Vista Dashboard, Quality Assurance, Advanced BOM, Advanced Inventory Management, What If' Scheduling, and Contact Management.

The Market For Avant and Vantage

Still, Epicor competes primarily in the true mid-market, which it defines as growing enterprises with revenues between $10 million and $500 million, which have similar requirements like their smaller counterparts above. However, the purchases in this market are primarily influenced by functionality, performance, availability of a Windows-based solution, price, quality and customer service. The Company believes it competes favorably with respect to all of these factors with Avant and Vantage products. Increasingly, since customers in this market segment are looking for Microsoft SQL Server based solutions, the Vantage product is better positioned to address this requirement, although both products include the full range of modules.

Avant is a fully integrated ERP solution that provides both a front and back office business solution to tie together almost every aspect of a manufacturing operation. Avant's capabilities are geared toward high growth, midrange manufacturers of discrete, highly engineered products with complex manufacturing requirements in eight principal industries: industrial equipment, computer/office equipment, consumer electronics, instrumentation and controls, medical/dental products, transportation/aerospace products, capital equipment and contract manufacturers. The product is comprised of groups of modules that aim at comprehensively supporting a manufacturing company's business process, and are built upon a common set of design and development standards and tools, which share a common database architecture.

Presently the following applications are generally available in Avant version 9.2.: Accounts Payable, General Ledger, Accounts Receivable, Inventory Management, Asset Management, Job Order Tracking, Barcode Document Manager, Master Production Scheduling (MPS), Bills of Material (BOM), Material Requirements Planning (MRP), Capacity Requirements Planning (CRP), Multi-Plant Planning, Cost Accounting, Product Costing, Cash Management, Purchasing, Distribution Requirements Planning (DRP), Quality Management, Equipment Maintenance & Repair, Return Material Tracking, Estimating & Quotations, Sales Order Processing, Executive Information System (EIS), Shop Floor Control, Focus Factory Management, Work Centers & Routings, Expert Product Configurator, Service Suite, Front Office, Decision Support, Material Real Time Tracking , Barcode Shipping, Shop Floor Control/Time & Attendance, Advanced Planning and Scheduling (APS), Human Resources (HR), Payroll, Sales Analysis DataMart, and Operational Data Store.

Avant is modular in nature and can be scaled from small to large configurations on a variety of platforms supporting the Microsoft NT and UNIX operating systems, and can be implemented in a variety of multi-currency, multi-company and multi-plant environments networked through client and host-based configurations. Avant also includes front office applications through its integration with eFrontOffice.

Still, while the Avant product suite addresses many discrete manufacturing styles, including ETO, ATO, MTS and Repetitive, these are still served through its disparate variants with different names. Beside primary functions for their respective manufacturing styles (such as project management, flow manufacturing and rate-based scheduling), there may still be subtle nuances of which functionality one version supports what (or not). Also, distribution functions such as warehouse management, plant load management, transportation management and demand deployment are not available. More significant is that consolidation of three product variants (i.e., ManFact, InfoFlo and DataFlo) into one has not yet yielded one unified Avant product in which the functionality supporting multiple manufacturing styles is integrated. As a result, Epicor has been unable to leverage its broad manufacturing functionality into a single solution for enterprises with multiple manufacturing styles. In fact, Epicor admittedly does not currently have either a strategy or intentions to combine Avant, DataFlo, InfoFlo and ManFact into one product under the Avant umbrella. Enter their still disparate technologies depicted above, and there comes Epicor's rationale to enhance Avant mostly only according to existing customers' requirements, but the product is no longer actively marketed to prospective customers.

Consequently, Vantage becomes the flagship manufacturing product, as is an integrated, Windows-based ERP solution that meets the dynamic requirements of custom manufacturing operations in make-to-order (MTO), configure-to-order (CTO) and job shop manufacturers. Like its minor sibling Vista, Vantage features intuitive UI and is an easy-to-use, yet comprehensive solution that meets manufacturers' needs through its potent tools for quoting, visual scheduling, job tracking and costing, as well as shop floor data collection. The product is comprised of more than 30 fully integrated business modules and offers a broad solution, from front office functionality including sales force automation (SFA) and customer support to an e-business suite including an online storefront and portal. It provides strong scheduling and online information access capabilities, since, with its graphical scheduling tools and "what if" simulation,

Vantage enables users to create and execute realistic production schedules, based on the available resources, and react quickly and efficiently to schedule changes. Vantage supports both custom and standard part orders, product configuration and multilevel assemblies. The product is comprised of the following groups of modules that can be differently configured to support changing customer's business processes: Vantage CRM, Sales Management (Quote Management, Order Management, and Product Configuration), Planning (MRP, Vantage Scheduling, Advanced Planning and Scheduling, and Multi-Site Management), Production (Job Management, Advanced Bill of Materials, Data Collection, Quality Assurance, Field Service, and Document Management), Materials Management (Inventory Management, Shipping/Receiving, Purchasing RFQ Management, Purchasing Management, and Advanced Materials Management), Financial Management (Accounts Receivable, Accounts Payable, General Ledger, Currency Management, Payroll, FRx, Open Active Planner), Epicor eIntelligence (ShopVision Executive Query and Enterprise Business Intelligence), eBusiness (Customer ePortal, Vantage Storefront, eProcurement, and EDI) and System Tools.

Further, because of the dynamic production requirements characteristic of MTO manufacturing organizations, Vantage provides particularly strong scheduling and online information access capabilities. Vantage's graphical scheduling tools and "what if" simulation features empower users to make realistic production schedules, execute them efficiently with the resources currently available, and react quickly and efficiently to schedule changes. Vantage features a strong Business Intelligence (BI) suite that allows manufacturers to access, explore and analyze data residing within the Vantage solution, to gain the knowledge needed to make better-informed business decisions. Because much of the information is pre-built, companies should be able to start seeing an ROI in Vantage BI faster than with traditional business intelligence solutions.

More important, in addition to featuring the same framework as its smaller sibling Vista, Vantage 6.0 supports new technology like Linux and HP UNIX. It has also been added many new features, some of which have already been depicted like Enhanced Workflow Management, Vantage Dashboard, Global Multi-Company Collaboration, Global Multi-National Financials, Advanced Project Management, Enhanced Personalization & Customization, Kanban Flow Manufacturing and Web Configurator.

Additionally, Epicor APS (formerly Epicor eScheduling and C-Way) is an advanced planning & scheduling (APS) solution designed to help manufacturers realize shorter lead times, accurate real-time order promising and smaller inventories. It aims at allowing a company to create and maintain schedules that coordinate all aspects of its manufacturing environment, based upon their business practices and customer needs. Epicor APS is designed as a real-time system --there are no overnight batch processes to run-- which should remove delays between collecting and actually using information, and should ensure that schedules include the most up-to-date information. The product provides forward and backward scheduling capabilities, as well as minimum WIP, rule- and dynamic constraint-based scheduling and dispatching. Epicor APS can be used as a standalone product, or as an enhancement to the scheduling capabilities included in Epicor's manufacturing solutions including Avant and Vantage.

Contrary to the other divisions that are solely Microsoft-based, Epicor Manufacturing Solutions Group is using the Progress toolset for Web enablement, building on the client/server framework, as to allow its mid-size customers to choose platform, database, and operating system. As this dilemma to stay with Progress product or not has both benefits (i.e., a smoother migration path) and drawbacks (i.e., a dual technology strategy), some vendors have opted for opposite alternatives Frontstep (now part of MAPICS) has opted out (see Frontstep Ups The .NET Ante), while QAD and Epicor have decided to continue the relationship, since the Progress OpenEdge platform, with its embedded database, often delivers rapid deployment, low overhead, high scalability and flexibility. The combination of the Progress OpenEdge platform supported through a native Microsoft .NET UI is touted by Epicor as best of both worlds. Namely, while the .NET framework will provide smart Windows client, Web services, and Web enablement and accessibility from almost any device, the Progress platform brings to the table the business logic that is database and OS independent, and whose existing code can be reused.


Nevertheless, 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. The vendor, 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, 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.

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. Given our difficulties to figure out the peculiar traits of the above products while compiling this article, it is likely that ordinary prospective customers will not be much clearer either. 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 (see Epicor Claims The Forefront Of CRM.NET-ification and Epicor Picks Clarus' Bargain At The Software Flea Market). 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.

Still, 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. Existing 6,000 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 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.

Incidentally, the competition remains fierce. In addition to an army of solid mid-market vendors with sharp focus on particular industries, like J.D. Edwards, MAPICS, QAD, IFS, Made2Manage, SYSPRO, Lilly Software, 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 (see Software 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. To that end, in the traditional back-office market, the threat comes from the likes of Intuit and AccountMate in the small business accounting market, via its peers (e.g., Microsoft Business Solutions, ACCPAC, Exact Software, Best Software and Scala to name only some), to the Tier 1 vendors storming down the market. In the pure-CRM mid-market, that would be the likes of Onyx, Microsoft CRM, Pivotal, Kana, Salesforce.com and FrontRange. Not to mention that SAP, Oracle, PeopleSoft and J.D. Edwards will likely be faced in all the above markets as well.

Still, Epicor seems to have refocused on its core competencies following the turmoil of acquisitions and negative growth. While Epicor indisputably has to deal with the above challenges in a sunken market, by harnessing .NET possibly more zealously than its creator Microsoft, the company has a fair shot at remaining in the mid-market leadership race amongst a slew of formidable opponents. With its solid cash position and current well-advanced development work for what should be leading edge, Web-based, 'software as a service' enterprise and collaborative commerce suites, that offer most of what manufacturing businesses need from the IT, a return to prosperity for Epicor should not be too far-fetched.

User Recommendations

Epicor's 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.

The current market trend is towards vendors that can provide comprehensive solutions for medium-sized companies with a quick ROI, and Epicor seems to have a fair shot at delivering that. Particularly well suited to the capital equipment, fabricated metals, electronics, instruments, and other discrete manufacturing industries, Epicor's integrated broad enterprise suites might help global manufacturers increase collaboration with trading partners, and improve speed throughout the value chain. 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.

Finally, very detailed information about flagship Vantage and e by Epicor products is contained in the ERP Evaluation Center http://www.erpevaluation.com/

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