At the end of May, Rich attended Epicor Software Corp.’s Insights user conference as Epicor’s guest at the Gaylord Opryland Resort in Nashville, Tennessee. Epicor delivers business software solutions into the manufacturing, distribution, retail and services industries. It is one of the major software companies serving our industry through its distribution software offerings: Prophet 21, Eclipse and Epicor ERP.
The conference provided more than 500 sessions ranging from a Q&A with General (Ret.) David H. Petraeus, to product announcements and product roadmaps, to education/training sessions on how to use existing/new features in their packages and, just for fun, a concert by the country western singer Kelly Clarkson. More than 4,000 users attended the four-day meeting.
The meeting also included a massive solutions pavilion where the Epicor team and partners gave attendees a hands-on opportunity to review and test products.
As a reminder, Epicor has approximately 3,800 employees, 20,000 customers in 150+ countries, and sales of around $900 million. The company has development groups located in every major operating region including the Americas (U.S., Mexico), Europe (Russia) and Asia (India, China, Australia).
Epicor brings hundreds of employees to Insights — including Joe Cowan, president and CEO, and the entire senior management team — so attendees have many opportunities to ask questions and, most importantly, provide feedback to all levels of the Epicor organization.
This year’s Insights was the first user meeting since Epicor was purchased by KKR & Co. L.P., a global investment company, in what was rumored to be a $3.3 billion deal that closed in September of 2016. While the acquisition resulted in some changes at the top, four of the senior management team will continue with similar or expanded roles. Joe Cowan will continue as president and CEO. Cowan was brought into Epicor by the previous owner, Apax Partners, with the mission of grooming the company for sale. Kathy Crusco will remain the chief financial officer and will assume the additional role of chief operating officer. Celia Fleischaker will assume an expanded role as chief marketing officer and executive vice president. Himanshu Palsule will assume the role of chief product and technology officer and executive vice president.
As with past years, this was a well-executed meeting. Kudos to the Epicor team in putting it together.
I had the opportunity to spend some one-on-one time with three members of the product management team: Himanshu Palsule, EVP and chief product and technology officer; Lee An Schommer, SVP of global product management; and Mark Jensen, director product management, Distribution. Due to space limits, I am providing some excerpts from my time with Himanshu.
Schmitt: For those readers who have not met you, tell me a little about yourself and how you got here.
Palsule: I have been in the software industry for 30 years, 28 years of which have been in ERP, accounting, manufacturing, distribution and retail type software. Before coming to Epicor 1 1/2 years ago, I was CTO for Sage, the ERP and CRM software company.
Schmitt: As I talked to readers prior to coming to Nashville and asked them what they would like to know, most of the questions seemed to center around the future of Epicor on a “big picture” level, and then what the outlook for its ERP package and its company is on a “micro” level. Can we start with the big picture view of Epicor?
Palsule: When you have a portfolio of products going forward, you have to have a portfolio strategy. Some portfolio companies with several products build a strategy to move to one product. If you were starting from zero, you could consider that. If you have a legacy of 20,000 customers, it’s very hard to move to a single product. Other companies have tried that approach and failed.
We defined the few areas where we want to win, and are putting the best product in each market to win. So in manufacturing, that’s Epicor ERP and iScala; for distribution, that’s Prophet 21 and Eclipse; for retail, that’s Eagle. We are migrating the customers in these sectors to those products. To get scale, we will have common software services that go across the sectors. For document management, we bought DocStar that will integrate with everything. For business intelligence we have Epicor Data Analytics that will work with everything and we are partnering with Avalara for tax; it will integrate with everything. I call them the pillars and the planks. The sector-specific products are the pillars, and the shared services are the planks that go across the sectors.
Schmitt: So distribution will be one of your go-forward targets?
Palsule: Let’s start with our investment profile. When we build our investment profile, we start by looking at markets and whitespace. Distribution is absolutely our sweet spot. That is what our focus is, it has been and will continue to be. Especially with the changes going on in the market, the disruption that is happening, the digitalization…we feel there is more need than ever for a vendor like Epicor to step up and help distributors solve their problems.
Schmitt: Those are a lot of changes. What would you say to wholesalers who don’t want to change?
Palsule: I would say, if you don’t like change, you are really going to dislike irrelevance.
Schmitt: Talk about the challenges facing your distribution users.
Palsule: Markets started to change a few years ago, especially in the distribution sector. The pressure in the market for labor and resources, the impact of globalization, mobility and the cloud illustrate that the rate at which markets are changing. I call it the “Amazon Effect.” things are moving faster for distributors than ever before and the distributor’s customers are expecting more from them. The distributors in turn are coming to Epicor and asking for help addressing these changes.
Schmitt: So what direction does that take Epicor?
Palsule: When all these factors started converging, we realized it was time for a major change at our end. We started with Prophet 21. While it’s a great product, simply adding incremental features isn’t the way we are going to satisfy these distributors in the long term. Features might get them past their current month-end or urgent issue they have, but not position them for significant changes in the market. So we decided to open up the product using an API strategy. With that strategy, we are saying that the last mile may not be us. It could be a partner, it could be a third party, it could be the Epicor professional services team, or it could be the distributor’s internal information technology team. We need to open our product enough to enable the changes that are needed to support the distributor’s business needs. The new version of Prophet 21, 2017, which is releasing this week is API enabled.
Schmitt: What is the “Amazon Effect” that you mentioned?
Palsule: This relates to the user experience. When I talk about Amazon, distributors think I am saying they need to worry about competing directly with Amazon. They do, but they also need to be concerned about the Amazon Effect, what competitors are doing, what customers are expecting, how fast is delivery, how much do you know about your customer, what is your reach. For Epicor, that means we need to do faster releases than the 18-month cycle from the past. The best way to deliver that is the cloud version of Prophet 21, which is part of this release. As part of the user experience we are moving to the browser interface. We know the browser is going to be the future, but we asked ourselves, “Are the customers ready for all the innovations we are putting out or will we be leaving them behind?” Leaving loyal users behind is the worst thing you can do; so with Prophet 21 2017 we are offering a browser and a desktop client. Then when the customers are ready, we will move to 100 percent browser. Instead of just implementing feature requests we are working to “future-proof” the distributor’s business.
Schmitt: More to an ERP specific level, what are the plans?
Palsule: When you have a portfolio of products, you first decide what are the best products to solve the needs of an evolving market and you invest in those products. You must also support existing customers who have been loyal to you for many years. Prophet 21 and Eclipse are clearly benefiting from a lot of investment. We are working with users of other packages to: a) Keep their businesses running; and b) give them a clear path to migrating to the Prophet 21 or Eclipse products. Migrations are about working with customers, showing them the value of migrating, holding their hand, and making it easy to move from product A to product B. We own the responsibility and the experience to make their migration successful.
Schmitt: I know we talked a lot about Prophet 21 since you are in the process of this major release. What is the plan for Eclipse?
Palsule: Eclipse is on a similar journey with a different trajectory for a different market and from a different starting point regarding the technology. We want to create that same user experience. The last release of Eclipse had a new user interface. We want to get to API. We want to move it to the cloud.
Schmitt: Any last comments?
Palsule: Things are changing quickly in the world, so it is important to remember that the species that have evolved the most were not the strongest or the fastest but the ones that were most adaptable. We at Epicor are working to build software that will allow our users to adapt to the coming changes.
Schmitt: Thanks again to my Epicor hosts for inviting The Wholesaler to their meeting.
Jen: I have a final comment as well: I think the API strategy is a huge step since it opens up a wholesaler’s access their ERP’s data and business logic. If the Prophet 21 or Eclipse doesn’t provide the exact functionality the wholesaler needs, she now has options that do not require expensive customization of the ERP code. If the wholesaler needs to respond to a customer’s needs, she can build the functionality herself or work with third party solutions providers. As a third-party solution provider who integrates with the Prophet 21 and Eclipse packages for ecommerce it will help us to provide even more powerful and functional tools to wholesalers.