In October Epicor Software Corporation (NASDAQ: EPIC), signed a definitive agreement with Clarus Corporation (NASDAQ: CLRS), a provider of buy-side e-Business applications to the mid-market, to acquire substantially all of its core products, including procurement, sourcing, settlement and analytics written on Microsoft platforms, in an all-cash transaction for a purchase price of $1 million. The transaction is expected to close in Q4 2002, subject to Clarus shareholder approval. Epicor will provide service and support to the majority of Clarus' installed base of procurement customers, and it has been engaged in reselling Clarus' procurement product for more than two years. Epicor believes the acquisition should enable it to leverage its experience in procurement and sourcing, its integration expertise, as well as its .NET architecture to deliver an expanded suite of supplier relationship management (SRM) capabilities as part of its enterprise suite offering or as stand-alone offering.
Nevertheless, the job of gaining traction will by no means be easy for the merged companies, both being long in a conundrum of down-spiraling revenues. The competition will be fierce, primarily from IBM that, on top of an attractive hosted e-procurement offering alliance with Ariba called Leveraged Procurement Services, also features the group-buying contracts functionality generally lacking in most mid-market e-procurement products. 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 PeopleSoft Internationalizes Its Mid-Market Forays and SAP Tries Another, Bifurcated Tack At A Small Guy).
It is also quite puzzling why Microsoft stayed away from a paltry acquisition of a hopeful beleaguered partner. Has it been content with the recent over thousand times more expensive Navision acquisition and its subsequently chartered business applications strategy (Microsoft Lays Enforced-Concrete Foundation For Its Business Solutions), will provide the e-procurement application on its own (via, e.g., Microsoft Business Network), was the possible insignificant traction of the Clarus' partnership within Great Plains' global network of over 2,200 channel partners the reason, or maybe the giant has no problem with OEM reselling a product of its partner/competitor Epicor?
Furthermore, integrating the Clarus application to all major back office products, as well as to a broader set of trading services such as content management, suppliers' integration, procurement cards, pre-aggregated contracts and catalogs, and payment settlement services, remains a major undertaking for Epicor despite the promise of nascent Web Services.
Epicor has recently also made attempts to logically group and brand an unwieldy number of its products. In manufacturing, which would be approximately half of its customer base, Epicor has Vantage and Avante as its midmarket ERP products while the 'e by Epicor' suite includes the components for back office operations, CRM, business intelligence, PSA, and eBusiness.. This solution caters to non-manufacturing industries. The Manufacturing Solutions Group, which includes the Vantage, Vista, Avante, DataFlo, ManFact and InfoFlo products remain strategic to Epicor and will continually be enhanced both with core ERP functionality and with extended-ERP components such as enterprise portals and Web storefronts.
One may also note that some of Epicor's more advanced modules like advanced planning and scheduling (APS), have been sold via OEM agreements by other software vendors. The company will particularly strive to make the similar success with its Clientele CRM.NET and Clarus additions. The R&D effort with Clientele is, nonetheless, only a harbinger for what is coming for the next generation of all Epicor's product lines throughout next year and beyond, with new web-based technology that exposes all the business rules and logic (via XML and BizTalk) as web services, and one should expect that in the long term (although quite a long term) the suites will converge in this way.
Additionally, the 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 Clarus and/or CRM.NET, 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.
Competition
The competition is indeed flying from many directions since the 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.
Epicor still needs to undertake worthwhile actions with its products portfolio to further provide the cost-reduction ROI value proposition that has been so deeply lacking in mid-market e-procurement forays of many ill-fated e-procurement has-beens. For instance, on the sourcing side, one could envision the need to link the Clarus product more tightly with the product design and supply chain side, as to address the product lifecycle management (PLM) side of SRM.
On the e-procurement side, sprucing up the direct materials side could address some users' intricacies around better Web-based direct procurement execution and supply chain collaboration. 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.
Nevertheless, the job of gaining traction will by no means be easy for the merged companies, both being long in a conundrum of down-spiraling revenues. The competition will be fierce, primarily from IBM that, on top of an attractive hosted e-procurement offering alliance with Ariba called Leveraged Procurement Services, also features the group-buying contracts functionality generally lacking in most mid-market e-procurement products. 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 PeopleSoft Internationalizes Its Mid-Market Forays and SAP Tries Another, Bifurcated Tack At A Small Guy).
It is also quite puzzling why Microsoft stayed away from a paltry acquisition of a hopeful beleaguered partner. Has it been content with the recent over thousand times more expensive Navision acquisition and its subsequently chartered business applications strategy (Microsoft Lays Enforced-Concrete Foundation For Its Business Solutions), will provide the e-procurement application on its own (via, e.g., Microsoft Business Network), was the possible insignificant traction of the Clarus' partnership within Great Plains' global network of over 2,200 channel partners the reason, or maybe the giant has no problem with OEM reselling a product of its partner/competitor Epicor?
Furthermore, integrating the Clarus application to all major back office products, as well as to a broader set of trading services such as content management, suppliers' integration, procurement cards, pre-aggregated contracts and catalogs, and payment settlement services, remains a major undertaking for Epicor despite the promise of nascent Web Services.
Epicor has recently also made attempts to logically group and brand an unwieldy number of its products. In manufacturing, which would be approximately half of its customer base, Epicor has Vantage and Avante as its midmarket ERP products while the 'e by Epicor' suite includes the components for back office operations, CRM, business intelligence, PSA, and eBusiness.. This solution caters to non-manufacturing industries. The Manufacturing Solutions Group, which includes the Vantage, Vista, Avante, DataFlo, ManFact and InfoFlo products remain strategic to Epicor and will continually be enhanced both with core ERP functionality and with extended-ERP components such as enterprise portals and Web storefronts.
One may also note that some of Epicor's more advanced modules like advanced planning and scheduling (APS), have been sold via OEM agreements by other software vendors. The company will particularly strive to make the similar success with its Clientele CRM.NET and Clarus additions. The R&D effort with Clientele is, nonetheless, only a harbinger for what is coming for the next generation of all Epicor's product lines throughout next year and beyond, with new web-based technology that exposes all the business rules and logic (via XML and BizTalk) as web services, and one should expect that in the long term (although quite a long term) the suites will converge in this way.
Additionally, the 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 Clarus and/or CRM.NET, 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.
Competition
The competition is indeed flying from many directions since the 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.
Epicor still needs to undertake worthwhile actions with its products portfolio to further provide the cost-reduction ROI value proposition that has been so deeply lacking in mid-market e-procurement forays of many ill-fated e-procurement has-beens. For instance, on the sourcing side, one could envision the need to link the Clarus product more tightly with the product design and supply chain side, as to address the product lifecycle management (PLM) side of SRM.
On the e-procurement side, sprucing up the direct materials side could address some users' intricacies around better Web-based direct procurement execution and supply chain collaboration. 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.
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