The announcements detailed in Part One are a part of the wider strategy and the product roadmap for the mid-market manufacturing industry, which was announced in March 2003, whereby development efforts for Epicor's manufacturing software solutions will focus on supporting discrete, mixed-mode manufacturers, a sector that encompasses the majority of Epicor's manufacturing customers today. The vendor believes that, with integrated end-to-end enterprise suites designed to help manufacturers increase collaboration with suppliers and customers, and improve operations throughout the value chain, its manufacturing software solutions are uniquely suited to support the needs of today's global manufacturers.
Although possibly not completely on an easy street (see Figure 2), it appears that Epicor is far beyond its most challenging days. Yes, its revenues have meanwhile shrunk both due to the soft market and divestitures, but so were the crippling losses, while staff reductions are left behind too, with likely profitable forthcoming fiscal 2003. The company deserves admiration for its traditional innovativeness and endurance despite a combination of hardships it has had to overcome during last several years.
To refresh our memory, Epicor Software Corporation, formerly Platinum Software, remains one of the largest providers of integrated enterprise software applications exclusively for mid-market companies as well as divisions and subsidiaries of larger global corporations. Founded in 1984 with headquarters in Irvine, CA, Epicor generated $143.5 million in revenue in fiscal 2002, which should still rank it amongst the twenty largest enterprise applications vendors in the world. The vendor currently has over 15,000 customers, and over 60% of the company's revenues come from consulting, maintenance, and other support services, while approximately 25% of its total revenue is derived outside of the US market.
Figure 2
Gerald Blackie, a former CEO of bankrupt software maker Heritage Computing, and two former associates founded Platinum Holdings in 1984. In 1985, they introduced the Platinum line of financial accounting software. In 1992, the company went public and changed its name to Platinum Software. After some trying years in the mid-1990s, the company reorganized itself by recruiting George Klaus as still ongoing CEO in 1996. With him at the helm, the company expanded into ERP applications through a number of acquisitions. In 1997, it bought CRM software developer Clientele Software and manufacturing and distribution software provider FocusSoft. These moves helped Platinum to a profitable fiscal 1998, its first in six years.
In late 1998, it bought much larger rival DataWorks Corporation (a mid-range manufacturing ERP supplier which with a history of acquisitions of its own, had a diverse set of products for different markets and/or company sizes), cut 15% of its workforce, and changed its fiscal year to December. In 1999, the company settled a trademark lawsuit, which was filed in 1997, with Platinum Technology (now part of Computer Associates), and changed its name to Epicor Software Corporation.
Unfortunately, until very recently, Epicor had not had to shuffle the many brand names/products that have emerged during last few years from now proverbial merger of its ancestors, former Platinum Software and DataWorks. DataWorks had also grown primarily through acquisitions, and created a single company out of a number of former smaller ERP vendors. After the merger with Interactive Group in 1997, DataWorks entered 1998 with overly ambitious plans to sell and support its extensive family of products, including six different ERP applications and an MRO (Maintenance, Repair & Overhaul) application. While former DataWorks was one of the best financially performing ERP mid-market vendors at the time, it had ventured far beyond its abilities. The foundation of DataWorks' mid-market competence, which Epicor is now building on too, was its ability to deliver low-cost products with strong service and support.
With the success of its own products and the 1996 purchase of DCD and the merger with Interactive Group in 1997, DataWorks had transformed itself from a niche US-centric vendor to a company with significant international presence. Thus, its revenue in fiscal 1997 was $147 million, which was higher than Epicor's 2002 revenues. However, DataWorks had six ERP products and was then developing a seventh under four product names, which was far more than any other ERP vendor at the time (little did we know about today SSA GT's formula of success for managing a dozen of products). The four brand names were Vista, Vantage, Avant and Impresa, covering the following seven distinct products:
1. Vista (developed by DCD),suitable for small Job shops and supporting then Microsoft Windows/NT, Novell NetWare, Artisoft's LANtastic, and Visual FoxPro (database and tools)
2. Vantage (developed by DCD), suitable for midsized Job shops and supporting then Windows/NT, NetWare, Progress Software's Progress database and tools
3. Avant for ETO (a.k.a. ManFact), suitable for mid-market engineer-to-order (ETO) manufacturers and supporting UNIX, Windows NT, Object Preview, and IBM UniData (then part of Ardent Software, today called Ascential Software)
4. Avant for Mixed-Mode (formerly Interactive Group's InfoFlo product), suitable for mid-market assemble-to-order (ATO) and make-to-stock (MTS) "mixed mode" manufacturers and supporting UNIX, Windows NT, System Builder, and IBM UniData
5. Avant for Repetitive (a.k.a. DataFlo), suitable for mid-market repetitive manufacturers and supporting UNIX, Windows NT, Object Preview, and UniData
6. Impresa for MRO (formerly Interactive Groups' JIT product acquired from former Fourth Shift), suitable for upper mid-market Maintenance, Repair, and Overhaul (MRO) operations and supporting UNIX, and Oracle (tools and database)
7. Impresa for BackOffice (formerly ECS), suitable for mid-market and large discrete manufacturers, and supporting Windows NT, Microsoft SQL Server, C++
With this arsenal of products featuring perplexing genealogy, former DataWorks was to position itself to compete in all but the largest ERP deals and to give its customers the opportunity to rely on the same vendor as they would grow. However, DataWorks insurmountable technological challenge was its wide diversity of technologies, given that among the seven products there were five different tool sets that natively supported four different databases -- overwhelming enough?
After the acquisition of Dataworks, Epicor Software thus found itself with multiple ERP products and the inherited daunting task of rationalizing its product development strategy. Soon after the acquisition was complete, the company went from actively marketing only four ERP products. Namely, former Platinum ERA (now e by Epicor) and Vantage were going to receive the major R&D investment.
While Epicor was going to continue to invest in Avant and Vista, the lion share of its development dollars was allocated to improve functionality and integration with Clientele CRM, Epicor APS (Advanced Planning & Scheduling), and the e-commerce side of each application. Epicor had indeed ever since strived to complete its evolution from a vendor of financial accounting software to a provider of holistic business performance solutions, including integrated front office, back office and e-business capabilities. The company had three primary areas of focus for its software products immediately after the merger:
1. Front Office applications, which included Clientele and Platinum ERA (Enterprise Ready Applications) sales force automation (SFA) and customer service & support applications for small and medium-sized companies
2. General Service and Distribution applications, which included Platinum ERA Financials, Platinum ERA Distribution, and Platinum for Windows (PFW), designed to satisfy the requirements of distributors and service organizations
3. Manufacturing applications, which included Platinum ERA Manufacturing an ERP suite designed for assemble-to-order (ATO) and light manufacturers, Avant an ERP solution for mid-sized manufacturers of discrete and highly engineered products, Vantage an integrated solution for engineer-to-order (ETO) and job shop manufacturers, Vista a Windows-based desktop business management system specifically designed for the needs of small job shops and make-to-order (MTO) departments of larger enterprises, and Impresa an ERP system specifically designed to manage the unique business requirements of MRO organizations
In February 2000, Epicor announced e by Epicor', initially envisioned as its next generation flagship e-business product suite for the mid-market. It was envisaged as a comprehensive line-up of solutions and an umbrella brand tailored to empower mid-market organizations seeking to take advantage of the Internet. e by Epicor' would deliver financials, budgeting, distribution, manufacturing, sales & marketing, and customer service solutions into an integrated suite of the following six applications: Epicor eCommerce, Epicor eFrontOffice, Epicor eBackOffice, Epicor ePortals, Epicor eIntelligence, and Epicor eIndustry. It then also incorporated Epicor's Platinum ERA (back-office system for non-manufacturing applications), Vantage (back-office system for manufacturing customers) and Clientele CRM suites. A year later in February 2001, Epicor launched Epicor eCentre, a comprehensive line of hosted applications and services.
The company has since made further attempts to logically group and brand still an unwieldy number of its products. The acquisition initially made Epicor one of the largest mid-market ERP vendors (with ~$250 million in 1999) and the company thereby gained some strong products and a large customer base in a number of new markets, especially in the realm of manufacturing, distribution and supply chain management (SCM). Nevertheless, the burden of an unfocused, multi-product and multi-technology (i.e., Microsoft, IBM, Oracle, Progress Software, etc.) strategy in markets with diverse dynamics also multiplied sales, R&D, and service & support costs, while many of these products could not have sustained long-term success in their respective target markets.
To that end, the sale of certain secondary and focus-diverting product lines like Impresa to Avexus and Platinum for Windows to Best Software (see Latest Development on Epicor's Trying The Divestiture Tack) has, in addition to bolstering its balance sheet, therefore allowed Epicor to lately concentrate almost solely on developing applications and functions based on Microsoft's .NET technology framework and SQL Server database. Consequently, it is more likely Epicor will at last succeed in integrating its internally developed applications by concurrently expanding its Web services and collaborative commerce capabilities.
Today, Epicor's pruned and revised product groups are still aligned according to the markets that they serve:
1. Customer Relationship Management (CRM), represented by Clientele,
2. Distribution and Services, represented by e by Epicor' (incorporates products formerly named Platinum ERA and Clientele and includes the following components: eFrontOffice, eBackOffice (featuring Financials, Distribution, People/Human Resources, Warehouse Management, Assembly), eCommerce Suite, ePortal, eIntelligence, and eIndustry), and
3. Manufacturing Solutions, represented by Avant, Vantage, and Vista.
In all three areas, Epicor's strategy is to offer a comprehensive suite of integrated software solutions for all pertinent areas like CRM, Financials, Manufacturing, SCM, Professional Services Automation (PSA) or Collaborative Commerce, which should also provide the scalability and flexibility to support long-term growth for the customer. Epicor's solutions are complemented by a full range of services, providing single point of accountability to promote rapid return on investment (ROI) and low TCO, now and in the future. The needs of SMEs such as having solutions that are scalable and reliable but cost-effective, functional but easy to deploy and customize, and open but have a relatively low barrier to entry (i.e., TCO), have yet to be met completely by any vendor, but Epicor is seemingly getting there by tackling major catchwords of mid-market success, such as integration, ease of use, one stop shop, low TCO, flexibility, broad & deep functionality, out of box' solutions, rapid implementation, rapid ROI, etc.
Epicor's technology direction currently embraces the Microsoft .NET Platform for XML-based Web services. Through .NET, which is the next generation of Microsoft's Distributed interNet Applications Architecture (DNA) and component object model (COM), the vendor hopes to be able to provide comprehensive support for Web services deployment and Enterprise Application Integration (EAI). With .NET and the emerging standards for data exchange such as XML, Epicor strives to be able to provide increased access to information both within and between organizations — no matter where their offices or employees are located. This technology strategy should enable Epicor's still diverse development teams to leverage Microsoft technology, while allowing each product group to continue to utilize the individual databases and development tools appropriate to the requirements of each product's target market.
Epicor's Manufacturing Solutions Group, which contains approximately half of the entire Epicor's customer base, features Vantage and Avant as its major mid-market ERP products and Vista for smaller discrete manufacturers. The the 'e by Epicor' solution remains an umbrella brand name for a number of above-announced products (e.g., eIntelligence, eFrontOffice, eCommerce, eBackOffice, eProject, ePortal, eCentre, etc) that cater to non-manufacturing service and distribution industries. As for specialization, Vantage remains the preferred system for make-to-order (MTO), job shop enterprises, while Avant leans towards complex manufacturing and project work environments; Vista, on its hand, is the low-end product for much smaller discrete manufacturing enterprises.
The rationale of Epicor focusing on Avant products as well as on the Vista annd Vantage products was that all run on the Windows operating system, which has long become one of the key requirements for success in the ERP mid-market. Also, the businesses have been similarly structured, since they sell to their own markets with their own products built with technology different than all other former DataWorks products. This strategy is therefore in tune to the growing market demand for vendors to focus on core competencies and products.
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