Epicor's five pillars of product strategy

Last year's Epicor Perspectives customer conference was a shaky affair. The company had seen a dive in revenue, was struggling to convince on Epicor 9 and had nary a cloud nor mobile strategy that sounded much more like a distant dream. This year sees a much more confident Epicor, with John Hiraoka, CMO, prepared to field tough questions on Epicor 9 deployment challenges in a much more forthright manner. But it was the product strategy vision outlined by Jon Norwood, SVP product marketing that captured the imagination.

Rather than come to the table with an outlandish, far fetched strategy, Epicor chose to apply its spin on themes that will be familiar to those on the leading and bleeding edge of enterprise software. In doing so, I sensed a pitch that was well attuned to the majority of Epicor's manufacturing customers. For those of us who think we can confidently peer into the future of enterprise software, it was a wake up call to the pragmatic application of themes that have been bouncing around the analyst community for a while.

Industry verticals: Epicor sees opportunities to deepen and extend its domain experience to make the professional services segment more attractive to its offerings. It sees mobile and enterprise 2.0 style applications as key components in that development. No prizes there I guess except that Epicor has the ability to offer deployment choice which means it can appeal to different parts of this broad segment in ways that on-premise only or cloud only vendors cannot.

Cloud: If you haven't got a cloud strategy then chances are analysts will mark you down. Last year Epicor hinted at Express as its job shop specific toe in the cloud waters. This May it delivered but take up has been pedestrian with 30 deployments and 12 live customers. Sheesh. I would expect a much faster ramp. Epicor says it has yet to market Express in earnest until it reaches a critical mass which it defines as at least 100 live customers. The reality is that despite Epicor is public in emphasising that Express is merely one option for deploying its single Epicor 9 code based solution, it is concerned about cannibalising its revenue model. This is a false assumption. In recent months I have spoken with customers who are experienced with cloud based solutions. I am consistently meeting with customers who say they are more, not less likely to buy more services than their on premise colleagues. That sounds counter intuitive but it does seem that those vendors which understand SaaS/cloud are now winkling out those transformational case studies that influence deals. Epicor has yet to reach that point.

KPIs: Vendors have been talking KPIs for years but in truth most software was built with analysis as an afterthought. Epicor is no difference but is taking a difference approach that while still in development sounds exciting. It talks about 'actionable analytics' where an event which might impact strategic intent is flagged for action on a what-if analysis. This is achieved through a combination of KPIs and best practice business process management. I really like the idea though execution sounds daunting. It will appeal to Epicor customers who find they have to customise the solution to achieve event driven decision making. In the longer term however, Epicor will need to consider re-engineering parts of its core to be natively event driven.

Mobile: Last year, James Norwood, SVP product marketing teased the audience with an iPhone demonstration. This year, Epicor is talking about connecting people, processes and transactions in what it calls: 'Epicor everywhere.' OK - so we've heard this kind of thing a few times but the company will for example have asynchronous connectivity for professional service field agents in 2011.

Enterprise 2.0: Given my penchant for pouring cold water upon anyone brave enough to use the E2.0 moniker, Epicor surprised with a cogent strategy that has the potential to be highly effective for its customers. Rather than make the mistake of saying: "We have this thing you can imagine as Enterprise Twitter," Epicor is proposing the notion of activity stream management. The canned demo we saw looked a tad crude but in truth it represents screens that simplified and made relevant the flow of data that might pertain to an event. In other words they are going heavy on filtering, personal and group based tagging and process based 'following' of connected individuals and groups. This is a smart move though I am yet to be convinced that it expresses the kinds of transformational collaboration in which customers will need to be engaged. That need not be a deal stopper because as I observe Epicor's customer readiness for such ideas, there is plenty of time for them to become accustomed to the notion of cross boundary operations.

There are linkages to Sharepoint as you'd expect from a Microsoft development shop but in this case, Epicor is making an applications play that brings Sharepoint under control and allows it to shine.

Analysis

Am I impressed? Yes. When you're seeing solutions and concepts for the first time that span such large enterprise themes, it is not always easy to digest what this means. However, when standing back and allowing the detailed lines to become blurred it is easy to see how the combination of solution ideas will have broad and deep appeal.

The vision is clearly forward looking and Epicor is cautious enough to ensure we don't get ahead of ourselves in assuming that what they're talking about is set in stone. For example, they see no obvious social product play in retail where there are many types of experiment. Instead, Epicor talks about developing solutions based on flexible capability rather than in solution buckets such as CRM, supply chain and the like. That is absolutely the right approach.

However, a couple of things disappoint. In talking with analyst colleagues we shared a certain frustration in not understanding why Epicor is not experiencing market leading accelerated growth. It is ticking so many boxes where competitors large and small are only talking conceptual programs yet here we have a company almost coy about what's in engineering development. The problem comes down to Epicor's relatively meek approach to marketing and the channel. It has a preference for doing as much go to market and implementation as it can without third party involvement. As a $500 million revenue company, it is understandable but it is leaving a massive opportunity for competitors to come in and steal its lunch. How that is addressed remains unanswered although it recognizes the need to expand partner involvement.

One immediate answer would be to broaden the media and analyst net. When you consider there were less than 20 analyst and media people at its marquee annual customer bash then Epicor should not be surprised to find it only gets limited media play.

This is a company that while forward looking is still wrestling with its past tied to a customer base that does not move as quickly as other industry segments. It is wise not to force the march and in one sense this relative laggardly approach should serve it well in developing well thought out and practical solutions. But I am still left wondering the extent to which it is overly cautious.

The other part of the problem lies in relatively slow adoption of Epicor 9. The company has shipped more than 1700 units of the latest version to a customer base of some 20,000. That needs to accelerate. However, Epicor 9 has proven challenging for customers with the inevitable cost implications, grumbles around quality and difficulty in keeping everyone happy. It should therefore be no surprise that Epicor doesn't want to play the vision card too heavily for fear of putting customers off, even though analysts largely approve of the company's strategy. Its a balancing act that will require finesse.

Endnote: in the above video, I asked James Norwood to provide examples of what the product strategy means in practical terms across three dimensions: cloud, KPIs and enterprise 2.0. I felt the answers should make sense to most customers who are coming to a point of being satisfied they're achieving ROI on Epicor 9.