Epicor charts a customer-centric path to the cloud
With a 50-year history, Epicor is currently guiding its customers through a transition that is all too familiar to observers of the enterprise application industry. Harnessing digital technology and charting a path to the cloud has become an increasingly urgent priority after the additional disruptions of the past two years. To learn more about how the company is navigating this journey, I recently caught up with Lisa Pope, who, after five years with the company, was promoted to president earlier this year.
I last spoke to Pope seven years ago, when she led sales for the flagship CloudSuite portfolio at Infor. It was useful experience to bring to Epicor, which a year ago launched Kinetic, the cloud-native, Azure-hosted version of its manufacturing ERP platform. This means she understands how the transition to a software-as-a-service (SaaS) model changes a vendor’s relationship with its customers. She comments:
It’s very easy to add Software-as-a-Service to your price list. It’s another thing to make the DNA of the business really become a service business and put your customers at the center of it all.
As president – and, by the way, the first woman to hold this position at a leading ERP company – she is responsible for all of the company’s go-to-market operations, image from branding and demand creation to sales and account management. She thinks it gives her the ability to speak on behalf of customers:
I spend most of my days with clients, I’m really a general in the field. And I’m bringing that voice of the customer back into our leadership team and our boardroom…
What I see as a big differentiation for Epicor is to continue to develop that customer relationship over time, and that long-term approach – differentiating ourselves from selling software, to truly becoming a service provider, and changing the Company DNA to really understand what it means.
Craft, move and sell
The company focuses on the three adjacent industries of manufacturing, distribution, and retail – businesses that make, move, and sell, as Epicor’s tagline goes. Manufacturing in particular has lagged in the move to the cloud, and Kinetic’s launch came relatively late compared to some competitors’ cloud offerings. But Pope says it’s been a good thing for Epicor. She explains:
We were able to scale our cloud strategy, make sure the whole company, all functional areas, were really ready for this move to SaaS… It gave us a great opportunity to get it right, scale and to have our customers not just in the cloud, but happy in the cloud.
More than half of the customer base has now made the decision to move to the cloud, she says, and SaaS reservations have grown “into the 80s” in percentage terms. Overall, the company has reached the milestone of a $1 billion annual run rate. That should appeal to its private equity owners, New York-based Clayton, Dubilier & Rice LLC, which took over the company at a $4.7 billion valuation last September from former owners KKR.
Focus on industry
At the same time, the company isn’t so big that it can’t tailor its offering to specific customer needs as their operations become increasingly digitally connected. Pope notes:
In the verticals we serve…we remain truly focused on manufacturers, movers and sellers – manufacturing, distributors and those essential retail businesses. So we focus on that narrow supply chain and provide that deeper industry expertise and bespoke systems, fewer customizations, and lots of reasons why they would look at us, compared to a broader solution provider.
I think digital transformation has kind of become the buzzword, like business process reengineering was in the 1990s. Everybody wants to do it. Everybody talks about it. And really, every customer journey is unique. It’s literally watching, what are they trying to accomplish? What is important for their growth? What do their customers want?
As a result, Epicor’s customer success proposition is largely about establishing what customers are aiming to achieve, then checking in every year to see if it’s happened to them and what else they can do. to get the most out of the software. She specifies:
[We’re] really trying to understand the results they expect from the software. Not so much focused on features/functions, but “We’re trying to achieve this level of customer experience” or “We need to be able to expand globally to reach these markets”. Then when we go back to those customer value workshops a year later, really looking to see, did they achieve those results? And how can we help them get there. I think this idea of this relationship as a circle is the key…
Since we are now selling a service, the truth is that customers vote every year because you have a retention rate. Either they decide to stay with your service or they decide to leave.
Move to the cloud
In addition to retaining existing customers, this approach can also help Epicor win over new customers who are considering their option when migrating to the cloud. She observes:
Especially now that many manufacturers are deciding to go cloud, not all of them will go cloud with the vendor they are with. So that’s a big realization that we have – both at our own base, so we’re very aggressively making sure that we provide really easy tools and easy ways for our customers to migrate to the cloud – but we also recognize that this is a great opportunity for us to reach out to customers who are unhappy with certain competitors and really convince them that we are the right partner for them going forward.
The first step into the cloud for many Epicor customers was to add point solutions around the core ERP, such as business intelligence, analytics, e-commerce, quote setup, and more. Last month at its annual conference, Epicor launched a cloud-hosted, low-code integration platform powered by workflow automation specialist Workato, with packaged integrations for core applications from Epicor. Just this week it announced the acquisition of Data Interchange, a UK provider of cloud technologies and managed electronic data interchange (EDI) services.
The pandemic experience and more recent supply chain disruptions have both accelerated the move to the cloud for many customers. For some, it’s about making integrations easier, making software easier for workers to access, and enhancing security and compliance. In other cases, acquiring key parts of their supply chain has become a driver, as onboarding new sites or business units is easier through the cloud. She summarizes:
[There’s] definitely a focus on owning or controlling more of your supply chain, definitely a focus on managing the workforce and ensuring your people have the best tools, the best access to system. Then, of course, due to labor shortages, automation is still essential.
On the other hand, some customers are not yet ready to take the plunge. Pope says:
Many of our customers, whether they are larger and have their own IT staff, or are family businesses, still prefer to run things on-premises. So we provide choice across our product lines, so companies can make that decision, and we have a valuable process to help them do that. We’ve even seen some companies with certain applications, where it just didn’t make sense to move them to the cloud due to a specialized application they were running on-premises that could potentially cause performance or latency issues. .
Meanwhile, other customers have grown, either organically or through acquisition, and the company has ensured that its software and resources can scale to support these large enterprises. One of the surprises of the pandemic has been the strength of demand. She comments:
One would expect that customers would have withdrawn and found themselves in a waiting situation. We haven’t seen that at all. We’ve really had record growth over the last two years, probably because it’s coming from our customers. They grow, and then we grow.
Pope is providing invaluable leadership in helping Epicor adapt to the continued commitment to the SaaS model. This is an interesting example of how value engineering concepts have been adapted to provide regular check-ins as part of a customer success program, ensuring customers get the results they want. expect from their software investment.