Epicor CEO talks about SaaS and growth plans

BOSTON — Following last year’s merger with Activant Solutions, ERP (enterprise resource planning) vendor Epicor is closing in on US$1 billion in revenue, a figure that belies the vendor’s relatively low profile compared to giants such as Oracle and SAP.

Now Epicor CEO Pervez Qureshi, who had served in the same post at Activant, is hoping to double the vendor’s revenue within five years.

In an exclusive interview with IDG News Service, Qureshi touched upon a wide range of topics while discussing “the new Epicor,” and the strategies the company has set in motion.

IDGNS: You’ve been talking about “the new Epicor.” What does that mean?

Qureshi: ‘Heritage’ Epicor was a global company, very strong in manufacturing and services, growth-oriented, entrepreneurial, with great technology. Activant was primarily a U.S. company, with a hyper-vertical go-to-market focus, and very process and metric-oriented in how [it] delivered things, and probably more profit-oriented than top-line growth oriented.

We had a lot of complementary aspects, with very little overlap in markets. We didn’t have the issues of integration you see with many [mergers], which is, ‘I’ve got two of everything and now I’ve got to pick, and one side’s going to win.’

Internally, we are setting the bar a lot higher. We’re putting in processes to measure everything we do. We’re adopting agile and scrum [application development methodologies and practices].

We are adding about 600 to 800 customers per year worldwide. And we’re hiring as fast as we can. That includes sales and marketing but the heaviest hiring is being done in professional services and development. We’ve added over 600 and are on track to adding 1,000 by the end of our fiscal year. That [partly makes up for] attrition, but net, we’ll have added people this year.

IDGNS: How quickly do you want to grow the company, and how do you plan to get there?

Qureshi: Over the past 12 months, we’ve had about US$860 million in revenue, and we’ve got 20,000 customers. We have a goal to roughly double in about five years.

Now, I’ll also give a caveat. I’m not hung up on doubling. The point is, it’s a vector. Some of it will be done through organic growth and the other part through acquisitions.

We want to be a global leader in the midmarket in each segment we serve: manufacturing, retail, distribution and services. Within those there are key verticals. We expect SaaS [software as service] to become a big part of what we do. The [SaaS] revenue right now is very small. Product-wise, we’re already there.

IDGNS: A private equity firm bought Epicor and Activant and merged the companies. What benefits have you gained by going private?

Qureshi: The time horizons are longer. Don’t get me wrong, we’re still focused on hitting quarterly numbers and annual numbers. But there isn’t the intense, “I’m going to worry about every penny per share.” There is an intense focus on, how can I make this company a better asset, so five years from now or whenever there is an exit, the value of the firm is higher so we provide a better return. My job is to make this company more valuable as an asset than it is today.

IDGNS: Private-equity firms often look to extract cash from their portfolios. Given this, how can customers be assured that you can deliver a long-term road map without making compromises?

Qureshi: I think history is the best assurance. When I ran Activant, it was owned by two private-equity firms. Neither of them extracted cash during the period they held us.

IDGNS: Can you talk about your longer-term SaaS strategy?

Qureshi: The area where we push SaaS explicitly is on the low end [with Epicor Express]. We’ve just done that in the Americas and we’re launching it in EMEA and APAC in the next few months. We have just under 200 customers on that today.

The plan is always to go upmarket. It’s always been our plan to offer the Epicor platform, whether standard or enterprise edition, in a SaaS format. Epicor Express is a way of testing our readiness from a hosting center perspective, being able to support the product, pricing and packaging. It’s all about seeing how it works.

If today, a customer wants [other Epicor editions] today in a SaaS deployment, we’ll make that available for them. But we’re not pushing it today.

IDGNS: Epicor has embraced Microsoft’s development technology stack and is also planning to extensively use its Azure cloud service, yet you also compete with the company’s Dynamics ERP products.

Qureshi: Recognize that when you’re talking to large companies, don’t think of them as monolithic. With Microsoft, there’s the infrastructure side of the house and there’s the application side of the house. Our relationship is very close and based on mutual credibility. They value our input, because we do use their stack in a deep way. That’s true as far as road maps and specific features.

IDGNS: Some Epicor products are based on infrastructure software from Progress. Is the goal for Epicor over time to get to one technology stack?

Qureshi: We have a very good relationship with Progress. Literally thousands of customers across the company use either the Progress database or the tools and I expect that’s going to continue for a long time. While we’re going to continue to be a good partner and developer with Progress I think it’s fair to say we’re going to be strengthening the stack [relationship] with Microsoft as well.

IDGNS: What are your plans for enabling customers to run Epicor software on other public cloud services besides Azure?

Over time, I think people will be able to pick which infrastructure they want to go with in terms of the cloud. We want to make sure we get it right. We’ll start with Express, make it available more broadly, and make [a SaaS] option available more broadly for other editions. Then we’ll look to Azure for solving a lot of sort of high-volume deployments. Then after that, if we need to go to other infrastructure platforms, we’ll go there. Right now the focus is, let’s get it right on Azure.

IDGNS: Let’s talk about a perennial topic that remains relevant for most ERP customers: annual software maintenance payments. What’s your view of third-party maintenance for ERP, which some companies provide at lower cost?

Qureshi: There are people that do that. Sometimes they can be at a disadvantage, because they don’t have access to source code. They tend to be more cottage. They may have specific expertise, and if they do so, that’s fine too.

IDGNS: How are you giving customers value for their maintenance dollars?

Qureshi: When you sell ERP systems, let’s just be very clear. They are complex systems and they’re not simple to implement. Salespeople that say it’s all seamless, it’s all easy, and all this other stuff, it just isn’t. It’s very, very difficult. We’re not selling toothpaste or a gallon of milk.

People don’t want to change ERP systems. It touches every part of your company. So when you do change you do it because you have a compelling business reason.

When you install it, it is complex. You will be calling us from time to time on all sorts of things. We are your partner. That’s the value you get from maintenance. Some of it is just help. Half the calls we get are things where people can look it up, but sometimes it’s easier to call than figure it out. Other times it’s a bug in the system. Third, we’re continuously adding capabilities.

When somebody buys a system, they’ll have it for 10 years, 15 years before they switch it. It’s a long-term relationship.

Maintenance services costs can add up but it’s a relatively small price to pay, given the complexity of the software, the workflow, the tools, and knowing they’re going to be continually enhanced.

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Jim Love, Chief Content Officer, IT World Canada

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