A Dynamic Answer to Enterprise Resource Planning for Services

Although revenue for Microsoft Business Solutions hovers around the $1 billion (USD) mark (only 1/40 of Microsoft's total revenue), Epicor has strategically carved out a significant niche in the Microsoft enterprise resource planning (ERP) market.

Epicor, a Microsoft BackOffice certified company, has built nearly a $400 million (USD) business by being early adopters of .NET technology and one of the first enterprise applications to have 1,000 customers running on Microsoft SQL Server (for the first time in its history Epicor surpassed the $100 million (USD) mark in the fourth quarter of 2006). In addition, strategic acquisitions of Scala Business Solutions in the global mid-market sector and CRS Retail Systems, Inc. in the retail industry have established Epicor's growth in the ERP market. The Scala acquisition has solidified Epicor's global presence in over 140 countries around the world.

With the Scala channel and the aggressive Microsoft-centric technology road map, Epicor has filled a gap within the Microsoft Dynamics family of products. However, it remains to be seen how Microsoft will respond to Epicor's growth. Will ERP for the services market experience another acquisition? Or will Epicor continue on its own path, chipping away at the Microsoft ERP marketplace?

In ERP for the services industry, Epicor has established its presence and its fully integrated offering in the upper mid-market (user organizations with revenues between $250 million {USD} and $1 billion {USD}). In the Microsoft world, where Dynamics SL caters to small services organizations and Dynamics AX competes in the mid-market services sector, primarily through Microsoft's industry builder initiative partnership with Foliodev, there is significant room for Epicor to dominate this space. Epicor delivers a complete ERP solution for larger services organizations targeting the architecture, engineering, construction, Marcom, management consulting, accounting, and software industries that require strong project accounting, resource planning, and time and expense capabilities. With the combination of its customer service model, market expertise, and comprehensive functionality critical to larger services organizations, Epicor delivers a Microsoft-centric ERP for services offering where the Microsoft Dynamics product line falls short in delivering a complete ERP system for services organizations in the upper mid-market.

Epicor Focuses on Its Customers

Epicor's emphasis on customer service has and continues to fuel its growth and success. More than any other mid-market ERP player (except for Microsoft) Epicor has an impressive 15 support centers around the world, consisting of 250 specialists that provide support to clients in 20 languages. In today's marketplace, features and functions play partial roles in the selection process of buyers evaluating ERP solutions. More frequently, ERP players focus on value-added capabilities, such as the quality of their support and customer service, as critical differentiators in the marketplace. In fact, many smaller vendors leverage their higher quality customer service and industry expertise to differentiate their offerings when competing against the tier one ERP giants (such as SAP and Oracle) in the mid-market. During Epicor's user show last October, an overwhelming majority of clients expressed that Epicor delivered excellent customer service by ensuring timely responses and resolution of user issues. Consequently, Epicor has capitalized on its leading customer service approach to gain market share from large tier one ERP vendors.

What's New in Epicor for Service Enterprises?

Epicor for Service Enterprises 8.1.1 focuses on delivering expanded capabilities in the customer relationship management (CRM) and project modules, together with new capabilities in account management. To better serve the upper mid-market in the services industry, Epicor has tuned performance in a number of key areas. Over the course of 2007, Epicor is planning on delivering new capabilities in resource management, multisite, and collaboration in order to better meet the demands of mid-market services organizations with multiple locations.

Epicor has overhauled its resource management module for the upper mid-market services industry including enhancements that streamline its ease of use, develop a resource workbench for capacity and resource planning, and offer off-line capabilities in Excel. Similarly, Epicor is aggressively pursuing its development strategy in the resource management module to grow market share in the mid-market services industries where resource management capabilities are core to the business. Furthermore, the enhancements will serve larger customers with international operations, delivering new features to address multi-company requirements, multiple tax issues, multiple currencies, multiple sites, global resources, and varying business rules in order to manage the diverse data of global services organizations.

Epicor's new information worker (IW) initiative will provide unparalleled collaboration capabilities for Epicor clients that are power users of Microsoft Office applications. Today, Epicor IW leverages Microsoft Office 2003 applications, integrating the ERP capabilities of Epicor with Excel, Outlook, Word, and SharePoint (Microsoft Office 2007 support is coming in a future release). This will help Epicor improve its clients' productivity by extending the use of Microsoft Office with Epicor. Epicor IW clients are able to synchronize their customers, bids and opportunities, client histories, and resource schedules with Outlook contacts, appointments, and tasks, eliminating duplicate entry into each system

Epicor has also simplified the collaboration between its system and Microsoft Office applications, such as Word and Excel, by quickly searching and dragging information from the Epicor task pane to fields in Microsoft Office. Moreover, Epicor users can save these documents to the SharePoint server, and then initiate a workflow process to create a transaction in Epicor along with the necessary document link managed by SharePoint server, thus ensuring improved collaboration and tracking of data. The addition of Epicor IW will improve the efficiency of an Epicor organization that is a power user of Microsoft Office applications, and that is looking to reduce multiple data entry and to streamline Epicor's interoperability with Microsoft Office.

Product Strengths

Epicor's biggest strength lies in its strategic technology partnerships with Microsoft. This partnership enables Epicor to deliver complete functionality on the popular Microsoft platform. Epicor's commitment to Microsoft technology also enables its clients to fully take advantage of Microsoft's technology road map to deliver a service-oriented architecture (SOA) framework. In fact, Epicor's current SOA offering is based on a Microsoft .NET framework, which is easily adaptable to client environments running on a Microsoft platform. Epicor's use of Visual Studio leverages Microsoft technology to assist organizations in their SOA strategies in the customization, reuse, and integration of the Epicor system within their existing infrastructures. Additionally, Epicor's tight integration with Microsoft Office (through its IW module) and Microsoft Project provides above average collaboration and project management integration for project-oriented organizations in the services sector. Consequently, services organizations with Microsoft shops can optimize their productivity with Epicor for Service Enterprises.

Epicor's focus on delivering a competitive best-of-breed professional services automation (PSA) solution provides the advantage of offering comprehensive project management and time and billing functionality, in conjunction with complete back-office capabilities critical to running a successful, billable services organization. With respect to features, Epicor offers above-average resource management capabilities with its resource workbench module, assisting organizations in managing the resources that drive their businesses. Moreover, its Microsoft-centric solution is ideal for Microsoft shops that are looking to maximize the collaboration between Epicor and such Microsoft solutions as Dynamics GP for accounting, ProClarity for business intelligence (BI), SharePoint for collaboration, and Microsoft Project for project management. As a result, for an organization seeking a fully integrated ERP system, Epicor's solution delivers fully integrated PSA capabilities (including complete project accounting) on a single platform.

Product Challenges

Epicor's biggest strength also represents its biggest challenge. Its Microsoft-centric application comes with the obvious limitations of Microsoft. Specifically, limitations include working with Microsoft SQL Server and its potential barriers of integration with non-Microsoft environments. For example, large organizations that have Oracle and IBM environments are faced with integration issues when working with Epicor's strictly Microsoft platform.

Similarly, Epicor's project portfolio management (PPM) capabilities are not as competitive as those best-of-breed PPM offerings that generally focus on aligning an organization's business strategy with project deliverables. Although ERP for services organizations tend to market to project-centric organizations, their PPM capabilities (as is the case with Epicor) are less robust and do not deliver the depth of functionality as PPM vendors focused on internal information technology (IT) departments. Similar to most integrated ERP for services offerings, Epicor has not yet fully embraced portfolio management capabilities and project governance methodologies to address the strategic issues faced by the executives of services organizations. Consequently, as portfolio management extends its influence in all areas of project management, ERP vendors will have to expand their PPM functionality.

User Recommendations

For service organizations that are believers or staunch adopters of Microsoft, Epicor is an excellent choice, and likely should be on their short lists. Leveraging both Microsoft Office applications and Microsoft technology, Epicor delivers a superior ERP for services offering for mid-market organizations than the Dynamics product line. However, for organizations that are seeking capabilities beyond the limited scalability of Microsoft (as is the case with SQL Server), Epicor may not offer adequate scalability. In addition, organizations should be cognizant of the current state of ERP for the services marketplace. In a consolidating marketplace, buyers considering Epicor should track its current growth that is making inroads into Microsoft's ERP market share. These inroads could potentially lead to an even deeper business relationship with the software giant. With a strong global presence through its Scala network, and Microsoft's gap in the mid-market services sector, Epicor could fit in the Dynamics family, serving a global audience.

The Return of Supplier Relationship Management

As the year 2000 approached, the catchphrase "lean manufacturing" was loosely thrown around in manufacturing industries. The media and software vendors led organizations to believe that a supplier relationship management (SRM) system could achieve the promise of lean. Yet the benefits promised by SRM systems were not kept. As organizations matured, they realized how the benefits were interrelated. Information sharing, sourcing, purchasing, and supplier relationships could translate into increased customer satisfaction and control of global spend. How to efficiently predict consumer demand was beginning to come into focus. As organizations realized the need for these separate functionalities, they started to look toward a solution that would combine these tasks. Enter SRM.

As time marched on, organizations were less than impressed by the unacceptable results of how these solutions were implemented. Vendors and resellers did not educate organizations on the full user capacity or on how everything ties together. Lack of knowledge transfer from vendor to organization gave the perception that the system did not meet the organizations' needs. Organizations lacked an understanding of how to translate the benefits of an SRM system into tangible results and of how all the system's features could help businesses save money, increase operational efficiency, and control global spend. Stories of failed implementations and misconceptions of what the software system promised rapidly brought the development of this "next generation" business tool to a near complete halt.

Several years later, SRM systems are now reemerging as the next big promise. Several of the benefits that an SRM system can deliver, such as management of globalization, adoption of mandated standards, inventory visibility, methods of managing stabilizations of technologies, and dealing with supplier auditing issues will be examined.

Reasons for the Resurfacing of SRM

Globalization

As organizations expand and become global operating entities, SRM is viewed as a method to help manage the process. The manufacturing of products is now largely outsourced to the East, as North America has become a service-based economy. This change in business structure has caused organizations to reexamine their current systems to determine if they can satisfy the new economic conditions created by this shift in the economy.

Organizations must deal with foreign suppliers, but how? Information must flow freely between domestic and international channels and from one system to another. Global enterprise resource planning (ERP)�distribution products, such as those from SAP and Oracle, often provide such tools as supplier portals. A supplier portal is a tool for compiling information (a significant feature within the SRM software) to build contacts, audit functions of each supplier or partner, verify quality of products, and monitor supplier and partner performance. Users can think of this as customer relationship management (CRM) for suppliers. This is done by way of supplier scorecards, establishment of sourcing relationships, the creation of supplier information, establishment and maintenance of procurement channels, etc. If a North American organization has overseas trading partners, these partners may use the SRM system as an effective means to link up with western operations and schedule shipments, manage trading partners, control sourcing strategies at the point of origin, manage supply overseas, and aid in the organizational planning of inventory to satisfy customer shipments.
Forced Adoption

Large organizations, such as Wal-Mart, Target, Albertson's Metro, etc. are mandating standards that their suppliers must conform to—that is, do business their way as a condition of partner interaction. Suppliers are forced to comply with standards that were created specifically to reduce costs, manage the supply chain from end to end, and ultimately lead to lower prices and increased customer satisfaction. Small suppliers that cannot conform to these guidelines are forced to exit from a business relationship with the originating company.

A system such as Wal-Mart's Retail Link was designed as a tool specifically to manage inventory, suppliers, and procurement and to enable full partner disclosure to adapt to changing customer demands. The thought behind the system was that if partners could share order information, they could more accurately prevent "stock outs," adjust order quantities, predict and accommodate forecasted quantities, and essentially reduce the size of the supply chain, leading to more selection and lower prices for the consumer.

Retail Link performs the following:

* analyzes and controls global spend by category, volume, and product
* manages service level agreements (SLAs)
* avoids duplication of contracts or materials to the same supplier
* consolidates purchasing volumes and improves supplier selection
* involves partners in the early phases of product development

Inventory Visibility

Organizations maintain that inventory visibility makes them more competitive. "How much," "where it's at," "what's its status," "who currently has it," and "when can it be delivered" are questions all organizations ask about their inventory. Knowing and understanding these variables allow an organization to make better decisions pertaining to demand planning, replenishment stocking, and, most importantly, availability of inventory to fulfill customer orders. SRM systems are great tools to accomplish these business objectives. Even vendor managed inventory (VMI) is usually handled by some form of SRM system, normally through the supplier portal.

With the capabilities to view "in transit" inventory over multiple modes, an organization can control and manage potentially critical supply problems. The SRM system provides a unified view of inventory from one source that supports the business. Issues such as custom delays, extended lead times, scheduling conflicts, and transportation problems, to name just a few obstacles, can be adjusted and addressed within the SRM software. This advance notice of possible disruption to the supply of goods can provide alerts to all partners affected so that they may react accordingly and adjust to the disruption. The ability to view "in transit" products allows for accurate forecasting and replenishment. The collaboration of all the affected business partners allows organizations to respond to rapid market changes, and to deliver goods to consumers on time and at decent prices.

Stabilization of Technologies

The new millennium has brought stabilization of technology. The rapid growth of the Internet has allowed organizations to use stable technology to share information over secure channels. The second nature of this method of communication has allowed for stable connections between locations as well as increased throughputs of network communications, which had previously not been reliable in the 90s. Modem connections gave way to e-mail, digital subscriber line (DSL), and T1 connections, and fax machines became electronic data interchange (EDI), extensible markup language (XML), and flat files that were sent electronically. This level of technology may have been previously overlooked or neglected due to poor information technology (IT) infrastructure and non-communication between partners. These technological advances were catalysts in taking partner interactions and trading to the next level. As organizations have built their networks, and stable connections are now the norm, the industry is reaping the rewards of SRM systems.

Web services have enabled business-to-business communication to progress. This is the base technology used for supplier portals, and it requires access from several locations globally. Any business partner can log in and check the status of a part, peruse an order, check an estimated delivery time, etc. based on user security. This convenience and information sharing is expected to be standard, as organizations try to limit shipping costs, plan efficient routes for their goods, control and manage suppliers, and minimize costs. Stable technology allows organizations options when implementing SRM systems. In terms of supply chain execution software available, only recently have vendors started to offer hosted models of software as a service (SaaS). Traditionally, this type of software was available only as in-house applications. Today, companies in all supply chain disciplines offer SaaS solutions, from demand management and warehouse management systems (WMS) to SRM. E2open, for one, offers a full SRM-hosted solution.

Secure access and availability of industry-specific hubs (such as automotive or aerospace) are offered through hosted solutions. This level of collaboration capability may not be possible through an in-house system. A hosted solution offers access to other trading partners online. This service makes it possible for even small organizations to compete globally and comply with mandated standards imposed by trading partners.

Supplier Accountability

Organizations have difficulty holding suppliers responsible. Metrics can easily be built within an SRM system because supplier data is located within the system. The collection of data gathered from the portal repository lends itself well to holding suppliers responsible for quality and compliance issues. According to an Archstone Consulting survey conducted in August 2006, 58 percent of organizations fail to use incentives and penalties to audit suppliers. Resources (approximately 49 percent) are not properly assigned to supplier management, consequently causing quality issues and duplication of resource managers for the same vendor accounts. Organizations assign duplicate resources to accounts without realizing it, which can be due to having several points of contact instead of just one, and time and money are spent unnecessarily to do the same job twice.

Issues with quality and lack of compliance are not accurately tracked. According to Archstone Consulting, 45 percent of organizations believe that suppliers do not comply with their own SLAs when they deliver product. Organizations have been looking at ways to change their sourcing and procurement strategies to get the above metrics back in line. They are beginning to see the value of the information a portal can supply. Consequently, the data aggregated from an SRM system can be used to analyze spend, cost, and performance, and eventually to align the data to the business practices.

Conclusion

Organizations are realizing that the issues an SRM system can address can significantly influence their bottom lines. Factors such as globalization, mandated standards, inventory visibility, stabilization of technologies, and supplier accountability are forcing organizations to reevaluate the need for an SRM system.

SRM solutions exist today that were not available just a few years ago. The possibility of a hosted solution for SRM, such as those offered by SAP and E2Open, are now more available than they have ever been. Of course, an organization always has the option of implementing in-house applications. Stabilization of technology has lowered the price points of these systems, which are allowing more organizations to take advantage of benefit from the vast benefits an SRM system can offer.

Common benefits of an SRM system include

* increased customer service
* accurate forecasting and product planning
* control of global spending
* control of procurement and sourcing
* greater inventory visibility
* reduced inventory carrying and holding costs

If these are organizational goals that are mandated from the top down, then an SRM system may be the solution to implement some of these initiatives, while receiving a return on investment (ROI) that is palatable.