In this episode, we explore what ERP buyers need to know and where the market is going.
Enterprise resource planning (ERP) is a rich a mature market that is evolving with the times. The impact of cloud, social, mobile on digital transformation is an important consideration for enterprise buyers looking at this software. In this episode, we explore what ERP buyers need to know and where the market is going. Our guest is Joe Cowan, CEO and member of the Board of Directors of Epicor Software Corporation, a global leader delivering inspired business software solutions to the manufacturing, distribution, retail, and service industries.
About Joe Cowan, CEO of Epicor
With over 40 years of experience serving small, midmarket and larger enterprises, Epicor has more than 20,000 customers in over 150 countries. Prior to joining Epicor, Joe held the position of CEO and was a member of the Board of Directors of Online Resources Corporation, a leading provider of online financial services that was acquired in January 2013 by ACI Worldwide. Prior to that role, Joe served as CEO and a member of the Board of Directors of Interwoven Inc., a provider of content management software, from April 2007 until its acquisition by Autonomy, Inc. in March 2009. He has also held executive management positions at Manugistics, EXE, Invensys, Wonderware, Texas Instruments, Eurotherm Corp. and Monsanto. Joe has served on the Board of Directors Blackboard, and DirectData Networks, and is currently a member of the Board of Directors of NICE Systems, a leading Israeli technology company. Joe holds a MSE degree from Arizona State University and a BSEE degree from Auburn University.
(00:03) What’s it like to be CEO of a billion dollar software company? Well today on episode number 129 of CXOTalk, we are talking with Joe Cowan who is the CEO of Epicor Software. We’re going to talk about ERP. We’re going to talk about the future of enterprise software. We have all kinds of enterprise goodness in store.
I’m Michael Krigsman and my co-host is Vala Afshar. Vala how are you?
(00:33) I’m doing great Michael and I’m excited to learn from Joe today. Welcome Joe.
(00:37) Thank you. I’m glad to be part of your show today.
(00:42) Joe can you start briefly telling us a little bit about your professional background please.
(00:49) Okay be glad to. You know I’m kind of a maybe a unique person to be doing the role I’m doing.I’ve a degreed engineer. I have a BS degree an electrical engineer degree from Auburn University and a Master’s degree from Arizona State. I started my career programming computers –we won’t even talk about what that was like. But then I went into sales and marketing and loved dealing with customers. Loved solving problems. I’m a problem solver. And then I’ve had the opportunity to run many different software company’s all the way back to Interwoven which was actually sold to Autonomy which is now part of HP. Then a company Manugistics which was supply chain planning. Ran another company that was in online banking (BelPay business?) that’s where I learned about my SaaS business.
(01:40)Actually I ran another company once upon a time called Wonderware which really taught me the concept of ease of use and how to build solutions that are simple ease of use for customer. So it’s a career I’ve thoroughly enjoyed.
(01:58) So Joe, tell us about Epicor, the company, the markets you’re serving? Give us some context for our conversation.
(02:07) Okay glad to Michael.Well like I said when we started, Epicor is roughly a billion dollar company. You know, we are a software company that has solutions where we sell into the manufacturing marketplace. We sell into distribution, and we also have some retail solution. But what we’re what you call a total solution provider. You know at Epicor everything we do is software, but then we provide the basic services to help our customers really utilize the software.
(02:38) in the real key to Epicor in our business is the fact that we are vertically focused and we tend to be in the midmarket companies that can go anywhere from 50 million – 500 million in size. And you know it’s important to really understand who your customers are, what their problems are, what their challenges are and you know, that’s what we pride ourselves in that deep domain rich knowledge that allows us to really understand and help our customers to be successful.
(03:09) Can you talk to us Joe, a little bit about your target market and what makes Epicor distinct in the market.
(03:16) Yeah, it’s a good question. You know the target markets are this like and we say manufacturing. We have selected markets, things like plastic, things like machinery manufacturing, you know of the things like the automotive part manufacturing space. You know we sell into some chemical, so we tend to focus on the more heavily discreet parts. But the key thing there is if you look at the heritage of the company, this is where the company grew from.
(03:50) We grew from small companies that solved problems for those industries, where there were a bunch of acquisitions that came together and now they gave us that deep rich vertical knowledge, so our software is very focused on the problems for selected industries and the knowledge we have the implementation in the sales to employ.
(04:10) You know we also have distribution. Let’s say you want to put in a new bathroom in your home and you would go and look at bathroom counter sinks, faucets so you would go to where the wholesale distributors that sells all of that and we provide total solution to those types of companies.
(04:28) In the end even in the retail side, it gets into what we call ‘hard goods’ retail and distribution. You go into an Ace hardware, the majority of the Ace stores actually use the total Epicor solutions to run their business. So we’re very focused and that’s the key to our success is knowledge and focus on the selected industries that we serve.
(04:52) So Joe tell us about your role as CEO. So you’re the Chief Executive Officer, what exactly does that mean?
(05:01) Well I guess you can say I’m the head man at the top of the totem pole, which has got it’s good points and it’s bad points and at least the buck stops here. But basically I’m brought in and we’re owned by private equity. I have worked for both public companies and private equity firms.
(05:18) So they brought me in and said, look Joe, we think we’re got a great asset, which they do. Epicor is a great company. They said that we believe this company has a lot to (unclear 05:28) excuse me.
(05:31)So as CEO I was brought in to really understand the company, understand our strengths and weaknesses. Understand the marketplace and the competition and put together the right strategy and plan to really take this company to the next level. What I like to tell people that I’m brought in to take the company from being a good company to being a great company. So, my role as a CEO is to understand that strategy, put an operational plan together and then go execute that plan that will allow us to accomplish those objectives.
(06:03) Do you want to maybe summarize briefly what that strategy is for Epicor to take it from being a good company to a great company?
(06:15) Good question, you know strategy is one of the hardest things that a CEO has to work on. So what I’ve done, I’ve gone into the company and I’ve said let’s look at who we really are. Let’s look at what our real strengths are, because the key thing to do is you want to match your strengths up to the marketplace. And that’s where early on I said we’re very good in certain verticals.
(06:35)So that concept is let’s take the vertical that we’re good in. Let’s focus into those industries, let’s make sure that that’s where our sales team is really selling. You know that’s services have certain knowledge, so it’s that deep vertical focus so that we can truly be the best of breed supplier into those companies. And we can be the best partner and our goal is to help them succeed.
(06:59)The next thing is to look at technology. Now the interesting thing is about Epicor, the company had spent quite a bit of money developing the next generation; the ERP system, which we call E9010 so what the development there is to take that technology and really make sure that its totally complete to solve those problems. But we’re not a technology company per se, we’re a software company who leverages technology and solves problems.So the real thing is to leverage the technology, make sure we understand where the technology is going and then build on those rich vertical applications in the markets that we’re serving.
(07:36) So that’s more or less what that strategy is, and then make sure that everything we do has a foundation of quality. You know, I learned a long time ago that for a software company to be successful there better be quality in your products, quality in your services when customers call and that’s an area that we’ve been focusing on to make sure that is the solid foundation.
(07:59) Joe you and your team have made an effort to hire military veterans which I think is awesome, can you tell us a little bit about that.
(08:07) Yeah, you know 15 months ago at our customer event we announced that we were supporting the wounded warriors. You know, I felt very strong about the fact that these people had dedicated you know their lives and in some cases they had given their lives, but you know, these people were willing to go out and risk that all for this nation, and I felt you know as a CEO of a company the least I could do was to let’s offer some opportunities for those people.
(08:36)There’s numerous ways we can do that, but rather than just trying to say we will bring everybody in, you know, non-experienced people who start at the bottom. We try to go in and get very experienced people. You know, people who have some very unique knowledge that we could bring in and really plug into the organization. You know, we’ll bring them into sales roles. But especially in professional services these people have a lot of, you know they are very good for what I call a program, a project management capability, because the federal government is very organized.
(09:08) And so we put them into those roles where we can take full advantage of their capabilities and start delivering real value to us. And we’ve had dozens of veterans that way and I don’t even know how many we’ve got in the company. It’s probably somewhere between 50 and 100, so we have quite a few and we are continuing to hire and I’m continuing to push this because I really believe in it.
(09:32) And so Joe do you have a training program, or how do you get them to adapt their project management skills that they learnt in the military which obviously is such an enormous organization into Epicor which is a private company and whichis much smaller.
(09:48)Well you know well bring, and typically when you have these people they are usually some very bright people. So we’ll bring them in like though a professional services organization and we have a program to bring them up to speed and to get them familiar with our products, to get them familiar of how we do business, so we do have a training program for our professional services. And you know each area that we manage to bring them into have the role of their own ownership, but we don’t have is what I call a generic training program across the company because we’re bringing in more experienced people, so we’ll bring them into their specific areas, and we have an individual program specifying each of those needs.
(10:31) Joe that’s great thank you so much for your background and the company background, it sounds like you do fantastic work, but I’m going to shift the conversation a little bit towards technology and products and solutions that you sell. So let’s start with what is ERP.
(10:48)Well you know ERP is pretty simple and the way I view it. It’s the backbone of how manufacturing and distribution companies run a business. You know it’s the financial system, it’s the planning systems, it’s the ability for them to take orders, it’s the ability of them to shift. So it’s really the backbone of the business solution of the companies and that’s the real simple way of putting it.
(11:15) And then briefly take us through the history of ERP, and again what we want to do is set context for the people who are watching.
(11:23)Now you’re going to make me talk about my age!
(11:27) You know I think you’re not the only one here who has some remembrance of company’s who have been around in the past and aren’t around today.
(11:37)So, well yeah it goes back a long way. I remember starting my days at (Unclear 11:42) and you know, back then you didn’t have the big gigantic financial systems and we had to basically create our own business solutions from scratch.
(11:52) So from early on it started out with companies piecing together the solutions, and then you had the IBM’s of the world who got into the business, and different companies who know a lot of the basic foundational ERP solutions today is really from some of those earlier IBM solutions, where they built the first products.
(12:13) You know, then you started moving into the issue of Y2K, and that really drove a lot, where now you have the Oracle and the SAPs of the world and even some of the companies like (Bonds?12:26) of the world that you know develop their solutions to solve those Y2K problems. And that moved us onto the next generation products that got us more from the mainframe into the client servers.
(12:39) And you know now I think we’re entering the next phase of ERP and really where that drives us to is what’s going to happen with cloud, the SaaS, the new technologies. You know, I was just looking at some information the other day that was talking about the number of companies that utilized the way of and it’s tremendous in the last 10 years the number of people and all of our businesses are starting to leverage it, and the number of people who use mobile.
(13:08)So the whole technology is now starting to play, so how do we use these technologies. Everybody hears about cloud, so how did we use those to create those next-generation systems. But each phase of the cycle, I mean what we’re seeing is systems that tend to try to be more specific, they tend to try to solve a better job of solving the problem – I won’t say that they are easier to use because we went through a real cycle way they weren’t. But I think we are starting to into a phase where customers are starting to demand that says, I need systems that don’t take me five or 10 years.
(13:42) You know we were talking to a major chemical company the other day, and they were talking about what they’re looking for in the next generation system, and their approach is you know we can’t afford any one of our players to spend three years making the change to our ERP system, because the dynamics of the market were in, we’re in global markets that products change too fast and the manufacturing processes need to change to adapt to our business. So we have got to have systems that are more configurable, more adaptable that we can implement much faster, much quicker.
(14:14) So this is where I see the market driving too for those custom systems that many years ago, to all the standard systems, the client servers, the gigantic systems, now we are starting to use more cloud-based solutions you know from current-based solutions that tend to integrate together and allow the customers a lot more flexibility in terms of their business processes.
(14:37) So Joe, in terms of points of innovation for ERP for the next few years, can you talk a little bit more about that. It sounds like the agility, the dynamic solutions, flexibility, cloud orientated solutions seems to be part of the road map. But can you specifically talk about some of the key innovation points for ERP in the next five years.
(14:59) Yeah, good question. You know, in some ways you have to kind of look at it and say whether you’re a large company or you tend to be a small company, so let’s talk general and I’ll give you some specifics of what I think it tries to break apart.
(15:14)You know, it’s obvious that the latest technology, I mean let’s talk about things like mobile. Everybody’s connected now, absolutely everybody is connected and matter of fact this survey that I was looking at was showing the number of smart phone users, and these are just going up exponential.
(15:32)And so everybody is connected and have a smart phone, and if I am a businessman I want to really know what’s going on in the business. I want to know in real time. So I think this is where one of the things that we have to look at in technology and your system have to have the ability to let the owners of the businesses to stay connected and know what’s happening with the business.
(15:52)The second thing that we are starting to see is and I’ll give you an example. The other day I had a lock on my gate that was bad, so I went online to look for the manufacturer on that lock, so I went online to look at their website and I said okay, that’s what I want. Then my challenge was finding a distributor that had it, okay. And so I had to do a lot of research, so but what I think we are starting to see now is that customers are starting to tell us, Joe, we need to be more connected to our customers and our potential customers.
(16:22) You know, they all have web technology, and people always research and that’s how you find out about companies. So they have got to make sure that that whole capability is there, but now how can act connect with my customers and my supply chain, so that I can do things much quicker and faster and make it much simpler for my customers to do business.
(16:41)So again, we are seeing that technology, and then I think the third component is technology changes and change is hard. You know how can you every so many years new servers and Microsoft or Oracle, how with new versions of the operating systems, and sometimes these things are not easy for small companies to really adapt to because it requires a lot of change and a lot of energy. They will run the business. They want solutions to implement their business, so that’s where things like the cloud will stop playing, so they don’t have to worry about some of those technologies, they can let companies like the Epicor’s of the world deal with that and provide those solutions.
(17:22)And then I think the final piece is information. You know, information is so key to running our business, it’s key to running their business. So with all of these systems, with all of the connectivity and the way they are tied into everything, all the customer data coming in. How do I manage my business much better, so that’s where having the right information and the ability to analyze and use that, and use it with all the connection points from a real time standpoint.
(17:55)That’s where I see technology taking the business. You know and I think it is going to require companies like us to really think through how to leverage this to the advantage of the benefit of our customers.
(18:09) Joe, when I speak with ERP buyers especially in the midmarket, but with larger companies as well, the common theme across the industry is this perception that ERP is difficult, and again especially with buyers from midmarket companies often at times they are just on the fence to even do this because of the perceived pain. Again, it is across the ERP industry, so what causes this and what do companies like Epicor need to do to just make it easier for buyers?
(18:49) You know, that’s a very good question. To be honest with you, when I go in and talk to customers that’s one of the first questions they want to talk is ROI, and I and how do I afford to go down this path because it is very costly, and it is problematic in those cases.
(19:04)And you know that’s something that we are focused on all of the time at Epicor, and the problem tends to be that and I think it’s twofold. One, is we see a lot of our customers or potential customers that they’ve got a certain way of doing business. They’ve got you know the processes are well-defined, and a lot of the times they will say I don’t want to change. I want to get a system that can do, that can do things my way.
(19:34) So the thing that we want to do is you know we want to go in and try to understand exactly how they run their business and help them and I think it’s a joint team. They’ve got to be committed to it and we’ve got to be committed to it, but let’s understand where they are thinking of making change. These systems, some things are easier to do, they’ve got certain processes built in, so they can take something standard that they’ve gotten already defined and use it, versus having to customize and look at all of the third-party integration they have and find out how we can simplify that. And some of it comes back to having to that are more simply to configure for you.
(20:15)You know I think to Wonderware where I thought about my experience. You know Wonderware was a very interesting company. We built in Wonderware manufacturing for systems that managed and monitored machines and allowed users to operate machinery on the factory floor that integrated into their systems today (and you may call some of this?)
(20:38) But what we really mastered was how to make those systems flexible but simple to use, and there’s things like configurations and there is things like having standard integrations. Let’s say one of our customers wants an interface into its CRM, so at salesforce we would be able to standard interface where they can customize it. So those are the kind of things that we can do for them, so that you don’t have all that engineering and all that customization, and all of that special configurations, (week end?) reports, and that’s where the vertical knowledge that we have comes into play.
(21:12) Because if we can understand and if we can pre-build and pre-do these things, in the end well work with them to say, okay what exactly do you need to do. And also start and not trying to do everything in one time. Let’s stage it one thing at a time and you know let’s get the financials working, let’s get the planning system working. So let’s go a step at a time and not try to bite off too much and stay very focused in terms of what to do.
(21:38) Joe business leaders in IT and other lines of business have an opportunity to identify clearly on ERP implementations, and that sometimes can be a challenge. What advice do you have for line of business owners who are trying to formulate and clearly articulate ROI on ERP implementations.
(22:04)You know all of those do it, and every time I’ve put in a new system and we are implementing these systems I always want an ROI calculation, and sometime that’s pretty easy to do and sometimes it’s not. You know sometimes there are all the real benefits that go beyond it. For example, if I put in a new support system, one of the things I talk about is I want to know about how to better the quality. A customer putting in that system in response to how fast can our customers interface to my system, how fast can they get data, or how fast can you know just like in the case I talked about, that if they had a system that allowed me (the order it’s going? 22:41) and distribute, so some of these things there is other benefits, and I think you have to weigh both the soft and the hard benefits.
(22:52) But usually and again I think this is where cloud comes in, because sometimes some of these costs are the fact that especially for a small company I’ve got to have that expert communication, and I have got to have a computer expert, and a database expert, so I need all of these professionals inside my company and that’s very costly too.
(23:13)So sometimes they are looking and say I want to go cloud, and I can look and say can use third party such as Epicor to do some of this for me. So I think they have to look at their systems, the cost of the system, how to look at the benefits. Sometimes it requires them to have fewer people, you know doing invoices, a process into receivables. Sometimes from a manufacturing standpoint to allow them to reduce inventories, because they do a better job managing the supply chain and optimizing supply chains.
(23:45) So there’s both hard and soft, so I think and we will do and that’s sit down with the customer and say, based on their knowledge and understanding, these are the areas that you should look at and when I see you do that and let us show you all the different areas that we’ve seen other customers do.
(24:01) One of the things I’m really pushing for is our users is to have more customers coming to talk about here is the real value proposition for our ERP system, so that they can look at both the hard and the soft.
(24:50) Joe, you know when I sit down with potential ERP buyers often times it seems like what’s happening it’s the people in the trenches doing the work, feel the need to have ERP systems to have greater efficiency, greater productivity, all of the benefits that we know come from ERP. But then you talk with the CEO of the company and the CEO may say, hey, yeah we could do things a little bit better but it’s not really going to change things, what’s the ROI. So there is a disconnect between the people doing the work and the senior management of the company, how do you bridge that gap, how do you help your customers bridge that gap so that when their buying and they are looking at an ERP system.
(25:07)You know that’s a very good point. You know, we tend to see small companies or large companies, and small companies, and we were just talking this morning with some of our team about how we are getting a lot of people who are the owners of the business, that’s the CEO, and they have their technology people. And so now when they look at the solution, you know they’ve got that real stand to gain, because this is dollars out of their pocket.
(25:37)So they really want to understand that there’s value. Typically, when you sale case like that sometimes the project started at that level, and we want to interface to those people and you know we need to make them feel comfortable with what the real benefit of the system is and they need to feel comfortable that we are a partner that is going to help them to help them turn it to be successful.
(26:02)And then you know once we get into the IT organization, we get in some of the operational people, you tend to get in more of the feature functions of a system, but I think we have to be careful that we don’t get in the feature function, that we really move to the level of the owner and the senior management and you have to get them to really understand the benefit.
(26:26)And then one of the things I think that is really important and that’s where I’m pushing my organization to do is you know, we want the customer to understand that our goal is not to make them continue to buy software and more and more software and to be in the business of buying software.
(26:45) There real responsibility and what they’re designed to do is to do things like grow the business, you know they want to fix some of those operational columns and keep them growing and they want to do acquisitions.
(26:56)So what I tell my people, we’re there to help them grow. We’ve got the software and solutions to help[ them do that, then that’s a win-win for both parties. And that’s the first one we’re focused on, value proposition, win-win, get them to achieve their objectives and that’s what I’m functioning my people to do more of this (unclear) selling.
(27:16) Joe, so far you know you’ve talked about cloud computing, you’ve referenced connected customer with mobile and social technologies. Obviously, the goal of business is to capture as much data and analytics, so that they can develop insights that have real value to the business and the customers and employees. These are all element of transformational journey to a digital business, can you talk to us a little bit about the Epicor journey of becoming even more of a digital business and give us some examples.
(27:53) Okay, well you know this is the area that we spend a lot of time in, and in fact I was just talking to our Chief Technology Officer this morning about technology and where it’s going and talking to the chief strategy person about you know where we are going. And the thing that I focused on and talked about it some of it earlier is to really understand technology, and to understand what the technology allows us to do. And to understand how we can take that technology and create solutions for our customers.
(20:35)You know one area that were focused on now is what we call the mobile platform, and we have a lot of different thoughts and most companies like us have different thoughts. So how do you really create a common solution for this product?
(28:53)So we would look at something like a mobile platform, and we’ll build applications on to that mobile platform to integrate all of their legacy systems. So what we try to do is understand and create that common solutions for our customers.
(29:08)You know another in technology which if this whole thing of cloud, I there is a lot of companies that are looking and saying what these cloud. You know my son and I have this debate at the dinner table a lot of the times about SaaS, but some of these business models is how do the customers want to do business.
(29:31)You know we go into our customers and we say do you want to buy our software or would you like to pay by the month, or pay by the transaction. So some of these companies different business models has different traits, so what we’re doing as a company is we are trying to understand what is the right business model for our customers that helps them really accomplish their objectives.
(29:55)So some of these technologies like the cloud is really just the business model and it takes away some of this infrastructure talk that we have. So it can be really big where they are paying upfront or hiring explicit people that they can pay overtime and accomplish the objectives. So sometimes it allows them to start if they grow into it that they can go and buy the software.
(30:15)Sometimes it’s it’s property equity owners they don’t want the cost upfront, they would rather go in and have a solution like the cloud. You know and then one of the things we’re doing – I we do it internally but also with our customers is how can they leverage and what are the challenges. You know when I used to work the company for a small period of time in big data, and big data is something that everybody talks about, and how do we make it simple for ease of use. People don’t want to go and get into the sophistication of all kinds of things. You know I worked with Manugistics and we used to talk about (27 algorithms that we couldn’t do anything with, but it takes a Ph.D. in operating solutions to research those?).
(30:59)So one of the things that we are really focused on is how I can create a standard element of material or standard report or standard function so that I can do my planning and leave all the ERP system people need to do the planning. They need to do some analysis on the data and they need to do the history and to do the forecasting.
(31:17) So how do we take these to it than simple and ease of use, so they get the advantage of using big data, but it is brought down to their level and their capabilities. So those are the things that we look to and try to help our customers to solve the problems and to take more advantage of the technology, but we try to do it a simple way. So we take the complexity of the technology out and we present the simplicity of the solution to our customers.
(31:45) Joe, you know you mentioned business models, and as CEO of a software company that sells both on premise as well as cloud software, in some sense you’re managing two different business models under one roof, the economics are quite different. So how do you inside Epicor manage these competing interests in a sense of these two different business models of cloud and on premise for yourself running your own company?
(32:21)Yeah, so very good question and that is a debate that we have. To be frank it is a discussion that I have because they are two different businesses and they impact exactly from a business standpoint (?)
(32:39) So, one of the things that I’ve done in my career is I spent two years with this company called Online Resources (unclear 32:50) In the banking business and my background is primarily you know supply chain, ERP distribution. But I went there because I wanted to truly learn about what SaaS was all about because we had a pure SaaS business model.
(33:08) And from that standpoint I’ve got a couple of people, my CTO and a marketing lady who worked with me there, so we understand the (unclear 33:16). So what we’ve set up until now is look Mr. Customer, Miss Customer, if you want to buy our software we’ll sell it to you, but if you would like us to run a SaaS model, which is really a monthly subscription model and we’ll do it that way.
(33:33) So that’s the way we’ve been doing it up until now, and I think as we go forward there’s going to be certain solutions maybe for a certain sized customer that we strongly recommend that we think you should do to go to the cloud. Because we think it’s less complex and less sophisticated, and it’s also simpler when you come up to implementation faster. And we can give you returns quicker and simplify some of your problems.
(34:14)We think there is a class of customers and that’s one area that we are working on now to understand how to segment our customer base in our business to do that. There will be other customers that will still continue to give them the choice.
(34:28)So what we’ll do is we look at some customers where we think it makes good business for them to go to SaaS, and we will look at other customers and we will say we’ll give you the choice. But one of the things that we are doing is that we are building our infrastructure so that we can go totally to the cloud. You know, one of the things that when I came in we had quite a few data centers when I came into the company and we consolidated those.
(34:51) You know we’ve got data centers set up all over the world, we’ve got our infrastructure and we are putting our systems in place and hiring operational people so that we can literally become a totally cloud-based solution if we so choose because we will have the infrastructure and heritage.
(35:07)And then the final component is that really plays into this is the ability to deliver software that works in the cloud or SaaS environment. One of the things that we thought we understood with the last company that we were with is that you have to have a very quick objective. I need the ability every 2 to 3 weeks to turn software that I can send to my customers and it has to be very high quality. We’ve got to have the ability to deliver that software you know in a very fast frequency to our customers, so that we can give all these different customers and the choices and give these customers (to own very quickly?).
(35:44)So we are putting the reliant systems and capabilities into the company (background noise 35:48). We are building the infrastructure to deliver and we’ll have the business models that match up to our different customers and to the different models.
(35:56) Do you have an economic all other biased towards your customers purchasing either on premise or on cloud?
(36:04) Well you know we all know that if you purchase the software I get the money upfront and if it’s cloud it’s subscription over time. So everybody would say I’d rather get the money upfront. But you know, you’ve got to realize the market is changing. The market is moving and I cannot dictate markets. As a company, I have to be willing, I have to be flexible and willing to go with the market and that’s the way we’re going to succeed in this.
(36:34) Joe, let’s talk about market moving and shifting and let’s talk a little bit about retail, you have now you know Amazon has got are bigger market cap than Walmart, you have the implication of wearables and beacons and Internet of Things. Of course, you know everyone is checking prices online and you know the show rooming affect in brick and mortar retail. You chose to spin-off Epicor’s business into a new company. Can you talk to us a little bit about your view of this disruptive nature of the retail industry, and how companies like Epicor can help organizations with stand this enormous velocity of change that retailers are facing?
(37:18) Yeah, you know it’s a very good question and the challenge that we tend to face with with RSG which is what we call the Retail Systems Group was that the business tends to sell to a different customer we had come in different sales organizations, we had different products and you know they were just totally different market and a totally different light of sales for those companies. The retail that we sell tend to be much larger companies, there were very few customers. You know, on the Epicor side we have about 20,000 and on that side we had about six or 700.
(38:02)So it was a different business model and we found the solution when we were selling the software was a different software for our typically Epicor customer versus the RSG customer. So that made sense to spin that off and allow them to get some economy to scale and do something useful with that business.
(38:21)Sothat was the reason we chose to do that. We still have a retail business which is we used to call it (RSGE) The hard goods retail business which was we were selling to places like Ace Hardware which is more if you think about it a distribution, it’s a different type of sale. It’s not in (size and style?), but it’s you know hammers and saws, and nuts and bolts, so it tends to be a different type of business.
(38:51) But what we are finding from that standpoint if I really think about that a lot of our manufacturing business are (job shops?) Were there going into (distribution?) So theymake produce (lots?) they may produce custom (lots?) and they produce certain kinds of machinery that they take to the marketplace. Or they may produce hammers. But what we tend to see is all of our customers are starting to look whether it be a hardware store, or whether it be a manufacturing company, they are starting to say, distribution how do I see my products (Background noise phone ring 39:32) Remember early on I talked about the fact that I went online to try and buy a lock for my gate and I found a lock and then I had to go and find a distributor. We see this whole e-commerce thing is where the markets going. Every one of our customers wants to be plugged in, whether that they retail customer, a manufacturing customer, or distribution. We’ve got a lot of manufacturing customers that say I want to be distribution. We’ve got a lot of distribution customers that say I want to be in manufacturing, so how do we bring these solutions together and how do we leveraged the way of e-commerce. How do we take full advantage of that and give them the ability to better communicate with their customers much quicker and faster.
(40:19) You know if you look at the supply chains and how they work with – you know and this is where some of the social network come in, how they work with their network of suppliers to make sure that they are interacting and receiving their products more in terms of what they are needing much quicker and faster. So these are all the things that we are doing and that’s where the retail and distribution tend to come together is in that whole area of e-commerce.
(40:47) So Joe we’re almost out of time, but before we go please share your advice for buyers who are considering an ERP purchase as well as your advice for running a smooth successful ERP implementation.
(41:08) Okay, that’s a very good question. Now for any customer who is considering a new ERP solution, I think they think that they really need to do is that if they look at the different companies out there and say okay, here’s what I’m trying to accomplish. We go and find a company that has a solution that matches well for them.
(41:33)You know, you can buy generic systems that you know will solve may be one component like financials, but they are not very good when it comes to the manufacturing components or distribution component. So I think what they need to do is say (minimise?) the marketplace and say who are the software or solution providers that really have a solution that matches up of what I’m trying to achieve, and I think that is first and foremost.
(41:59) Then I think they need to look and say, we are seeing a lot of companies that are global, and so the question you know, we sell to a lot of 250- $500 million companies that may have three or four places in the US or they may have won in France, one in Germany you know, two in China and four somewhere else. So they’re really not US centric companies; they are global companies.
(42:29) So if you are picking a system, you need to go and make sure that you have a global company, someone who sells solutions to them, someone who understands the problems of dealing with all these different countries nd who can support and grow them.
(42:43)So I think the second thing is understanding the global nature of the business. And I think another thing that they need to look to and say, what is the business model that I would run, I want to license my software and pay by the month, or I want to pay for it upfront (for an additional capital? 42:59).So they have got to understand how they want to do it and look ay their cash flow or with their money and understand how they want to go and do it for the business.
(43:10) But then first and foremost they need to look and say, I need a partner that really understands me and not just their software that looks like it fits my solution, but I need a partner that really understands me and they need to make sure that this is the key. And we see a lot of people falling short in this area. If you’re committed to spending a dollar, they need to go and do it by the month , (you’re still spending the dollars?)
(43:35) You’ve got to have a team, you’ve got to be committed, and you know you’ve got to be willing to make some changes and to drive your business, and it takes a strong team effort, a strong partnership between the supplier and the manufacturer and the distribution company and they’ve got to be doing it, and it’s not going to always runsmooth. Our goal is to try and make it move as smooth as possible and build a system that is easy to use.
(44:03) But depending on what that customer is wanting to do, there may be some tough integration and there may be some things that they want to do that requires some extra work. So the key is working together as a team and realizing that there will be challenges, there will be problems, but if they’re focused together and are committed to drive down this path, then the end result will be success. And the other thing is don’t bite off too much at one time. Stage a program.
(44:32) Figure it out how you can do differently, the biggest payback, the quickest way possible, do that piece first. And then go and do the next piece, the next piece, and the next piece. Do it in stages. You know focus on success, don’t try to put in it all in at one time and make sure you plan, plan, plan, that’s my recommendation.
(44:52) That’s terrific advice Joe. My final question to you is I’m wondering, do you sell mostly to IT or the business, and if it’s IT, are the CIOs more or less involved in terms with engaging with Epicor for IT implementations.
(45:10) You know we sell heavy into the IT organisation with the smaller companies you always going to have the CIO, the larger you get you could potentially not. Usually if you are doing ERP implementation it is important and up to the company that the companies we deal with the CIO is always going to be part of that decision…
(45:47) … I know Joe, we really appreciate you joining us because I know that you’ve been sick and your voice, and am glad. We’re just about done and I’m glad that your voice has lasted this long.
(46:03)Yeah if you tried to do this last week, I picked up this bug a week ago and you would have seen my mouth but nothing would’ve come out.
(46:11) Well you know we just about out of time anyway, and if you have enough voice left to give us a brief sales pitch about Epicor you can do that if you want.
(46:22)You know I’ll give you a quick sales pitch and it’s what I’m trying to do at Epicor. You know the thing with Epicor is we’ve gotten some basic things that we are trying to accomplish with the company, and it starts off with really delivering quality. One of the things that I really preach to my organization and sometimes I can get pretty passionate about this, but it’s the quality of our products and our services.
(46:54) You know I am always striving and we’re never as good as we can be, and I always tell our people that if you don’t strive for perfection, you will never achieve perfection, and we’re not there yet today, but we are working on it and Jeff Kissling, the CTO, and I know Jeff very well. Jeff is a genius in software and he knows how to build quality software. You know, I talk to our services people and made a lot of changes there, and we are doing it because I want to make sure that when the sale guy goes to sell that we have the ability to deliver what we sell is what we have committed and doing it in a quality way.
(47:31) So, quality is – and I just had a conversation with my management team the other day, and I told them that I want you to put yourself in the customer’s position every time you deal with a customer, you ask yourself is that how I would want to go through with. It’s that response to say, so we’re very very focused on this issue with quality, about who we are, about a brand.
(48:00) You know we are very focused and we have got a new tagline that we’re coming out with, and that tagline is really talking about you know, growing your business and not just your software, and that’s where most of our customers, is that we are here to work with you and to grow your business and help you be successful.
(48:22) Our focus is not just to go and sell you a bunch of software, but if we can create value for you and if you would be successful, then we are going to sell you the software. So it’s all about our customer, it’s all about quality. It’s all about value and that final component about who we are, is how we personally leverage technology, and make technology simple for our customers to use.
(48:58) Well thank you so much. Vala, we learned a lot of inner workings of an ERP software vendor today.
(49:06) It’s about growing your business, not your software. I love that. Well done Joe.
(49:11) And helping the customers, putting the customers first.
Absolutely.Terrific sage advice. Thank you.
(49:17) So, we have been talking today with Joe Cowan, who is the CEO of Epicor Software, one of the dominant ERP providers out there in the market. Joe, thank you so much for taking the time today.
(49:34)Thank you so much for having me.
(49:38) And everybody thanks for watching. Joe, I hope you will come back another time and we really appreciate it. That would be wonderful, and Vala to you, I hope you have a great week.
You as well, thank you Michael and Joe you were terrific, thank you.
Thank you everybody bye bye everybody.
Companies mentioned in today’s show:
Published Date: Aug 21, 2015
Author: Michael Krigsman
Episode ID: 255