For months ElectricalTrends has raised a
red flag about the long term viability of Epicor’s products as many clients and friends have struggled to complete installs and gain or continue support. Recently Pemeco Consulting’s Jonathan Gross ( click his name for his article) threw his comment’s into the ring and essentially predicts that with new management, Apax Partners, the owner of Epicor, would eventually sell the company.
Allen Ray Associates, after warning it’s client base about Epicor’s unstable financial condition, began to field major distributor concerns that they were seeing and hearing support phones go unanswered and the slowing down of current installations. In about the same time frame long time Epicor personnel began to leave, and to a certain extent this continues today.
Several ET posts have been written (Mothership ERP Revisited, Epicor’s High Yield Bonds Mean, Changing of the Guard and ERP Hangovers, Is Your ERP system a Mother-ship or a Satellite? to name a few) which drew a fair number of responses as their then President and CEO told the public, through publicly filed documents, that Epicor might not be in business. To a fair number of distributors that had “bet the ranch” on a Epicor ERP purchase (Eclipse, Activant, P-21, Prelude and several other packages) they now had an essential portion of their business operation threatened. Naturally distributors began to ask hard questions and many of them were not pleasant.
- What do I do to escape the pain of a possible Epicor bankruptcy? I have a business to run and money to be made and don’t want to worry about my ERP system
- How do I keep it running when the phone don’t answer at Epicor?
- With is my plan if I want to grow my business? Do I actually have to rip out the old Epicor system quickly? What are my options / choices?
- Why should I continue to pay for support? (since I’m not receiving any)
Apax Partners recently made a business move to replace their CEO and Board member, Mr. Pervez Qureshi and bring in a turnaround expert Mr. Joseph L. Cowan to help build value for Apax Partners, not necessarily for the Customer-Distributor. Apax will probably sell the company in three, four or so years.
Distributors go forward
While the cracks were being troweled over, a number of distributors large and small still have a business to run and plans to make. Some of my clients are making plans to use middleware software so they can plug into other systems.
About 20% are looking at a complete replacement with newer coded ERP systems and with plans to add on SalesForce.com.
While others are looking at other ERPs with a eye on financial stability.
So the question from your viewpoint is “how much disruption does the potential of Epicor being sold again, raise questions in your future plans?”
7 Comments
I like you, think there will be more disruption sooner than later. We’ve found the support we need.
We have a couple of focuses at replacement and adding other specialized software.
Epicor’s former CEO is kin to Nero as Rome burned.
Guys, especially Allen, have been of service by staying on this “Drama” as it has unfolded. I am pretty sure not many distributors understood what was happening with all the mixed messages that Epicor put in the market. They had former NAED Chair persons completely fooled about the true state of Epicor.
Anyway…good job and Happy Holidays.
Bill Johnson IT
Guys, the Eclipse product isn’t a bad product as many of us use it as do some of the national chains. The support is a different story. And if I read what you’re saying correctly, the issue is how the company finances are affecting their service. Not surprising given that we have a mature, consolidating industry and these people at Epicor think they can squeeze blood from a turnip. This is a company, at least the Eclipse group, that should be a private company, not owned by private equity who’s looking to flip it to the next company.
I’ve been tracking consolidation in the ERP space for years at http://www.erpgraveyard.com … and Allen’s caution is very warranted. Distributors should assume that no software vendor is immune to this danger, and the older the package, the greater the danger. Each time a company is flipped (see my Graveyard Scorecard at the blog site for a graphical representation of this), a new group of bankers buys the customer base (or revenue stream, as they see them), and looks for areas to cut. Chief on the list: product development and support. More customers start to head for the exits, and the bankers look for the next sucker to buy the ever-diminishing company. It’s a death spiral where the bankers make their money, and the customers are left holding the bag.
That’s a harsh, and perhaps oversimplistic summary of the situation – but it’s not too far from reality. So what can a distributor do, in the face of a continually tough economic climate and heightened competition from national brands?
Take charge of your software investment. Look into commercial open source options like my company, xTuple – where you get the “insurance policy” of the source code always being freely available, along with the comfort of membership in a global community of tens of thousands of professional ERP users (all of whom have the same access to the source code, and many of whom are actively involved in making the product better every day.)
Have a look around http://www.xtuple.com and http://www.xtuple.org for more information o the company and our community generally, and http://www.xtuple.com/distribution for info specifically for industrial distributors.
This story seems more like a michael moore documentary than a business perspective. Private equity firms aren’t boggie men. They usually grow the value of a company and they are the last to get paid in the case of insolvency. Compared to other types of investing, I feel private equity to be the most likely for investors to push for success. Hertz and Snapple are two great examples of private equity doing well for customers.
I think your comments about the healthy role of private equity are generally correct in most traditional businesses. But for some reason, the legacy ERP software space has had a different experience. I would suggest that the relationship between customer and vendor is a little out of balance (with the former overly subservient to the latter), and that is what makes non-growing, maintenance-mode companies like the 100+ products inside Infor and Epicor attractive to PE funds looking for a place to extract a return over five years. They’ve got a reasonable expectation of extracting maintenance revenues from customers for whom making a move is too painful and difficult to contemplate – and because that relationship is one sided, they don’t have to invest much in anything more than a fresh coat of paint to keep the attrition rate at a manageable level.
I’m as robust a free-market capitalist as you’ll find, and no fan of Michael Moore. But the incentives are all short-term for these kind of deals – and, as I said above, misaligned with the long-term interests of the customers.
What I’m suggesting is a very business-oriented, freedom-seeking solution – take charge of your ERP investment and insist on a value proposition that works for your company. I believe that open source ERP like xTuple, with a healthy successful vendor at the helm, is a very effective solution to the problem.
I wish I had never heard of Epicor.
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