Scaling the ERP heights

It’s not just the traditional giants who are making in-roads into the enterprise resource planning (ERP) market. Patrick Pando reveals how Epicor’s strategy is yielding results

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By  Dylan Bowman Published  April 16, 2006

|~|Pando,-6body.jpg|~|The Middle East is an absolute key area for us, admits Pando, and points to Dubai as the hub for the Gulf as well as the Middle East Market.|~|While the likes of Oracle and SAP get a lot of attention in the enterprise resource planning (ERP) market, there are a number of other companies that are also strong in this space, many of whom are successfully targeting the lucrative small and medium-sized business (SMB) sector. One such firm is Epicor, which has built up a strong reputation in the Middle East for its ERP and customer relationship management (CRM) software. It further enhanced its product lines with its 2003 purchase of European rival Scala Business Solutions for US$87million. That deal saw Patrick Pando, formerly senior vice president, global sales and marketing at Scala, join the company, and he is now the firm’s EMEA sales vice president. With a background in a diverse range of industries (he can lay claim to having introduced vacuum weight-packed hotdogs to Russia and to have managed global sales operations for 40 countries) Pando brings a wealth of experience to his role. He tells IT Weekly about the company’s plans for the region. The first question to ask is what is the purpose of your visit here to Dubai, what brings you here? Well, it’s a regular milk run and this is a key part of our region so I am here regularly. The event we are having today is pretty much announcing that Scala merged with Epicor about 18 months ago and I’ve been marched around to tell folks that the merger is completed. Also that, just as we promised at the beginning of the merger, iScala is rock solid and continuing to be invested in, so the customer knows their investment is safe in our solution and we are continuing to invest in it. We talked about some new products that are coming out, showing that we are growing into the services organisation and the support team so it is pretty much, shortly put, giving the proof in the pudding. Whenever there is a merger of course everyone says ‘we are going to protect your investment’ because you can’t afford to say anything else, but 18 months on we have proven that actually we delivered on exactly what we said we would do, if not better. When you talk about new products, what new products are your referring to there? Our key product is in ERP (enterprise resource planning) back office, financial logistics and that’s rock solid basic ERP. We have built on top of that service management, manufacturing, and then a reporting layer which we call iScala Business Intelligence. The newest product we have brought out is a product we have developed with Microsoft called FRX, which is accounting software designed by accountants. It is integrated with our system so as soon as you open the package you have a balance sheet, an income statement as apposed to traditional ERP systems where you just get the tools to create reports. Here, you get 270 standard reports out of the box. Are these products what set you aside from your competitors in the ERP space? It is a Microsoft product in this market and it is already sold. What sets us aside is that we have that on top of our business intelligence and the ability to work on multiple databases across multiple countries in multiple languages. So what you can do is you can have a real-time environment or single-instance environment then you put a standard package like FRX on top of it and instead of having to manually consolidate up to it you have real-time consolidation up to it and that is where the separation is. It is taking the single-instance capability of our software across multi languages, multi countries. How important is the region to Epicor? We have tripled in size here in the last three to four years. The Middle East represents about 20% of our overall revenue in EMEA and so it is quite important because when you run a mature ERP product your revenue is usually quite predictable. I can predict within about 97 % what our revenue is going to be for the year – except I can’t predict our growth. The Middle East is where the growth is. Last year we grew at about 29% and we grew at least that fast in the region and if I want to grow that fast again I have to focus on the regions that are growing. From the skyline here [in Dubai] it is self evident how important this region is if I’m focusing on growth. So the Middle East is an absolutely key region to us and Dubai being the hub for not only the Gulf but for the entire Middle East is a crucial market. We are also continuing to hire and add people like almost every other company is here. So it is definitely not a maintenance mode, it is a growth mode. What is Epicor’s personnel presence in the region — how many staff does it have in sales and support? The Middle East is distinct because here relationships drive business so much it is really crucial that you have solid local relationships. In Kuwait, for instance, we need to make sure that it’s a strong Kuwaiti team. So we do work through partners a lot in the Middle East whereas in Europe we are primarily direct sales and distribution. So when I discuss the Middle East, I like talking about the team that is 100% dedicated to the iScala product line. They may not be full-time employees for us, but the guys are absolutely dedicated and we have 80 people across the region that work on selling, distributing, supporting and maintaining iScala products. Of that, 35 are consultants and about ten to 15 are maintenance hotline and the rest is sales and administration. Everyone in this region I like to say carries a bag: everyone has client responsibilities so we don’t have an operational manager in that sense. This is something we are doing all across the world now — everyone carries a bag, including myself. How many partners do you have here in the region? We have about 12 to 13 and we are looking to add four more partners by August of this year. Two of those are in the Middle East and two are in North Africa. We are continuing to grow and we may add some more in country partners where we may already have a partner. The two Middle East partners are already decided on, so these are concrete partners… in general we have agreed on terms. It is just to give us complete coverage across the region. ||**|||~|Pando-2body.jpg|~|We are a great fit for the Middle East, claims Patrick Pando, when describing Epicor’s regional ERP strategy.|~|How does Epicor see the region developing in the business applications market? What is really driving our business now is local businesses actually having end-to-end business processes. What I mean by end-to-end is we are getting more into manufacturing on one side and more into service on the other side. In the past we were mostly in the value chain sales and distribution — what we are seeing now is more complete solutions to large regional clients. If you look at the large deals we have closed in Europe and the Middle East, what we are seeing happen is more and more regional clients moving up to sizable transactions as, one, they grow and become healthier but also they are looking for a solution. One of the things that is happening in the West is the way SAP and Microsoft view SMB they would view a Jordanian pharmaceutical company as an SMB when actually, maybe it’s doing US$500 million a year, it is truly a global multinational and this is where our product really fits. It fits in tight with the growth of the local market and the return of capital into the market is really driving that side of the business and that is where we are seeing the underlying changes in the nature of our business. What will be the main factors driving the business applications market? Transparency of data. It has been the same thing since 1985. What’s happening now is we have heard these promises that have been made for years actually delivering now. The technology is there, the communication across the region is there, and so with the simple advent of universal virtual private network (VPN) we’re able to deliver single-instance accounting packages, which frees up management to move around the region more and to go into new markets. What is driving the single-instance is that the communications is now there to be able to deliver it. Is Epicor looking to make more acquisitions? Absolutely. If you look at Epicor 50% of the growth of Epicor over the last 10 years has been through acquisition. One thing Epicor does know how to do is purchase. They [management] clearly know how to buy and integrate companies. Epicor is very functionally driven, objective driven, and that is key when you are crossing so many borders to simplify your own operations. It is something many clients are doing also. Is Epicor a target for larger companies? I have heard of nothing. How does Epicor compete with the larger players in the ERP market like SAP and Oracle? It is all about being the right fit. We win approximately 70 to 75% of the time when we go against these guys. A lot of it is knowing when to pick and chose your battles, but it is about being the right size. We are a great fit in the Middle East where there are lots of countries, lots of local requirements and lots of variants. We are in 144 countries, more than Oracle or SAP are in, we just have better coverage. So we can win on the coverage and then our functionality where we are is in industrial equipment, fast moving consumer products, we’re just also a really good fit. So I would say our number one competitor is SAP followed by Oracle. We are different scalable. Single-instance Oracle or SAP implementations, they need significant scale and again talking about the emergence of Middle East companies, a lot of them haven’t hit that scale just for their balance sheet to be able to support a system like that. We come in a much more difficult segment for them when they have all the requirements that a global multinational has but they don’t have the budget to do it. So maybe SAP kind of teaches elephants to dance, but we teach ants to act like elephants. The way we are set up and how we’re aimed for the mid tier, we can fit in their budget to do it. When will products and solutions from the CRS Retail buy be available in the market? Is there a lot of interest from potential customers? Right now what we are doing is distributing through current CRS clients. So if a client of CRS is using it in America and have shops here they are available to come immediately. Epicor is very good about the merging process. For us, iScala, it took approximately 12 to 16 months before we started seeing Epicro products offered in our product line and iScala products offered in the Epicor line. I suspect it will be about the same with CRS. It is very simple the way Epicor does mergers and that is to get the cost right, structure right, then strategy right — they have seen it too often where people trip over the strategy and not do the basics. We already have interest and I think the key market for CRS internationally will be the Middle East, central and eastern Europe and China, because of the market cultures. In these areas that fits into what is happening in the West anyway with the move to specialty stores, so the Middle East — except for hypermarkets — will skip the big box retail stores and have many more specialty stores and this is where CRS really fits. So that is CRS’ sweet spot. Once we integrate it into our product we are going to have a real hit on our hands, because there is not a global product yet in this market space. CRS is number two in the US, so we are coming in with a strong product and we also know how to integrate and do global distribution. How successful has the portal collaboration with Micros- oft been that you announced recently? It is an interesting question because we developed on Microsoft technology anyway so we use the database, the development tools, so we have been using Sharepoint and integrating Sharepoint for three or four years now. So the announced collaboration was really more about a reconvening of our convictions that we are developing on the platform. The iScala BI tools and iScala has been designed to work with Sharepoint so it is one of our key selling benefits that there is an ecosphere and standard portal products are already available. Most of the time the portal products from Microsoft go through the Microsoft channel so we’re actually not selling it. Clients are buying our software because of this capability, it’s a clear benefit. So I would say the collaboration has been great, but it is because it is a standard and so it is us applying to the standard. How successful has the launch of Epicor’s SOA business integration platform and when is it available in Middle East? That’s a great question because again, we call it Service Connect, but iScala had a product called Connectivity and we’ve been selling it for four and a half years. That is Service Connect. The Service Connect SOA product was re-branded iScala product. We have over ten clients in the Middle East already using it today, so we have successful implementations, we have successful track records, the only difference is we called it iScala connectivity. With Epicor re-branding the iScala SOA product, has that added extra interest in the product in this region? Two years ago, 10% of our sales in the ME were new name clients, last year 50% of our sales were new named clients. I am absolutely convinced that is about being a Nasdaq traded American software company. So the Epicor brand has had an incredible impact on our sales. We were number 27, we are now number eight, we’re traded on Nasdaq. New sales are up here nearly five fold in an 18-month period. That has to do with the stability and quality of being part of true global software company. Like it or not being a US company gives us the credibility we didn’t have before. It has opened a lot of doors and kept them open. ||**||

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