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Epicor Software applications make transition to SaaS

In this Q&A, Epicor CEO Steve Murphy discusses how the ERP vendor is moving its products from on premises to a SaaS model but gives customers the choice on when to migrate.

Epicor Software Corp. is a longstanding ERP vendor, but that doesn't mean it's set in its ways.

In the past few years, Epicor Software, which was founded in 1972 and is based in Austin, Texas, has made major investments in modernizing its product architecture to support a SaaS model and has redesigned the UI to be more usable and mobile-centric.

In September of last year, Epicor was sold by KKR & Co. Inc. to Clayton Dubilier & Rice LLC (CD&R), private equity firms that are both based in New York, for a reported $4.7 billion. It's expected that CD&R will provide the investment for Epicor to manage the transition to a cloud-first company.

The transition won't be easy -- Epicor maintains a large customer base of small to medium-sized manufacturers that still run legacy, on-premises products. But, as Epicor Software CEO Steve Murphy said in this Q&A, it's a challenge the ERP vendor is meeting head on.

Your cloud approach has been called innovative by some industry analysts, despite Epicor being an almost 50-year-old company. How have you managed that?

Steve Murphy, CEO of EpicorSteve Murphy

Steve Murphy: We started overhauling all three main Epicor Software products -- Epicor Retail Cloud, Prophet 21 and Epicor ERP -- in 2015. It was a major overhaul that was finished over two years ago. In the most recent quarter, 55% of all bookings we had were SaaS, and that's with the strictest definition of SaaS. The SaaS business is growing at about 60% in year-over-year revenue, and we have 6,000 customers on cloud using the strictest definition of cloud -- multi-tenancy. Our architecture is completely modern at this point, and I'd say it would stand up against any level of scrutiny.

It's also true that I would be reluctant to twist anybody's arm into going SaaS or cloud if they're not ready for it. We see a lot of failed cloud implementations where a SaaS product couldn't be customized to what the customer wanted. So, we've been somewhat ambivalent about encouraging people to move to the cloud if they're not ready.

What's your feeling on single-tenant SaaS versus multi-tenant SaaS, and what are your customers looking for?

Murphy: We're multi-tenant across the board, if somebody wants it. Sometimes, people think multiple tenant within a single instance is risky, but I don't think it's risky. I haven't seen instances where there's been any kind of a sophisticated hack, but a lot of people say, 'I want my software running on my own server, where there's no physical co-mingling of what I do with anyone else.'

When somebody requires or requests a single tenancy, it's for security purposes or they just feel better about it. At this point, it would be difficult to find anybody who would say it's technically more secure because of things like logical domains and compartmentalization, which is software that separates process and data within a single server that shares storage and RAM.

In a lot of cases, you can host an on-premises situation and, using network capability, you could call it cloud because it's running somewhere else. But that's not SaaS as far as having an architecture that can serve it up in an efficient way, that can be patched or upgraded instantaneously. If it's truly a SaaS product, then it can be patched and updated wherever it runs, and that will happen when everyone else is patched and updated. That's where there's efficiency for us -- or for Oracle or SAP; it allows us to have a much more seamless user experience. We install once for the customer, and it's going to be current all the time.

What kinds of deployments does Epicor Software offer?

Murphy: We have three flavors. You can run it on premises. For example, you've got a distributorship and want to run it on a rack in the warehouse. You can run it there, and it'll work just fine. That's traditional on premises.

You can do the other end, which is that the only thing needed is that everyone working in the warehouse needs an iPhone. As long as they have that they're good because you're running [your instance] in an Azure environment somewhere else. It will be completely SaaS and very secure, and for that you don't need to buy any hardware. It's going to cost more per month, but it's always going to be updated, upgraded and patched.

In the middle, you can run the same software as a colocation in our data center in Austin, Texas. It will seem like it's the same thing running in Azure. It's just that, from time to time, when you need to do patching and upgrading, somebody actually has to do it for your instance. This is the one that's dying the fastest because most people want to do it themselves the old-fashioned way or run it in the Azure cloud or on AWS. But we still have business in what we used to call 'hosted' in the colocation center.

How is Epicor innovating on things like improving the UI and mobilizing applications?

Murphy: That's one area that I appreciate now more than I used to. Engineers are bad at certain things, and one of them is in thinking that the UI shouldn't matter that much. Actually, it matters a lot, because a more intuitive and easier-to-use UI makes the product more accessible and more usable. It takes a user who may be used to Facebook, Twitter or Instagram and gives them applications that they're used to.

The Kinetic system [a UX that Epicor has developed for its products] is like being somewhere between LinkedIn and Facebook. It has the intuitive ability to get you the reports you want, run a scenario or make a process flow change. We spent a lot of time and money over the last four years 'Kineticizing' the UI, which is not just changing the view or the graphics or the HTML pages. There's a lot of code that has to be written behind that page, so that when you adjust the knob on the dial, the actual system makes the changes you want at the application and data layer. [The UI innovations] can take a user and make them a superuser quickly, because it's easier to use.

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