At Epicor's 1999 user conference, chief executive George Claus's keynote was characterised by a series of apologies for past mistakes.
Although the enterprise resource applications (ERP) vendor was announcing an array of applications designed to position it as a full service vendor in the mid-market, many questions remain over its future as it struggles to re-group and return to profitability.
Claus freely admitted that the 1997 merger between the old Platinum and Dataworks companies had not gone smoothly, and this had led to significant losses among key executive personnel. He also admitted that the company will lose money on the last quarter of this year, although he hopes the business will return to profitability early in 2000.
In Q3, Epicor shocked the market when it announced losses of $9.7 million on declining revenue of $63.2 million.
On the upside, Mike Pennell, vice president product marketing, showed off products which revealed Epicor as being one of the very few vendors with a complete Web-based vision that embraces customer and supplier activities tied to core transaction processing systems.
Explaining the product strategy, Pennell said: "Customers and suppliers will insist on interacting with you electronically, because otherwise it will be too inconvenient for them to do business."
Web-based product configuration and buying management is scheduled for late next year: Pennell was prepared to name a date as early as August 2000.
Customers balk at broader product base
But customers may not be ready for this radical increase in the product footprint. Ben Williams, of Protocol Systems, an international manufacturer of healthcare monitoring systems, said: "We have customised existing transaction systems to interact with Clientele [Epicor's flagship CRM product suite]. We haven't made a decision about moving those legacy systems."
Epicor's entire message centres on encouraging customers to invest in a broader footprint of its own suite.
This is in line with GartnerGroup predictions that enterprise applications vendors are best positioned to benefit from the current explosion in front office and supply chain systems, as they deliver a more complete view of customer interactions with the enterprise.
To that extent, Epicor is rebuilding its application suite with an emphasis on creating an XML-based layer that underpins a Web architecture to its applications suite as a whole.
Claus is convinced this is the way to go, but getting to the point of product delivery is especially difficult when there are so many product areas to tackle at the same time. Claus must return the company to profitability quickly so that investor and customer confidence is restored - and so that he can finally bury the problems associated with the merger.
While Claus would not be more specific, there was a strong implication that job cuts will feature significantly in any further restructuring. These are likely to be announced over the next quarter.
Making the point
But the biggest problem lies in confusion over Epicor's product-set positioning. Today, it sells under the Clientele, Platinum, Avante and Vantage banners. From a customer perspective, this positions Epicor as a point solution provider at a time when it wants to be seen as an integrated player.
Asked how Epicor will resolve the brand recognition issue, Claus said: "Next year, you will see a bringing together. But I want to stress that we will continue to compete as a point solution provider."
But this does not make sense when set against the product strategy outlined by Mike Pennell, vice president product marketing, as it encourages immediate competitive comparison between product sets rather than seeing Epicor as a total solutions provider.
For example, in CRM it pitches Clientele against Siebel, Onyx or Pivotal, while in financials, Platinum is pitched against Great Plains or JD Edwards.
Commitment for the future
A question mark also hangs over Epicor's choice of technology base. Pennell averred that Epicor is "unquestionably a Microsoft house."
But according to Gartner's Comport, forward-thinking organisations will favour vendors that offer advanced technology that could come from vendors that favour non-Microsoft technology. This may mean vendors that choose Microsoft as the platform base will be positioned as following rather than leading players.
Whether this matters in the mid-market remains to be seen, but Claus is in no mood to surrender without a fight:
"We had choices, sure. We could have spun stuff off and taken some money. But I didn't want that short-term play for Epicor or its customers. We're committed to making sure this is a half billion dollar business in the next few years, so what we're doing is absolutely right for that strategy."
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