How ERP changes the manufacturing industry

Austin, Texas based software company, Epicor, creates, and markets innovative products to an array of industries in virtually every market across the globe. At the core of the company’s offering is Enterprise Resource Planning (ERP) Solutions. However, Epicor also produces state-of-the-art customer relationship management software, supply chain management software and human capital management software.

Erik Johnson,Vice President, Product Marketing and Technology Strategy, and Craig Charlton, Senior Vice President and General Manager, Asia-Pacific Operations, were recently in town to launch Epicor’s highly anticipated ERP 10. International Metalworking News for Asia (IMNA) sat down with them and spoke about Epicor’s exciting new product, Asia’s biggest challenges, and the future of manufacturing.

IMNA: What sets Epicor apart from its competitors and what are its core values?

Charlton: One of our biggest differentiators is that our product is built to change. In this day and age, when businesses are constantly faced with change, and they need to find ways to differentiate and find ways over their competitors, they have to have an ERP system that they can mould very easily. The problem with the big box ERP providers is that to do anything it will cost you a fortune. And you’ll be stuck in a technology cul-de-sac where you’re using an eight year old application and an upgrade will be so expensive. From a cultural perspective, being a direct organisation, we have partners and we use the partners quite extensively. We have a very small amount of partners who are essentially a direct extension of our team. Ultimately we are committed to making our customers successful. A lot of our competitors might push you to a partner because the business is difficult or it is not cost-effective. But Epicor always stands behind our customers.

Johnson: Our goal is that ERP always should go direct to the customer, and not the other way around. It is very important [to understand] that each customer is very unique. Job number one is that you should never put your customers in a fixed ERP situation. Job two is to make it inexpensive. Change is continuous, it’s not just “go live”, and you’re done. That’s only day one, and the whole idea is to be able to change going forward and to make it inexpensive. Because if it is inexpensive, people will try things, and that leads to innovation. But if it is risky and expensive, they won’t try things.

Charlton: The term that is often used in ERP is “best practice”. I think it is an over-used term. A lot of the competitors in the marketplace see “best practice” as a destination. [We believe that] “Best practice” is a journey; you should never stop innovating. And the only way to do that, like Erik said, is to make it cheap and easy to do.

IMNA: How involved is Epicor in Asia?

Charlton: In Asia-Pacific we have 17 offices and it is our company’s fastest growing region, and it has been for years. So we put in quite a significant amount of investment, and we continue to invest in this region. Last year we established a technology centre in Guangzhou. It was really about making us relevant in China. It’s about making us behave and feel like the local vendor. It’s a big investment but it is something that we understand that we have to do. There’s a big difference in being a big multi-national and the small local guy, but we want to blend the best of both worlds. We believe that in doing so, we will be able to grow at very high rates in Asia.

IMNA: What are the new features that ERP 10 offers, that ERP 9 didn’t offer?

Johnson: First and foremost, it is collaborative. Secondly, it is on a new platform, so it is easier to implement and it runs faster. It is easier to deploy and requires IT skill sets that are more readily available. Anybody can go online and buy a book on Windows, and basically administer our system. It’s really about lowering the barriers of adoption and making it easier to manage a complex ERP system with less expensive resources and less resources. It’s not about making it free or making it cheap, but it’s about using the resources to do more strategic things.

IMNA: What kind of research went into the development of ERP 10?

Johnson: It was a seven year project. There were three years of pure research that involved Microsoft directly. We did another year of research on how to move the code from 9 to 10; there are 18 million lines of code in ERP 9 that all had to come across safely and confidently. Then it was two years of production.

IMNA: What were the main factors that led to the development of the new features of ERP 10?

Johnson: We never stop trying to make the product better and faster and we reached a point where [we realised that] the main factor was control of the technology. We used to use pieces built by other companies because it was fast. But over time, we lost the ability to be as aggressive as we wanted to be. So we pulled out that code and wrote our own code instead. That means that we have more control of the stack, the performance, and adopting new technologies. This was really a win-win scenario. ERP 10 was a very customer-centred release because it has a very low adoption barrier and customers immediately get great benefits off performance and ease of use. But more importantly, to me, it enables Epicor to begin a faster cadence of new product development because it is simpler to develop on.

IMNA: What are a few recent and large hurdles that your clients in Asia are encountering and how is ERP 10 attempting to resolve those problems?

Charlton: One of the biggest factors is the price of labour. If you go back ten years in China... and if there were any issues that they needed to resolve, you could just throw more labour at it because it was cheap. But now you’ve got this perfect storm because it’s difficult to find people, people are erring away from moving [to the cities] to go to work and the cost of labour is becoming significant. So one of our biggest challenges is to be able to grow the output, without necessarily growing the labour base. You can do that through efficiency and through technology. We’ve got a great case study in China, where they’ve been able to grow the company three-fold without increasing their people – and it was essentially done through automation. A great feature that we have delivered in ERP 10 is machine level integration, which takes people out of the equation and you can monitoring every machine, real time. Previously this would have been a very manual exercise.

Johnson: It’s at an accelerated time pace, but I think the region is seeing a lot of the same labour manufacturing issues that the rest of the world has seen. I think that they are all going to be solved in the same way, which is using technology to get the growth and output that you need. We can also use technology to get new start-ups out quicker, which will then employ more people. I think we are going to see more new companies – which means more diversity, which is better.

IMNA: What direction do you see Epicor going in the future?

Johnson: From a product standpoint, it is all about data and devices. From an industry standpoint, what we are going to see is an expansion in financial capabilities. We are definitely expanding on the cloud because we see that it’s hitting the tipping point now. So we are establishing data centres in new locations to handle that capacity. We have a great product for this but we just have to put the investments in the right place at the right time and make sure they are backed up with the people who can help our customers be successful.

Charlton: What we are planning to do in the next twelve months is to launch cloud in Southeast Asia and North Asia. Actually we hope to do that in the next three to six months because we are seeing an increasing demand. We are unique because we have the exact same product in the cloud and on-premises. We’ve spent a few years ironing out the kinks and now we want to go to the world with it.