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Article
SaaS ERP for the Smallest Manufacturers

The universe of SaaS/Cloud offerings just got bigger. Today's announcement of Epicor Express means a full-featured SaaS solution is available to small manufacturers who have had almost no SaaS options up to now.


Full Article Below

SaaS ERP has been around for over a decade, since the launch of NetSuite in 1998. More recently Workday, SAP with their Business-By-Design (BBD) offering, and others have joined the fray. However, none of these SaaS ERP suites really meets most of the needs of manufacturers. NetSuite is primarily a CRM and eCommerce system wrapped around a financial core; Workday's focus is HR; and BBD is taking forever to rollout and won't be fully multi-tenant until 2011. See "Does Cloud Equal On Demand?" for more on multi-tenancy vs. other delivery models. 

Now small manufacturers have another choice. Today, Epicor announced the release of Epicor Express, a true multi-tenant SaaS offering, aimed initially at very small manufacturers and job shops - i.e. under $10M in revenue and under 50 employees. To target this market, Epicor Express is delivered with a pre-configured database, whose design is based on Epicor's experiences implementing manufacturing systems in the field for over two decades. They also created a much simpler streamlined user interface, and reduced functionality (compared with licensed versions of Epicor 9) to try and give small manufacturers everything they need, but no more. 

Common Code Base Creates Upgrade Path

Epicor Express is one of the most important fruits of the complete re-architecting of the Epicor code base in version 9, which was built from the beginning with a multi-tenancy architecture. Epicor Express shares the same base code as the full Epicor 9 suite, inheriting all of its functionality, but with some of that functionality intentionally disabled. Because the database model and source code are the same, it is a straightforward change when customers grow and require more complex functionality, to easily transition to Epicor 9 Standard, Enterprise, or Advanced Edition without requiring a burdensome data migration effort.

While Epicor Express focuses right now on manufacturing (Epicor's heritage), they will release other versions in the future, such as one with more warehouse functionality for Distribution-intensive companies.

Customizability 

As with all true single-instance multi-tenant solutions, customers cannot change the source code. But customers can customize the Epicor Express system at the metadata layer. This includes not only data customizations, such as configuring the chart of accounts, but also revising the actual workflow, and the associated forms, labels, queries, dashboards, and reports. A lot of functionality is configurable at that metadata level. 

Epicor actually maintains two instances for their customers - a "Live" system for companies' production environments and a "Test" system for training and testing, allowing new metadata customizations to be tried out before going live on the production system, as well as for training and learning to be conducted without impacting the live data.

Rapid Startup - Now This is On Demand

Epicor offers two different levels of fixed fee services to get the system up and running. Express Start is for companies that don't need to migrate data (currently using paper or e-document based systems). Express Start with Data Migration is for companies that have an existing system from which they need to import core data such as journal entries, parts, customers, BOM, etc.

Epicor strives to get customers up and running as quickly as possible, both for customer satisfaction reasons and to control their own costs. Their expected target is for Express Start implementations to take 20-30 days, and Express Start with Data Migration to take 6-8 weeks. Of the five companies that are already live on Epicor Express, the shortest implementation was 20 days, and most were up in a couple of months. That is a good sign, considering that the first implementations of a new product typically take much longer than the later ones done after the project teams have gained repeatable rollout experience.

Of course, when it comes to data migration, there will always be some cases where a lot more data cleansing and normalization are required. Especially in manufacturing environments, these processes can get quite complex and messy. So we can expect that Epicor will draw some lines in the sand on how much they will do for the fixed fee, but they believe that the majority of cases will fit within their standard fixed fees.

Availability, Security, Price Guarantees

As all successful SaaS vendors must do, Epicor realized that system failures or security breaches would be devastating to their reputation and revenues. So, they have made significant investments over the last 2 years on hosting, system redundancy, failover, and security. They have two different geographically dispersed SAS70 II data centers, with warm failover capabilities and several levels of redundancy.

They also have a contractual guarantee, when it's time to renew, that they will not raise prices more than the rate of inflation. That is a great model that we hope other SaaS vendors will follow. In addition, if the customer wants to migrate to an on-premises licensed solution, Epicor reduces the cost of the license fee by 20% for every year someone has been a SaaS customer. In other words, a customer that is on the SaaS system for 5 years can migrate to the licensed version at no cost. We like it!

A Win for the Little Guy

There are, of course, a number of licensed ERP offerings with functionality for small-medium manufacturers, such as Microsoft Dynamics, Lawson, QAD, SYSPRO,  Infor, Exact, and others. However, until now, Plex Online has been the sole true SaaS vendor with real manufacturing functionality (although QAD has multi-tenancy for parts of their product set). 

Epicor has targeted an underserved space - the very small manufacturer. Now those small manufactures can get off of Excel and yellow note pads, without having to invest the time, effort, and capital required to install and set up their own hardware, network and application. Remember, some of these are tiny shops that do not have an IT staff or implementation team - it often might be just the owner and her son. Now they can "play with the big boys" in IT capabilities.

Whether Epicor will take their SaaS offering further upstream to serve larger and more complex requirements remains to be seen, but that would be a natural evolution. The decision to target the smallest manufacturers seems to be a marketing decision, rather than one based on inherent functional limitations.

This announcement reinforces our predictions about the growing importance of true SaaS. It is also a credit to Epicor that they saw the writing on the wall and made the investment to re-architect their system to meet the changing expectations of the end user communities for lower risk, faster implementations, and ongoing commitment from the vendors.


 

This article is part of our ongoing Cloud Series ; our effort to bring clarity to these technologies.

To view other articles from this issue of the brief, click here.



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