We Want To Make A Stronghold In Manufacturing This Year Before Diversifying Into Other Markets: Himanshu Palsule, CTO, Epicor Software

With the demonstration of its growth potential, Epicor, a private equity owned company was purchased by KKR, a little over a year ago. Himanshu Palsule, Chief Product and Technology Officer (CTO), Epicor Software, says that India has obviously been a big part of the revenue and employee growth perspective, and increasing its global footprint. Sarabjeet Kaur from BW CIO discussed with Himanshu on how 2017 being a good year for the company really sets it up for 2018 as Epicor plans to accelerate its growth in the Manufacturing sector.

BW CIO: How has India been for Epicor in the past one year and how do you plan to accelerate growth while moving forward?

Himanshu: Post KKR acquisition, we are a key growth asset in their portfolio. I think 2017 was a good year and that really sets us up for 2018. Our fiscal year started in Oct 2017 and we are just looking at accelerating that growth. Growth for us comes across several areas. We start with a very keen industry focus - across manufacturing, distribution, and retail sector and double click down a few levels to really understand the needs of customers in those sectors. So growth for us comes from expanding our footprint into these markets, that too regionally.

In market share, we have less than 100 customers today, some of them are large organisations but we have very ambitious goals on how we expect that to grow. So that will mean you will see us in more regional centres and be part of conversations, like this conversation with BW today. 

BW CIO: Tell us about the Epicor India Technology Center and its expansion.

Himanshu: We set the India Technology Center 3 years ago in 2015. The first year was about setting your footprint – getting the word out, hiring people, doing the knowledge transfer. Today, we have almost 450 people here in India. We are projecting another 25-28 percent growth in people this year as we have opened the second campus and I think we have the capacity to grow. So there is definitely growth that is going to happen, the footprint will increase both through naturally increasing the size of our India team and in also growing our market share.

The first, a singular campus is where a lot of our products and technologies have come together. We enjoy a fairly low attrition rate. People enjoy the fact that they work for a global company as well as a market leader in the space. We have been fortunate with the decisions that were made (even before my time) to set up in Bangalore. And with the launch of our products to be sold in the Indian market, I feel it is great that we have an established beachhead here and we are looking at expanding our market share and footprint.  

BW CIO: Are there any specific technology trends that impact your customers here in India? 

Himanshu: The whole renaissance of manufacturing, also called manufacturing 4.0, seems to be very alive. In fact, probably even more dominant in this market than other geographies around the world. I think it is driven by a combination of smart machines, the availability of data and intelligence and then having a context-aware ERP allows to pull all of this together. Whether it is integrating the shop floor, top floor or IOT connecting data across machines, I am very pleasantly surprised. 

One of our customer in Pune is increasingly moving his operation to the digital side. In fact, you mentioned in one of your articles on Artificial Intelligence (AI) that 59 percent of organisations in India have already started gathering information for AI. I believe it is a massive opportunity in India for us. However, a major aspect to keep in mind is the gap in the mid-market. There are companies who have focussed on the very high-end enterprise and there are companies native to India that cater to the small business segment. This whole mid-market segment is wide open for a company like Epicor to come and start to transform.

BW CIO: Do you see trends in India dissimilar compared to the global backdrop? 

Himanshu: I have spent time with some accelerators and I think there is a lot of grassroot innovation happening in manufacturing. What I have been amazed by is that I met people who run robotics company and also people who are building data centres. 

I feel that 10-15 years ago what probably happened in the Silicon Valley in the US gave birth to financial services and B2C services. Although it may be too early to tell, I am certainly seeing quantum thinking with start-ups and small business here who are focused on enabling manufacturing. I think whether it is going to be through accelerators or working through partners if we can start tapping into that ecosystem as it gets formed, I think it gives us a big leg up.

BW CIO: Epicor provides solutions for almost every sector here in India. Are there any existing India specific solutions in manufacturing or do you plan to launch any?

Himanshu: We have a global product called Epicor ERP. This product today is available in 150 countries, 35 languages. We have something called CSF – Country-Specific Functionality. We also finished all the GST work here so the customers in India will use the same product. To them, it will feel like it is a product that has been designed specifically for the Indian market. We have this whole idea of engines – we have a rules engine, a tax engine, a general ledger engine, and more. These engines are then catered for the local market so it will be the same product. The difference in India is that as we expand the ecosystem. We have some global players that we integrate with but because of our open API architecture, I think we will start integrating with more local players who sought of complete that last mile. Whether it is a local tax player, or a local payroll player, or even a local inventory management player. So you will see in this next 12-18 months is this broadening of our ecosystem using the same core product.

BW CIO: Since Epicor plays an important solution-providing role in the manufacturing sector. In line with the government programs such as Smart Cities and Make in India, how does Epicor support these initiatives? 

Himanshu: The Make In India initiative is a big boost for the manufacturing sector, which I believe it contributes nearly 24% of the total ERP market in India. I think it is about being in the right place at the right time. We have been in India with over 80 mid-market customers. But this whole new launch that we are doing which we started 4 months ago with our, I think we are going to ride the coattails of the Make in India movement. In my interpretation, the Make in India movement is not just about manufacturing, it is about digitalisation and globalisation of manufacturing. 

Things like smart machines, IOT, Big Data, Cloud and Mobility will be what spurs this whole thing. It is because we have been so successful with this around the world, the timing couldn’t be better for us to hit the Indian market with the same initiative. India is expected to be the 5th largest manufacturing country by the end of 2020. So what better than this for our timing, to come and launch in this mid-market. Also, the CAGR is anywhere between 7-12 percent which is phenomenal for manufacturing.

BW CIO: What are the India specific solutions which you plan to launch for other sectors as well?

Himanshu: We have a product called iScala which is a services ERP and has played extremely well in the hospitality sector. We have several hospitality customers in India like the chain of Hyatt hotels and local hotels as well. For companies that are looking at hospitality or basic financial services, iScala is going to be the solution for them.

However, our focus today is going to be manufacturing and services. We also have a very strong distribution footprint in the US, and at some point, we may look at bringing distribution and retail solutions, but that will be seen more in 2019 and beyond. We really want to make a stronghold in manufacturing for the next 12-18 months before we diversify into other markets. 

BW CIO: What is your go to market strategy for India?

Himanshu: We have decided to go through partners. We already have an established partner channel and have announced a value-added distribution agreement with Redington. As you may know, Redington is a large Value Added Reseller with a national and international footprint. So we are going to work directly with Redington, who is going to work with other partners. Redington will bring us scale and market know-how.  We have established our own marketing and sales organisation here to support Redington. So while we will continue to work with some of our existing partners, I am very optimistic, that the relationship with Redington is going to start driving that acceleration that we need in this market.

BW CIO: Epicor’s undivided focus on the manufacturing sector is timed perfectly with the government’s Smart Cities and Make in India initiatives. Do you plan to form a synergy between the two?

Himanshu: I think there is an opportunity to get into that in the future. But firstly, we had to make sure of the massive change that went on with GST in the past months. With the expectations on what the smart cities are going to need, we wanted to make sure that we are 100 percent compliant with the legislative changes that have been driven before starting to get ahead of ourselves. Now that we are confident that we have many customers running complete GST with us, working through Redington, I see us starting to gain traction into this whole Make in India messaging.

So we are not doing anything directly with the legislative bodies or the government. But I think once you start gaining traction, you get noticed and that becomes a logical place to eventually move to and forming those relationships. 

BW CIO: What differentiates Epicor from its other competitors?

Himanshu: There are three things that will really differentiate us in this market. The first is the industry fit: we have been built for manufacturing, by manufacturers; so we get that space. The second is the choice: the fact that you can use the same code base on premises, you can use it as a dedicated tenant or you can use it in a full multi-tenant SAAS environment. And the third is global: the fact that it is a complete engine driven global product. A big focus for us is also the ease of use and the whole experience, whether you are upgrading or migrating. So if you draw a four-way Venn diagram, putting in Industry, Cloud, Global and Experiences, and you look at that area in the middle of those four. I think that is our differentiation.