Epicor is known in the market for its strong direct sales force. Now, it’s trying to put more faith in the channel it has always had, but is looking to grow in strength rather than numbers. The company, which provides ERP, CRM and supply chain management software, signed 36 new resellers last year, bringing the number to 282 worldwide—65 of which are from North America. They are contributing to a larger percentage of revenue than ever before, says Selena Butler, director of Epicor’s channel sales for the Americas.
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Forty-six authorized consultants worldwide—19 in North America—also pitch in by offering implementation and professional consulting services, but they do not resell Epicor’s products.
Preliminary figures show that channel sales rose by 33 percent and represented 20 percent of Epicor’s revenue in the fourth quarter of 2007, and Butler predicted the total would reach roughly 22 percent when final numbers were calculated. No matter what the number, it’s a big increase over the 15 percent of sales for 2005 and 8 percent for 2004.
Epicor has had an up-and-down relationship with the channel. Its VARs had a strong reputation for technical skill, but many left during 2000 to 2002 when Epicor forbid them from carrying competing products.
Meanwhile, the company’s CEO told attendees at a JP Morgan conference in June that Epicor is a direct sales organization. Questioned about that, Klaus responded that while Epicor’s principle go-to-market strategy is through direct sales, the company “continues to see the value of having a focused channel that complements (the) direct model.” In December, he told investors at a Lehman Brothers conference that Epicor differed from competitors because its buyers dealt with Epicor employees, not resellers.
Butler says her goal is to have the channel contribute 30 percent by the end of this year while still keeping the number of resellers the same.
“Some partners won’t make it this coming year,” Butler says. “We’ll replace them with more strategic, profitable partners we can make stronger and more reputable so they can build their practice and their name out in the field.”
New VARs most likely will be those who have an established business and will be recruited in key markets or who possess expertise in the vertical areas such as manufacturing, distribution, retail, hospitality and professional services.
Three years ago, resellers typically took 12 months to get up to speed before making their first sale, but today some rookies are closing their first opportunities within 30 days, which Butler attributes to “smart recruiting.”
Epicor also is doubling its channel management team in North America from two to four and plans to build out its certification program, which has more than 400 online classes, to encompass role-based training, including business development, sales certification, presales, professional services and technology.
VARs will be rewarded for a job well done more so than they are today. They currently receive higher margins—ranging from 30 to 50 percent—for better sales, but other benefits like marketing development funds, which can be used for a variety of purposes including trade show booths, outsourced telemarketing services or personalized product brochures, and annual maintenance commission are standard across the board at roughly 3 percent and slightly more than 16 percent respectively.
There is no upfront or annual fee for joining Epicor’s Partners for Growth Program. New members receive kits with tools valued at about $150,000 including a copy of Epicor’s software with 10-user licenses, product literature, training tools and access to a special Web site where they can register, track and close leads to minimize competition with other resellers and the direct sales force. A URL lead-generation program helps VARs track prospects who visited their Web site first and then visited Epicor’s site.
Channel managers facilitate this lead-tracking process and resolve conflicts, a task at which some partners say the company is constantly improving but can still do better.
“People who manage the channel do a good job maintaining relations between the direct sales force and channel, looking out to referee those situations,” says David Popowich, president of Ontario-based Second Foundation Consulting.
Second Foundation, which was Canada’s 2007 Partner of the Year based on revenue, has a product roster that includes Epicor Enterprise, Vantage and Vista; Sage’s MAS line, Accpac, Abra and PFW; and Microsoft NAV and GP. “You’ve got to have a very good mechanism to deal with conflict or it’s going to get out of hand,” he continues
Popowich, whose organization also has an office in Durham, N.C., knows that his sales go toward the direct sales force’s quota in his region, but he would like them to feel further incented to work with him as opposed to selling for themselves.
“In Canada, we have fantastic adoption of working with the direct sales force and no channel conflict, but that is not true in all regions of North America,” he says. “Some people defend their turf and I don’t know how you get away from that short of dictating it from above.”
Moreover, while some resellers believe Butler and her teams are trying to make the channel feel important, others feel neglected by senior executives who they say acknowledge the support from the direct sales force but fail to mention the channel during user conferences and other events.
Building a good relationship with the vendor takes work on both sides, says David Warford, COO of Alpharetta, Ga.-based Manufacturing Solutions Group.
Epicor named his company its 2007 Partner of the Year for the United States—the fourth year he received this award—and honored Manufacturing Solutions Group for having the most new customers in this country.
“There’s always a little bit of a clash, but they’ve done a good job and are committed to both sides of the table,” Warford says. “They take the partners who are spending the money and trying to sell software and they work hard to try to make you successful. I pull heavily on Epicor resources. I do a couple hundred demos a year and I use their people inside and out.”
Jonathan Shoolman, owner of West Chester, Pa.-based Technology Works, which signed on to sell Epicor’s Vantage and Vista ERP systems at the start of 2007, hopes the channel program will evolve.
“As Epicor has been demonstrating the ability of its products to meet the needs of larger and larger customers, we anticipate that in the months and years ahead direction will focus up market to multi-company, multi-environment, and they will come to rely more heavily on the channel for the $100 million and under companies and more direct on $100 million plus,” Shoolman says.
Multiple-company scalability is one of the things that attracted Shoolman to Vantage. Many midmarket or Tier 2 solutions fall short of delivering the level that Epicor provides in terms of financial transactions and things like transfer pricing when a product is made in a different plant that still needs to make a profit, he says.
Multi-language capabilities are particularly important in Quebec, where many users only want to see French screens. Customization inside the system is another plus.
“Epicor generally fits 80 to 90 percent of anything anyone wants out of the box. They’ll never get 100, but the last 5 percent is strategic and they’re willing to put the money into monitoring that over the years,” says Popowich.
HQ: Irvine, Calif.
Revenue: $420 million to $422 million (projected 2007)
Employees: 2,500 +
VARs: 282 (worldwide)
Web site: www.epicor.com/www/company/partners/channel
Phone: (800) 999-6995
Key products: Epicor Enterprise, Vantage, Vista, iScala, CRS Retail
Alexandra DeFelice is Associate Editor of Accounting Technology and can be reached at firstname.lastname@example.org.