66564a689a569922e5229374 Manufacturing Tech Phuchit Dreamstime

Epicor Eyes Faster Growth, Doubling Over Four Years, As AI Tools Find Uses

May 29, 2024

The enterprise software company will continue to be a buyer but is “taking more chances, too” with testing and developing new offerings.

Geert De Lombaerde

As a proxy for the manufacturing and distribution sectors, Epicor Software Corp. is telling us plenty more good things lie ahead.

Speaking last week at the 2024 Epicor Insights conference in Nashville—which drew about 4,000 people to three days of keynotes, workshops and meetings—CEO Steve Murphy said his team is planning to double sales of its enterprise software to about $2.6 billion over the next four years, with roughly $2 billion of that number being recurring revenues.

Austin-based Epicor—which has about 21,000 customers in the manufacturing, distribution and retail sectors of the economy—last grew its top line 11%. Most of that growth was organic—“investments we’ve made alongside you,” Murphy told his audience—but 11 acquisitions since 2021 have been chipping in, too. Most recently, Murphy and his team bought Smart Software, a developer of inventory planning and optimization tools powered by artificial intelligence.

Putting AI to work throughout Epicor’s products is a key initiative for Murphy, Chief Product and Technology Officer Vaibhav Vohra and their team as they target doubling by 2028. Vohra told IndustryWeek his group isn’t pursuing a hard monetization strategy with AI tools but is instead embedding them in a range of practical use cases across its ERP lineup to digest data in new ways and provide suggestions where appropriate.

“We don’t want thousands of user screens,” Vohra said. “It all needs to be wrapped into the experience.”

That means testing different possible uses, Vohra said, and—somewhat like a venture capital investor—spreading bets rather than focusing on a single killer app. The opportunities for customers to remove repetitive tasks and accelerate time-consuming jobs are legion.

“We need to be more agile. R&D investment has to go up,” he said. “We’re taking more chances, too.”

In putting money to work on embedding AI in its offerings, Epicor is joining many of the biggest names in technology. Wedbush Securities analyst Dan Ives earlier this month said that spending related to AI will grow to between 8% and 10% of businesses’ IT budgets this year from less than 1% in 2023. Similarly, research firm Gartner is forecasting that global spending on AI software will grow to $297 billion in 2027.

Tech firms are finding customers and prospects still have an appetite to spend on automation specifically and efficiency more broadly. A BDO USA survey published early this year showed that nearly half of manufacturing executives will grow their AI and machine learning investments this year versus 2023.

Zooming out further, the most recent RSM US Middle Market Business Index echoed those intentions and added that 59% of respondents plan to add to capital spending going forward. If that materializes as planned, it would add to a 14-quarter streak of higher spending intentions.

“Based on the survey results overall, the primary takeaway is that executives have a bullish outlook on the year even as economic growth moderates from the blistering 3.1% pace of last year,” RSM researchers wrote.

Epicor is investing in growth just as many of its customers are and Murphy said its line item for product development will grow along with its top line. He also said acquisitions—which often start as specific feature requests from customers—will continue to be part of his team’s spending mix. Of the more than 15% annual growth he is targeting, about 4 points will come from acquired businesses.

“There’s a lot to choose from and I think there’s more coming,” he said. “We want to take more share.”

About the Author

Geert De Lombaerde | Senior Editor

A native of Belgium, Geert De Lombaerde has been in business journalism since the mid-1990s and writes about public companies, markets and economic trends for Endeavor Business Media publications, focusing on IndustryWeek, FleetOwner, Oil & Gas Journal, T&D World and Healthcare Innovation. He also curates the twice-monthly Market Moves Strategy newsletter that showcases Endeavor stories on strategy, leadership and investment and contributes to other Market Moves newsletters.

With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati in 1997, initially covering retail and the courts before shifting to banking, insurance and investing. He later was managing editor and editor of the Nashville Business Journal before being named editor of the Nashville Post in early 2008. He led a team that helped grow the Post's online traffic more than fivefold before joining Endeavor in September 2021.