Epicor CFO Discusses Corporate Challenges
In an interview on SearchFinancialApplications.com, Kathy Crusco, executive vice president and CFO of Epicor, answered questions ranging from the challenges of merging two organizations (Epicor and Activant) to the Financial Accounting Standards Board’s new standard for recognizing revenue. Here are a few highlights:
What happens when two ERP providers merge?
“First you need to understand how it will impact customers, which goes to market strategy and what the organization needs to look like. Typically, in the back office, which I manage, there are a lot of synergies in merging two companies of roughly equal size. We brought the two organizations together and provided a better experience for customers, as well as took out roughly $20 to $30 million of costs in the combined companies.”
What was involved in the merger for a CFO in terms of ERP challenges and other processes and systems?
“Both companies had, for the most part, different systems in place, from sales force automation to ERP systems to customer relationship and (professional services) automation. On top of that, both companies had been individually very acquisitive. In some cases, there were even different systems within one of the existing companies. One of the key challenges was rationalizing all the systems. We needed to pick the right ones. It may have required a newer system, in some cases, in order to build the infrastructure.”
What did you use for ERP at Epicor? What were the ERP challenges during implementation?
“We went with our own system for a couple of reasons. We wanted to help our development organization understand what a best-in-class financial system needs. We also wanted to be an early adopter as they come out with new versions of the software so that we can provide feedback to product development before we offer general availability. We also wanted to bring our prospects into the company and show them how we are running the software. Another key goal was consolidating into one system the different ERP systems we run in different pieces of the business.”
The FASB is planning to enforce a new standard for recognizing revenue. What is Epicor doing to prepare for this new standard?
“We’re very excited about the new revenue recognition standard. It puts all companies on an even playing field rather than having industry-specific revenue recognition guidelines. Under today's software revenue recognition rules, we tend to have to defer revenue on certain transactions involving multiple elements in bundles of software products and services sold together as a unit. Under the new standard, we will be able to recognize more revenue up front. Another element beneficial to software companies is that today, if we discount a transaction for some reason, in many cases we have to apply that discount unevenly across the different elements. The new standard will allow us to discount more evenly and will enable us to take more license revenue. Whenever there is a new revenue recognition standard, it is a lot of work across the company to understand all the changes and then change your systems to account for the new standard. We have a revenue group in the organization that is actively evaluating the standard.”
For the full text of this wide-ranging interview, you can go here.
Posted by Epicor Social Media Team