It’s been hard to find real value in ERP for more than a decade now. Many ERP vendors gave up the pretense that their solutions could deliver a positive ROI and instead opted for a lower TCO angle to pitch to prospects. For these reasons, the market started to shift and more buyers looked to vendors that could deliver ‘value’ and not just the appearance of lower costs.
To that end, new market entrants emerged. Firms like Automation Anywhere and UIPath brought RPA (robotic process automation) to business processes. Firms like Celonis, which recently raised a $1 billion capital round, brought us process mining and execution solutions. And there are other firms developing high-value solutions in new white spaces, too.
I recently had an opportunity to chat with the folks at Esker. And while Esker’s been around since 1985, they’re probably new to many of you. The company is big and its offerings may be a big surprise.
Who is Esker?
Esker provides cloud-based process automation solutions in the procure-to-pay and order-to-cash back-office areas. They process over one billion customer transactions/year. Esker defines their business as “digital transformation through process automation”.
Lyon, France-based Esker is actually a large technology firm with over 6,000 customers and more than 6,000,000 users. Many of those customers are quite large firms that include Whirlpool, Moen, Toshiba, Siemens, Samsung and one of my favorites, DrPepper Snapple.
Esker takes a different viewpoint than many ERP vendors. The company recognizes that organizations will have many different ERP, banking, payment and other systems. Even if an Esker customer standardizes on one ERP solution, they may actually be running different configurations of it in different divisions or countries. This recognition that systems diversity is the norm (not the exception) has shaped their worldview and their approach to integrating and automating systems, processes, decisions, etc.
The executive view
Recently, I briefly chatted with Emmanuel Olivier, COO of Esker. He’s been with the company for 22 years.
Olivier believes the “ERP world is diverse and will stay that way forever”. This heterogeneity of technology is what makes his firm's approach to the market different from the homogeneous tech world that ERP vendors erroneously believe exists.
Olivier sees Esker’s raison d'être is to ‘digitize the back office’. Let’s look at this further. Most ERP solutions allow users to enter journal entries, sales orders, invoices, etc. These systems can generate payment schedules and reports of past-due customer payments. But what they don’t do is actually a lot. These older solutions are designed for specific functions (not processes) and for the people who must complete certain tasks. The goal of those old systems designs was to record an event and forward the accounting effect of it to a general ledger.
Old solutions had long, serial processes that baked in delays and lots of human interaction. The concept of rapidly clearing issues (via collaboration or workflow technology) was not in the original ERP design. The idea that exceptions could be dealt with in real-time was also a foreign concept. But most of all, the old ERP world never imagined an environment where a system and some rules could automatically handle the entry, processing and disposition of thousands of business events without any human interaction.
Esker is all about this white space between where ERPs end and all of the possibilities that ERP solutions could have delivered (but didn’t).
Esker partners with SAP and Microsoft (for Microsoft Dynamics 365). It also integrates with Oracle e-Business Suite, Oracle JDEdwards and other ERP solutions. Emmanuel indicated that they also have clients running SAP Business ByDesign, NetSuite, SAP Business One, SAP R/3 and other ERP solutions.
The driving force behind many new Esker customer acquisitions is, according to Olivier, the need for more productivity gains. He argued that the most compelling value proposition for new customers is a combination of process automation and integration to resolve transaction issues in near real time. Esker even supports portals and chatbots so that a customer’s suppliers and buyers can interact with the customer and get information (eg: payment status), request support and other activities immediately.
Olivier is right on this productivity gain point. Given how each successive generation of ERP software has followed a diminishing benefits curve, companies are definitely looking for net-new kinds of benefits and/or productivity gains.
He shared a particularly illuminating insight re: a customer of theirs during the pandemic. This customer of Esker’s realized how tenuous their supply chain was. Component shortages of even a single item could shut down their production line and leave this firm’s business in a bind.
As a result, the company wanted to ensure that they paid ALL of their suppliers on time so that suppliers had the cash on hand to buy critical raw materials and/or pay employees. It’s an interesting perspective given how many firms went to extremes to hoard cash and stiff suppliers during the pandemic. Those that hoarded cash and squeezed their suppliers probably found themselves at the bottom of their suppliers’ order fulfillment priorities. To help this firm pay its suppliers on time, Esker’s automated process tools handled the presentation and payment functions but also highlighted and routed exception items so that they could be dealt with fast.
You know these new white space applications (the ones powered by machine learning, workflow, exception processing and/or RPA) are hot when merger/acquisition and IPO activity is on the rise. SAP made a splash with their recent acquisition of Signavio and other deals are potentially in the offing.
Another ‘hot’ sign is the interest of systems integrators, resellers and implementers in this space. Smart tech services firms like to go where there’s growing demand and scarcity of skills as this permits a services firm to charge market or higher rates. In many ERP services markets today, the landscape has an abundance of potential providers, low growth, too much competition and painful margin pressure. It’s understandable that services firms will move into markets like those that Esker enables. Currently, Esker has relationships with KPMG, Capgemini, IBM, Hexaware, GrantThornton and BDO. Just this week, Esker added a new partner, Marlabs, to its ecosystem. I suspect more partnerships will form in short order.
One big caution for readers is this observation - a lot of the focus of these new technologies is around the productivity improvements for back-office workers. While that is a great benefit, it’s far from the only thing you should expect. For example, the ML (machine learning) and exception handling capabilities possible in solutions like Esker's can help catch fraudulent transactions and prevent financial losses. In fact, the time saved by letting software process routine, pedestrian transactions could be re-allocated to better examination of non-standard transactions. The result of this new employee focus could be fewer fraudulent events and better accounting of transactions.