acquisition

Epicor to Acquire Solarsoft: Expanding its ERP Portfolio While Adding MES and EMI

Last month Epicor announced its agreement to acquire privately held Solarsoft Business Systems from Marlin Equity Partners. Solarsoft itself is a product of acquisitions, with a portfolio of enterprise resource planning (ERP) for manufacturing and distribution, as well as offerings that extend deeper into manufacturing execution. These include a Manufacturing Execution System (MES) and Enterprise Manufacturing Intelligence (EMI). While there is certainly some overlap with Epicor’s existing product offerings, Solarsoft will expand Epicor’s reach to include process manufacturing, push it deeper into manufacturing operations and strengthen its print, publishing and packaging offerings developed by Kodak.

OH NO! More ERP Solutions?

That might be the initial knee jerk reaction to this further consolidation of the ERP market. After all, Epicor already has a whole bevy of ERP solutions. However Epicor stands out in the field of acquisitive companies as the first major ERP solution provider to deliver on a promise of convergence, while also extending functionality and modernizing the underlying technical architecture.

That modern technical architecture is Epicor ICE, which combines a second-generation Service-Oriented Architecture (SOA) with Web 2.0 technologies. This technology provided a good framework for the convergence of nine different ERP solutions, (originally called Epicor 9, now known as Epicor ERP) but its continued evolution has also resulted in the evolution of Epicor’s product strategy.

With the acquisition of Activant last year, a company dedicated to serving wholesale distribution, the focus on converging multiple ERP solutions shifted slightly. In the short term it is now focused on convergence of technology and bringing the benefits of ICE to a broader portfolio of solutions, including the products acquired with Activant (including Prophet 21, Eclipse and Prelude and several other legacy applications). While Epicor ERP is a multi-purpose solution, these products will continue to serve more specific micro-verticals in the wholesale distribution industry, verticals such as distributors of fasteners, ceramic tile, electrical supplies, etc. as separate products for the near term.

However, Epicor didn’t just wake up one day and change its mind (and its strategy) with the acquisition of Activant last year. The evolution of ICE was also a significant factor in evolving the overall Epicor strategy. Over the past several years, ICE has been further strengthened to allow Epicor to build new features, functions and applications on a modular basis without touching the core of ERP. This means Epicor can continue to add new (converged) functionality or supplement or replace existing features without requiring its customers to implement an entirely new ERP.

ICE provides a bridge that connects the existing application with new, modular functionality. And it allows Epicor to “build once” and deploy across multiple solutions, freeing up resources that would otherwise be required to satisfy those requirements in each product line – freeing them up to work on more targeted functionality which has the potential of helping its customers in select industries achieve a measure of competitive differentiation.

So how do the Solarsoft products fit into this strategy? First of all, Tropos, its solution for process manufacturers, allows Epicor to address a whole new segment of the manufacturing market. While discrete manufacturers typically manage components and production in discrete, numeric quantities, process manufacturers often must handle ingredients and produce batches by weight or volume. Discrete manufacturers create bills of material. Process manufacturers deal with recipes and formulas and quite often have specific requirements for material traceability and regulatory reporting. These special requirements typically require special features and functions.

So the sequence of events that must occur to determine exactly how Tropos will fit into the convergence strategy is one of the decisions that will be required once the acquisition is complete. Yet even in the meantime, there are certain features and functions that are common across all sectors. Once the Tropos solution has been enhanced to work with ICE, the investments Epicor has made in evolving ICE should also ensure that Tropos customers have earlier access to much more innovation than Solarsoft itself could have delivered.

Other niche markets covered by Solarsoft such as retail packaging and corrugated manufacturing will reap the same type of benefits and further expand Epicor’s addressable markets. The addition of aVP and bVP, both serving the packaging industries will also further strengthen Epicor’s partnership with Kodak (announced in 2010) to better serve the print, publishing and packaging industry.

Manufacturing Operations

In addition to broadening its market, the Solarsoft acquisition also strengthens the depth of manufacturing operational functionality Epicor can bring to manufacturers in many different industries. Prior to the announced acquisition by Epicor, Solarsoft itself had made two strategic acquisitions: Mattec and Informance.

Mattec MES – Production Control

Mattec provides real-time production and process monitoring allowing manufacturers to gain control of their shop floor and achieve significant improvements in efficiency and product quality. It includes:

  • Real-time production monitoring
  • Process control
  • Dynamic Job Scheduling
  • Statistical Process Control
  • Scrap and downtime monitoring
  • Preventive maintenance management
  • Operator tracking
  • Real-time alarms and alerts
  • Open communications and machine interface

Because its primary role is to control the shop floor, there is of course some overlap and contention with the shop floor control (SFC) functionality already available in some of the ERP solutions Epicor (and even Solarsoft) offers. Yet this kind of overlap between MES and the SFC module within ERP is quite common. MES tends to provide an added level of “real-time” over SFC, as well as a higher degree of interoperability with machine and process automation. So each manufacturer (including Epicor and Solarsoft customers) must make its own decision as to its own specific requirements. And indeed Mattec may be quite a welcome addition to some existing customers, like those running Epicor iScala, which has nothing to compare or compete, or other customers for which SFC provides only a good start to a complete manufacturing operations solution.

Informance EMI – Enterprise Manufacturing Intelligence

The Informance product previously acquired by Solarsoft may in fact be more universally appealing across a broader spectrum of the Epicor and Solarsoft customer base.  The Informance product can be categorized either as EMI (Enterprise Manufacturing Intelligence) or MPM (manufacturing Performance Management). Whichever way you look at it, the overriding goal is to improve the performance of manufacturing operations. In fact, using the Informance software, along with the permission of its customers, Solarsoft has been able to benchmark performance of these operations and determine “best-of-class” standards. It publishes a number of benchmarking studies each year to demonstrate how best practices impact manufacturing performance.

Unlike MES, which adds a level of shop floor control, EMI serves to aggregate data from a variety of sources (man, machine and software applications) and provide a level of analytics and intelligence that cannot be gleaned from any single source.  As such, it does not replace any ERP functionality, but complements it. Today there is nothing in the Epicor product portfolio that competes in terms of this type of functionality, so this part of the acquisition should be entirely accretive.

Conclusions and Key Takeaways

What’s the bottom line here? Epicor expands its addressable market to include process manufacturers and strengthens its position in print, publishing and packaging. Epicor manufacturing customers benefit from added solutions that dive deeper into their operations. Solarsoft customers will benefit from ICE and the “Build once, deploy everywhere” philosophy behind it.

Yes, there is soon to be one less ERP solution provider, but the solutions themselves aren’t going anywhere except forward.

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Infor Rounds Out Hospitality Offering with Acquisition of EasyRMS

On June 13, 2012 Infor announced the acquisition of London-based EasyRMS, a leading provider of revenue management software for the hospitality industry. This is another step in executing its industry go-to-market strategy, more specifically in expanding its Infor10 HMS solution. Infor has been growing its presence and its solution in the hospitality industry over the past several years through a combination of acquisition and organic development. This acquisition buys them both added presence in Europe and Asia Pacific, as well as an important piece of the puzzle for a complete solution for this industry. Because this solution is delivered as multitenant Software as a Service (SaaS), Infor’s cloud offering also gets a boost.

A Bit of History

Infor is no stranger to the hospitality industry. Both its Infinium and SunSystems products were back office solutions that had been adopted by a fair number of hotels and casinos. Infinium products were added to the Infor product portfolio as part of the SSA Global acquisition in August 2006. SunSystems was acquired at the same time. But it was through the SoftBrands acquisition a couple of years later that Infor was able to address the operational needs of the hospitality industry in general and hotels in particular.

Later Infor combined the industry expertise acquired through the SoftBrands acquisition and the technology acquired from DataStream and its Enterprise Asset Management (EAM) solution to re-architect the solution from the ground up. Among the advantages of this approach is a very scalable, full multitenant SaaS architecture, which allowed Infor to bring a newly architected product to market twice as fast as it would have taken without this proven SaaS platform. A SaaS environment should also be particularly appealing to companies rolling the solution out to multiple properties within a chain or group of hotels.

Compatibility with an EAM solution doesn’t hurt either. Facility management across multiple properties is a key concern for many in the hospitality business.

That is what forms the basis for Infor10 HMS from an operational perspective. This operational solution is then paired with either Infinium or SunSystems to provide the best fit for the back-office, if that is also a requirement.

So hospitality business can come to Infor from any number of directions. For example, a hotel or hotel chain running SunSystems back office solutions or a casino running Infinium might come looking for an operational solution to assist in reservations, event planning or managing hotel staff and scheduling. Or a hotel using the original SoftBrands product might come looking to replace its back office applications. Or a brand new prospect may come looking for either or both. In all cases they will be purchasing Infor10 HMS, but it may be configured differently depending on their needs.

How Does EasyRMS Fit?

EasyRMS ‘ EzRMS product suite complements the operational component of Infor10 HMS with a fully automated Revenue Management Solution. The solution treats book-able hotel nights as a perishable commodity and looks to optimize revenue produced. While historically most such revenue optimization algorithms simply managed room price, EzRMS also considers ancillary spend in spas, restaurants, on the golf course, and other extra revenues. Profits and cost (per day, per room, per guest and per stay) are considered.

Potential revenue is analyzed based on past stays for returning guests and based on demographics and channel from which the inquiry comes (e.g. coming from Expedia.com, Priceline.com or a search based on a particular hotel brand) to predict total spend and thereby determine the lowest possible rate that should be offered.

Other components of the EzRMS product suite deal with quotes for group rates and contracts as well as reporting by region. The addition of this suite to the existing functionality of Infor10 HMS makes it a very complete solution from an operational perspective. When combined with the back office solutions available, companies would be hard pressed to find a more comprehensive solution for hotels. If you further consider EAM as an added option, it makes it even more comprehensive and complete.

Infor will be welcoming customers from more than 1,200 hotel properties using EasyRMS solutions. These customers could very well prove to be greenfield opportunity for back office Enterprise Resource Planning (ERP) solutions like Infinium and SunSystems. A large chain like Marriott, which already has an ERP installed, would never have been on the radar of the sales team without having a foot in the door.

With its base in London, it is also not surprising to learn that it has a strong presence in Europe, Middle East and Africa  (EMEA). And it also has a strong presence in Asia/Pacific (APAC). This also offers a nice complement to Infor’s current stronghold in North America.

The Infor hospitality business itself grew 35% last year. With the addition of EasyRMS, this growth could easily be dwarfed by the growth fueled by an extended product and expanded presence. Additional opportunities may also arise by applying some of the same revenue management optimization algorithms to other industries. Hotel nights aren’t the only perishable products supported by Infor solutions. Certain food and beverage industries might also benefit from the same kind of science. It will be interesting to watch where Infor takes it.

 

 

 

 

 

 

 

 

 

 

 

 

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QAD Strengthens ERP with Acquisition of DynaSys and its Supply Chain Suite

Earlier this month QAD quietly announced what some in the industry might call a “tuck in” acquisition of DynaSys Société Anonyme. DynaSys is a supply chain solution provider based in Strasbourg, France. I say “quietly” because many acquisitions these days, large and small, strategic and tactical, are accompanied by so much hoopla, even before they occur, that you lose sight of the real value of the merger. QAD announced this as a done deal, after having kept on all Dynasys’ management and staff. Dynasys will continue to operate from Strasbourg as a division of QAD.

Why call it a “tuck in”? Because this is not a move to acquire a huge customer base (i.e. buy market share), but instead one to further strengthen QAD’s offering and presumably to garner a larger share of its customers’ wallet. According to Gordon Fleming, QAD’s Chief Marketing Officer, the company has seen supply chain planning as “becoming more important to our clients’ success, especially following the economic crisis which has caused companies to place far more emphasis on optimizing resources to meet variable global demand and other competitive pressures.”

This makes sense. For years we saw manufacturers increasingly sourcing components, raw materials and even operations from offshore, low-cost countries. But then as the price of oil rose and rose and the whole energy market became increasingly volatile, often the savings achieved by going offshore were eaten away by rising transportation costs. Supply chain planning and optimization became increasingly important, but also harder to achieve given the added complexities of global sourcing.

QAD sees a great demand for supply chain capabilities and while it offered forecasting, supply chain planning, trade management and a supply chain portal, Dynasys offers a much more extensive portfolio both in terms of depth and breadth. Its product, called n.SKEP is a demand and supply chain planning suite of solutions and its expertise in food and beverage, pharmaceuticals, chemicals, cosmetics, distribution and retail is a nice complement to the industries in which QAD is strong.

The Mint Jutras ERP Solution Study examines this hybrid type of environment by distinguishing between modules of ERP (i.e. what QAD already has) and extensions (what it adds through Dynasys). Let’s be clear on terminology used here. Any ERP solution, simply by definition, consists of a suite of integrated modules. All the modules of ERP use a single data base model. Integration is built in and there is little or no redundancy of data elements, except where there is a specific need. All modules are built with the same development tools, on the same architecture as the core of ERP. While a module can be implemented incrementally, its release cycle is in lock step with the remainder of the core ERP modules. The advantage to implementing a suite of modules is full and seamless integration. The downside is that everything and everyone using ERP has to move forward (or not) together. And a complete ERP solution extends very broadly across the business and impacts many departments and individuals.

“Extensions” to ERP are enterprise applications that might extend the functionality, but are sold and implemented as separate applications. This might eliminate the need for upgrades and release cycles to be in lock step, but also introduces the potential need for integration and the possibility of redundant data. It is fairly common for ERP vendors to use an acquisition strategy to add more robust functionality. But the value is typically directly proportional to the level of seamless integration between their ERP and the newly acquired product. Too often these same vendors would like you to believe that simply by acquiring the product they have a fully integrated solution. But there is no magic fairy dust you can sprinkle on to make this happen overnight. It is refreshing to see QAD acknowledging this.

QAD is being very conservative in predicting revenue growth in the first year but sees n.SKEP as augmenting its existing supply chain capabilities and ultimately becoming a “single coherent model to allow real-time planning of Demand, Distribution, Procurement and Production. The DynaSys suite will also provide the heart of QAD’s ‘next generation’ Sales and Operations planning capability.” As a result QAD’s first priority will be to integrate n.SKEP into the QAD Enterprise Applications. It will then roll it out to its global market. Beyond that it intends to invest in the Dynasys product, seeking a competitive advantage to other ERP solutions.

The Dynasys suite includes:

  • Sales Forecast (Demand Planning)
  • Sales and Operations Planning (S&OP)
  • Distribution Requirements Planning (DRP)
  • Master Planning
  • Network and Inventory Optimization
  • Master Production Scheduling
  • Procurement Planning and Optimization

Some of these components will at first appear to compete directly with modules that QAD already offers. But Mint Jutras research shows that sometimes what appear to be competing modules and extensions are in fact complementary. In our 2011 ERP Solution Study we intentionally included some functions as both modules and extensions and supply chain planning is a perfect example. A manufacturer or distributor might look to its ERP solution for supply chain functionality, while others might purchase a separate application. And it is clear from our results that some combine the two.

We presented a list of modules specific to a general industry (e.g. manufacturing or wholesale distribution) and captured which modules were fully implemented or partially implemented. We also allowed participants to indicate if certain modules were not relevant to their business. From this we can get general adoption rates across all companies, but more importantly adoption rates only counting companies where the modules are applicable.

As part of our solution study we also benchmark the performance of ERP based on a combination of results realized since implementing a solution, progress achieved against company-specific goals and selected metrics measuring current performance. The top 15% in terms of these performance metrics are determined to be World Class. We found that 92% of World Class implementations (where supply chain planning was relevant) had either partially or fully implemented these modules. And 39% had implemented supply chain planning extensions. Clearly this adds up to more than 100%, indicating some had both.

Even in All Others (those not World Class), 64% had (partially or fully) implemented supply chain modules. Yet only 7% of All Others had implemented extensions. Just this data alone does not prove that supply chain planning applications are necessary for World Class performance in manufacturers and distributors, but it certainly makes a case for QAD’s assumption that they are of strategic importance.

QAD’s strategic vision is for every one of their customers to become what they call an “Effective Enterprise.” It defines an effective enterprise to be one where every business process is working at peak efficiency and perfectly aligned to the strategic goals of the organization. Having an effective plan to manage the supply chain is an important step in realizing this level of effectiveness. And planning is what Dynasys solutions are all about.

 

 

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Plex Systems Announces Pending Acquisition by Francisco Partners

Yesterday  (June 6, 2012) Francisco Partners announced the pending acquisition of Plex Systems, one of only a very few SaaS-only ERP solution providers and the one that offers the deepest and broadest offering for manufacturers. If you look at Francisco Partners’ website you see the company describes who it is and what it does as follows: “Francisco Partners (FP) provides transformational capital to technology companies facing strategic or operational inflection points.”

It is pretty clear that SaaS ERP is at one of those strategic inflection points. While a short 5 years ago only about 10% of manufacturers would even consider a SaaS ERP solution, my research indicates that percentage had grown to 45% in 2011 and I expect to see another jump this year. While in the past I have called ERP the last bastion of resistance to SaaS, that resistance is fading and more and more ERP vendors are jumping on the bandwagon, which only increases the acceptance and the hype. But Plex is not following that trend; it is leading the way.

Unlike many other ERP solution providers that are new to SaaS, Plex has been offering SaaS ERP (exclusively) to manufacturers for the past 12 years. For years, deals were often won largely because of functionality and in spite of being SaaS. More recently SaaS has also been a key selling point. I would agree with Petri Oksanen, a principal at Francisco Partners who is quoted as saying,  “We believe that Plex Systems has the potential to lead the transition to cloud ERP for manufacturers, and that this will be as transformative as the adoption of cloud solutions has been to sales, marketing, and human capital management.”

As a result of this acquisition, Francisco Partners will own 100% of all existing shares of Plex. This is also a divestiture of shares by Apax Partners, which happens to have recently acquired Epicor and Activant and merged the two companies as Epicor Software. Mark Symonds, CEO of Plex called the sale of Apax shares “a natural course of events.”  Apax had invested for six years and this is a logical exit strategy for them.  However, unlike the Apax/Epicor/Activant deal, this acquisition is not a mash up of multiple solutions or solution providers.

Which means few, if any, strategic and operational changes for Plex. That is good news for employees and customers, both of which are extraordinarily loyal and engaged. Plex was recognized by the Detroit Free Press as one of the top workplaces in Michigan in 2011. I believe at least one of the reasons customers remain happy is because of the relatively instant gratification they get from Plex’s approach to rapid application development and opt-in enhancements. Unlike the traditional on-premise approach where customers request enhancements, which get put into 12-18 month planning/development cycles (and then those same customers often delay upgrading for another year), Plex updates software frequently, sometimes on a daily basis.

Mark indicates Plex will largely continue along the same path it has been on for the past several years, but Francisco Partners will bring added resources and possible relationships.  This might open doors to Systems Integrators that might have remained closed to a company of Plex’s size and I have to think it might also attract new channel partners. Plex will continue to serve the automotive, aerospace and defense, food and beverage and electronics industries and will also continue to seek to stretch the boundaries of those sectors to expand incrementally.

Plex and Francisco Partners see the market entering into a period of increasing replacement cycles. My research indicates one in four companies surveyed are planning to purchase a new ERP within the next three years and another one (in four) are still undecided. Of those planning a purchase, three out of five will be replacements, while one will be a new purchase for the entire enterprise and one will be a purchase for a new site not currently supported by ERP. Clearly there is lots of opportunity in the niche Francisco Partners calls “Manufacturing ERP.”

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SAP’s Cloud Strategy: Striving For Clarity

Sometimes procrastination pays off. Whenever I attend an event like SapphireNow, I always write something about it. In the case of Sapphire in particular, I usually have several things I want to “say.” But it has been over a week since I headed out from the event (a bit early this year) and yet this is my first attempt to write anything. Why? First of all, I was on the road, but that usually doesn’t stop me. The bigger reason… I had been really looking forward to hearing about (and writing about) SAP’s cloud strategy.  With the acquisition of SuccessFactors and the reorganization of the teams, I had a lot of questions. Unfortunately the presentations (to groups both large and small) this year created more new questions than they answered and I struggled with how I could publicly voice my lingering questions and concerns constructively.

But before I resolved that dilemma, the picture changed.

Yesterday (May 22, 2012) SAP announced it would expand its cloud presence through the acquisition of Ariba. While I know Ariba quite well, I haven’t followed the company closely over the past several years. The SAP announcement said, “Ariba is the second largest cloud vendor and runs the largest global trading network, driving more than $319 billion in commerce transactions among more than 730,000 companies.” The acquisition will make SAP a clear leader in cloud Supplier Relationship Management (SRM) and also has a direct impact on some of my concerns.

My Questions

To put this in context, let me explain some of the questions I had after I heard Lars Dalgaard, former SuccessFactor CEO and now SAP Executive Board Member, speak about the company’s cloud strategy. During his keynote, and also in a press release launched during the show, cloud solutions were announced for four lines of business to manage people, money, customers and suppliers. That statement alone raised no red flags with me. Every company deals with those four elements in some form or another. But the comment Lars made next did cause concern. He added something along the lines of, “That covers everything any company would need.” With my own roots extending deeply in the manufacturing space, my first thought was, “Did I hear that right?” Those four elements are indeed critical to every manufacturer, but there’s also more to manage, like inventory, planning and scheduling, engineering and production. I Tweeted:

Didn’t hear @LarsLuv talk about #Manufacturing processes in #cloud #sapphirenow

So just to be sure, in the press conference that followed, I asked if this had been an oversight or had SAP specifically decided against competing in this market. The answer I got (from Lars himself) was that SAP thought the interest and demand for other solutions far outweighed the interest and demand for manufacturing solutions. This included solutions that surround ERP with functions such as CRM and HCM. History bears this out. Adoption rates for cloud solutions for these extensions far exceeds cloud-based ERP. But that’s more about what’s running in the cloud, not what kind of company is running it. So that implied (but didn’t specifically state) that other applications were a higher priority for the cloud than ERP.

OK, that’s a business decision and SAP appeared to be going where the easiest sell and the most opportunity was. I followed up with another Tweet saying it didn’t look like SAP was going after the same market as Plex Systems, a SaaS only ERP solution provider that markets and sells exclusively to manufacturers. Response in the Twitter stream went like this:

Hide conversation

 

William_Newman: RT @ERP_cindyjutras: Didn’t hear @LarsLuv talk about #Manufacturing processes in #cloud #sapphirenow > can already happen w/ @sapbydesign 11:46am, May 15 from Twitter for iPhone

 

LarsLuv: @William_Newman @erp_cindyjutras @sapbydesign that’s right, and we’re excited about this 2:23pm, May 15 from Twitter for iPhone

Now of course, having followed Business ByDesign since its very first coming out party in New York City in September 2007, I knew it had manufacturing functionality and I have spoken with more than a few manufacturers that use it today. That was partly why I asked the original question. But these exchanges left me more confused. I don’t expect the guy at the top to get mired in the details, but is SAP going after manufacturing with cloud solutions or not? I know it has a strong solution in on-premise solutions (the Business Suite and Business All-in-One plus complementary manufacturing and supply chain planning and execution applications), and I know partners strengthen the Business One offering for manufacturers. But I’m left thinking ByDesign will compete better against NetSuite’s solution for light manufacturing than it will against Plex Systems’ Plex Online or other mature ERP solutions for manufacturers now offered in various flavors of SaaS or hosting.

So what about ERP in general?

The second sentence of the cloud strategy press release continued, referring to the four lines of business, “These are planned to be offered in a consistent way and seamlessly integrated into enterprise resource planning (ERP) business software.” Now we already heard that SAP was responding to demand for other applications that extend and surround ERP (like HCM and CRM), and this statement implies these other applications will be fully integrated with ERP. Indeed Lars talked both about “loosely coupled end-to-end integration” and the press release states, “SAP plans to deliver its multitenant cloud solutions as a loosely-coupled suite of best-of-breed applications.”  But nowhere in the press release did it specifically talk about delivering ERP as part of the cloud strategy. Yet if Business ByDesign isn’t ERP then I wouldn’t know what else to call it today. And it is only available as a multi-tenant SaaS solution (i.e. via the cloud). Does this mean ByDesign will be transformed from ERP into a loosely-coupled suite of best-of-breed applications? Is there a difference?

Loosely Coupled versus Tightly Integrated

The difference lies under the covers. There is work to be done in order to make this transformation. SAP will be pulling different components out of ByDesign so they can stand alone. Finance will be first and in fact will be the solution to satisfy the “money” line of business referenced previously. This allows SAP to bundle different elements together like finance (money) and human capital management (employees). Other functions will be prioritized and extracted in the future, but finance is the logical place to start as it is probably the most marketable as a separate “best of breed” application.

Everyone needs general ledger, accounts payable and accounts receivable and many smaller companies are intimidated by the thought of implementing a full blown integrated ERP. And in offering these loosely coupled applications it provides the customers with more choice to keep other non-SAP solutions or even to buy new non-SAP solutions. While this provides more choice, it also encourages complexity and makes less business sense from a cross-sell and up-sell perspective.

The advantage of a tightly integrated ERP is the ability to eliminate redundant data and reduce complexity. There used to be an intrinsic functional advantage of “best of breed” applications over those included in ERP. The disadvantage (trade-off) of course was lack of integration. But those functional differences have shrunk over the years as ERP solutions offer more robust features and functions even in some non-core modules. And there is no integration required between the modules of ERP – it is all built in.

In terms of redundancy of data, with integrated ERP there is only one customer master shared by order management, accounts receivable and any other function that deals with customers. There is only one supplier master file shared by purchasing and accounts payable and perhaps manufacturing planning. This is one of the reasons most ERP vendors have moved away from selling individual modules in favor of a bundled set of core modules and charging on a per user basis. A customer using fewer modules will have fewer users and pay less. As they expand into new areas, they add more users (and pay more), but there is no additional license or installation to worry about.

SAP appears to be bucking this trend and moving in the opposite direction, moving from fully integrated ERP to loosely coupled best of breed applications. So in pulling out the finance function, SAP will need to bring the customer and supplier master files along with them. OK, that’s just a packaging issue. But those same customer and supplier files will also have to be bundled with best of breed order management and purchasing solutions. Then if a customer buys finance, order management and purchasing, will they have two copies of a customer master and two copies of a supplier master? Probably not. There are other ways to handle this – most likely by defining these masters as meta data. And it makes it easier to deal with multi-vendor solutions. Good for the customer, not as good (business-wise) for SAP. This isn’t especially difficult, but it will mean that developers will be working on this instead of working on innovation.

How does Ariba change the game?

Today all cloud offerings across these four lines of business: customers, money, employees and suppliers are managed in a single business unit run by Lars Dalgaard. When (and of course if) the acquisition is completed, Ariba will run as a separate SAP company. SAP has done this twice before rather successfully – first with Business Objects and then with Sybase. Eventually both were quietly merged into the SAP fold.  But in the meantime, there will be two business entities within the SAP corporate structure that together provide all the cloud offerings. When that happens the supplier area will land in the house of Ariba, as it should.

I actually think this will be a very good thing. Lars has great experience with Human Capital Management. He has a proven track record for delivering on a go-to-market strategy (something that has been lacking with Business ByDesign) and he has the necessary cloud DNA. He’s already brought energy and focus to SAP’s cloud strategy. But a global trading network and experience with supply chains and supplier networks is something that fits much more naturally into a manufacturing (and also a distribution) environment and Bob Calderoni (current CEO of Ariba) clearly has more experience on that front. Will Business ByDesign be divided up and shared or will it stay with Lars? I suspect had Bob been at Sapphire I might have gotten different answers to my questions about manufacturing and maybe even those about Business ByDesign.

Bottom line though… even as Bob and Lars manage different segments of SAP’s cloud strategy it is imperative that they work together as a single cloud team. The SAP co-CEOs said as much. And eventually SAP will quietly merge Ariba into SAP proper. At that point there may only be room for one of these powerful leaders at the top. Will this fact influence the journey up until that happens? Time will tell.

 

 

 

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Infor customer Filtronic Broadband chooses to standardize on Infor10 ERP Business in M&A

Today Infor announced that telecommunications component manufacturer Filtronic Broadband will extend its implementation of Infor10 ERP Business (SyteLine) to support recently acquired Isotek Holdings. Like the vast majority of the “World Class” ERP implementations participating in our Mint Jutras 2011 Solution Study, Filtronic Broadband has defined corporate standards for ERP. Mint Jutras defines World Class to be the top 15% in terms of results, progress achieved in reaching company-specific goals and current performance. Our study found that 97% of the top-performing ERP implementations have defined corporate standards for ERP, although this does not always mean a single ERP solution is implemented at all operating locations as we see planned for Filtronics Broadband. In fact World Class implementations with such standards are equally split on having a single standard (51%) or a two or multi-tier strategy (49%).

Filtronic Broadband’s requirement was for an ERP solution that could be used in sites spanning two continents: the UK and the United States. It was also driven by the necessity to move fast – it had to be implemented quickly before the end of the fiscal year. It decided to use Infor10 ERP Business to standardize inventory processes between the two operating locations, with the added benefit of accelerating those processes and reducing the cost of materials.

It’s not clear from the announcement whether the combined companies will use a single instance of Infor10 Business or whether each operating location will have its own. One thing is clear; operating in two different countries requires them to maintain two different legal entities. Passing data between two instances of the same ERP can be far easier than between different ERP platforms, but only if master data and processes are standardized. And that’s a big “if.” A certain openness and support for interoperability is a big factor. Yet success will depend as much on the design of workflows, processes and master data.

The approach Filtronic Broadband decided to take was to have a master database of all parts, with consistent item numbers across both sites. In addition to speeding up processes, it will help them eliminate excess inventory where the same part might have existed with different item numbers. This of course isn’t the only way to manage this type of distributed environment. Instead of using a single standardized set of master data codes (e.g. part numbers), master data using different codes could be mapped to one another.  But for every one World Class implementation mapping different codes, there are slightly more than two using universal codes.  So Filtronic Broadband was hardly unique in this decision.

According to Dave Barry, IT manager for Filtronic Broadband, the company is still in early stages. We’ll be watching to see what kind of real benefits are gained, whether related to time and money saved, as well as consistency in reporting.


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Did your software vendor get acquired? What now?

Earlier this fall, I helped IFS North America conduct a survey of executives and professionals of manufacturers with annual revenues in excess of $100 million. The purpose was to better understand the impact on customers when enterprise application solution providers are acquired. The ERP market in particular has been undergoing consolidation for years now. I remember back in the mid-1990’s Manufacturing Systems magazine used to publish a “top 50” ERP vendor list (solution providers were ranked by size). Soon that “top 50” list became a “top 100” list because there were so many ERP vendors. After more than a decade of consolidation, if that list existed today it would probably be a “top 20.”

As an interesting aside, the publishing industry underwent similar consolidation. Manufacturing Systems became Manufacturing Business Technology (MBT) magazine, owned by Reed Business Publications, who later sold it to Advantage Business Media. And in fact, Advantage Business Media was instrumental in collecting over 340 qualified responses to this survey.

Some of the areas we explored were:

  • What percentage of companies is impacted by acquisitions of enterprise application solution providers?
  • How are these acquisitions perceived?
  • What actions are taken by customers post-acquisition?
  • What concerns do customers have when the enterprise software they use is acquired?

Over half (54%) of the survey respondents have “experienced” one of these acquisitions. Acquisitions that result in broad portfolios of products are not necessarily viewed negatively but this will depend on the nature of the portfolio. Only 10% express no concerns whatsoever upon acquisition. Concerns primarily arise over the continued support and innovation of products that are acquired.

Most (86%) continue to run the acquired software post-acquisition. The majority (68%) simply intend to continue to run the software, hence the need for that software to continue to evolve.  But 18% are considering replacement and when they do, the incumbent vendor does not necessarily have the advantage. A search for replacement is more than 3 times as likely to be put out to bid. Fourteen percent (14%) plan to replace it through a competitive selection while only 4% plan to replace it with a product offered by the acquiring company. Of course even among the 14% the new company may be considered in the “competition” but aren’t necessarily any more likely to walk away with the deal. And in fact, where a replacement has already occurred, a new vendor was chosen 71% of the time, a new vendor is chosen.  Only 4% replaced it with a product from the acquiring company while 10% replaced it with an offering from a different vendor.

This isn’t surprising because throughout the consolidation that has occurred, I find companies develop much more loyalty to a product than they necessarily do to the company that owns it, particularly when ownership changes multiple times. The vendors often gain much more from the acquisitions than the customers.

GOALS OF M&A

Vendors may have a variety of goals when they engage in acquisitions, and these goals often have nothing to do with better serving the customer. One goal is to grow market share. Growing a customer base through acquisition often creates a step function. Instead of selling one customer at a time (gradually), the installed base grows in large blocks of hundreds or even thousands at a time. Because so much of an enterprise application vendor’s revenue comes from recurring maintenance revenue, this can be an immediate and significant boost.

 Acquisition can be a cheaper way of growing a customer base, but that assumes the acquiring company is good at it – good at integrating the new company, formulating product plans and executing that strategy. Some are better at it than others and some become good at it only after learning from mistakes of prior acquisitions. When you see ERP companies acquiring other ERP companies this is often the goal.

Yet another goal of acquisitions is to grow the share of the customers’ wallet. By acquiring complementary solutions that fill gaps in the product line, the acquirer creates more potential for cross sell and up sell opportunity. Now of course, this may not happen immediately. No acquisition comes with a magic wand that instantly integrates products, although in some instances, where the two vendors have previously partnered, the integration may already exist. But there is no guarantee that integration is seamless. For many acquiring companies though this fills product gaps faster than doing the pure development route. Although with the introduction of agile development methodologies the difference is not as dramatic as it once was.  But it also can be a means of strengthening internal expertise immediately.

And the final reason for acquisition is to enter new markets. These may be new geographies, particularly in emerging markets. Or they may be new industries.

SO WHAT’S IN IT FOR THE CUSTOMER?

 In some cases, acquisitions benefit the customer if they place an acquired vendor (or even the acquiring vendor) in a stronger financial position. M&A activity can “bail out” struggling companies, preserving legacy solutions and companies that may otherwise simply vanish. When vendors use M&A activity to grow their share of the customer wallet, customers may immediately benefit from having access to a broader solution from a single vendor. There may be synergies between merged companies/solutions and there could be an accelerated (or slowed) innovation processes’

When the goal is to enter new markets, there is little to no customer benefit unless the customer is in (or is entering) a market that is underserved by the original vendor. But that probably means the original selection of that product was questionable.

Given the fact that the vendors often have more to gain than the customers, it is not surprising to see concerns. These concerns can be summed up as follows:

  • We could wind up running a collection of separate point solutions owned by the same vendor instead of a well-integrated ERP (58%)
  • The product we use may not be well integrated with the rest of the product portfolio (55%)
  • The owner of the product may not continue to invest in or evolve the product in the future (48%)
  • The product may be discontinued, forcing us to move onto another product from the same vendor (33%)
  • While customer acquisition goals are always important, don’t neglect customer retention
  • Rounding out a solution portfolio is commendable, but don’t forget integration. If all you have done is reduce the number of vendors a customer deals with you are not really adding value in the eyes of the customer

SOME ADVICE TO ACQUIRING SOLUTION PROVIDERS:

ADVICE FOR USERS OF PRODUCTS THAT MIGHT BE ACQUIRED:

Get the facts. Hold your vendor’s feet to fire in terms of product road maps. But recognize that continued development of the product you are running might not be a good business decision for your new vendor.  But it also may not be best for you, particularly in the case of a legacy ERP developed on older technology. ERP used to be viewed as brain surgery. Don’t do it unless the patient is dying. Today I would recommend viewing it like joint replacement (think knees and hips). Even if the joint is painful, you suffer along with it as long as it doesn’t severely handicap your ability to function. But when it becomes too painful, or too limiting, it is time to undergo the surgery. ERP replacement can be like surgery – it can disrupt your life. But if the quality of life post-surgery is vastly improved, it was worth the effort.

To see the actual results of the survey please click here.

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Lawson/Infor Address GRC Gap With Approva Acquisition

On September 1, 2011 Lawson Software Americas, Inc., an Infor affiliate, completed the acquisition of Approva® Corporation. In doing so, the combined companies add a component previously missing from their product portfolio to address a growing need for Governance, Risk and Compliance (GRC). At the time of the Lawson acquisition in July 2011 Infor promised a fast pace of development and delivery of deeper industry-specific features for key industries. This move signals that Infor is serious about investment in establishing itself as a leader in the enterprise software industry. Integrating yet  another company before the dust has even settled from the prior one is an aggressive move that is not without risk. Yet managing risk is what this merger is all about.

Approva Key Facts

  • Founded in 2002
  • 200+ Customers – including Fortune 500 leaders in key verticals
  • 190 Employees
  • Headquarters in Herndon, VA
  • 120+ employees in Pune, India
  • Previously owned by four VCs – Sierra Ventures, Novak Biddle, NEA, and Columbia Capital

 

Identifying the Need

High profile scandals of the past decade, increased regulatory requirements and security and privacy issues that come with the age of connectivity have heightened the need for all three elements of the broad category of Governance, Risk and Compliance. And yet most companies today still rely on manual processes and have done little to automate controls. This condition itself adds a level of risk in being able to detect fraud, comply with reporting requirements efficiently and perform internal audits in order to prepare for the external ones.

The Enterprise Resource Planning (ERP) solutions offered by both Lawson and Infor are a focal point for gathering data and recording transactions that need to be monitored but do not provide the level of monitoring and control required for GRC purposes. However, to be fair, most ERP solution providers today, with the exception of SAP and Oracle, suffer from the same deficiency.

The Mint Jutras 2011 ERP Solution study looked beyond the realm of core ERP modules and investigated current and planned adoption of 20 different extensions to ERP. These are additional applications which might (or might not) be integrated with ERP. One of the categories included was GRC applications.

Figure 1 compares the current and planned adoption of World Class ERP implementations to all others, not achieving this status. To define “World Class” we use a broad spectrum of metrics. While the study also measures additional key performance indicators (KPIs) that are specific to different industries, we limit the World Class definition to those which can be universally applied to all companies. The definition of World Class performance is based on a composite of three different categories of metrics: results, progress in achieving goals and current performance.

While adoption rates are relatively low (39% for World Class and 16% for all others), World Class ERP implementations are almost 143% more likely to include one or more elements of GRC and 86% less likely to have no plans for adoption.

GRC is a broad category and can mean different things to different constituents in any organization. For the office of the Chief Financial Officer (CFO) “risk” generally refers to both financial risk and the financial impact of operational risks that can be caused by both internal and external factors. Those operational risks can include Information Technology (IT), which largely centers around IT security.

Approva positions its application as Continuous Controls Monitoring (CCM), which is all about monitoring what users “can do” and then analyzing what they “did do” in financial and business systems. Sitting outside of the ERP solution, between the corporate governance layers and the underlying IT infrastructure allows them to provide cross-platform monitoring across any number of different applications.

It has been the experience of Mint Jutras that most companies embarking on implementation of any GRC solution are most likely to start by implementing access control, whether driven by the need for segregation of duties (SOD), security or just good management practices, or for all three purposes.  While most modern enterprise applications today are able to secure access to individual functions in the application, and more and more of them are able to secure access to particular data (e.g. a sales representative can only access order status for his or her own customers, or warehouse personnel can only enter inventory transactions for that warehouse, etc.) the controls are confined to a particular application. What happens when an individual is allowed to add vendors in one particular application but payments are processed by a different application? Without cross-application visibility, there is risk of the same individual creating a vendor in one application and paying the same vendor from another.

The folks from Lawson tell me that while their customers have not articulated the need using references and terms like “access control”, indeed they have identified the need to better support internal audits. A CCM solution directly addresses this concern.

Why Lawson?

So, given that Lawson is the “newbie” in the Infor family, why did Approva land here? The answer has much more to do with the original Lawson S3 legacy than its acquired M3 (Intentia Movex) product line. Selling to and servicing the office of the CFO has always been Lawson’s strong suit. The addition of Infor’s Corporate Performance Management (CPM) suite only added to that strength and there is significant potential with the ION suite. Infor ION at the Center of Providing Immediate Value to Lawson and Infor speaks to this potential.

Lawson is also the home for products that specifically address two of the industry sectors most sensitive to GRC issues today – healthcare (and associated HIPAA requirements) and the highly visible public sector. Approva fills a notable gap in addressing these issues.

Two Distinct Markets

This begs the question of whom and what will be the target market for the acquired CCM product. It would seem there would be two separate and distinct targets.

First of all, there is the cross-sell and up-sell opportunity in the existing Lawson and Infor installed bases. Since there is no product in the current portfolio that competes in any way, there seems to be ample opportunity here. The Lawson S3 base would appear to have the most low-hanging fruit. Lawson already has a relationship with those most likely to perceive the need for this solution, and also those that control the budget which would fund the investment – namely the office of the CFO. And, according Lawson’s Darci Snyder, Director FS and Public Sector Product Management, its customer base has been asking them to fulfill that need.

Whether the remaining customers using Lawson M3 and other Infor products see that same need remains to be seen. To date, large enterprises have been most likely to invest in GRC solutions. Smaller companies don’t have deep pockets when it comes to investments in GRC or CCM and while Infor’s customer base does include very large corporations, it also includes small and midsize companies as well.

Lawson has always taken a very industry focused approach in its product development and its marketing. Expect to see this industry focus spread through all the Infor product lines over the coming months. This focus had already begun before the Lawson acquisition across 10 specific industries and the acquisition simply added three more industries. Lawson and Infor are already working to integrate Approva’s applications into existing financial suites (yes, there are still multiple) and to address industry-specific requirements. So adding CCM as a feature/function to those solutions will be a priority and will simply give representatives selling these solutions more to offer.

Yet the cross-platform, cross-application capabilities of Approva have always been its strength and therefore it would be not be in Lawson/Infor’s best interest to walk away from that business. And while there is some overlap in customers, there are a lot of Approva customers running applications that are in neither the Lawson nor Infor portfolio. It has an obligation to those companies as well. Yet expecting the existing sales teams that are focused on selling a complete ERP solution to be successful selling stand-alone CCM is unrealistic…which brings us to questions that are normally associated with any acquisition.

Integrating the Companies

How will Approva be integrated into the Lawson/Infor corporate structure and strategy? It is still too early in that process to answer all the burning questions about branding and about sales, and even development teams. It would certainly make sense to have a dedicated team that specializes in marketing and selling this type of solution, since Lawson/Infor does not have experience in this realm. Yet this may be entirely separate or managed more as an overlay team.

Infor has already broken rank, so to speak, in absorbing Lawson. Infor combined Lawson with SoftBrands, Inc., an affiliate company which was acquired back in 2009. This represented a bit of a divergence from past acquisition strategies. Until it acquired Softbrands, Infor had generally executed mergers where the staff was fully integrated and the acquired company’s brand was subsumed by the Infor brand. The combination of Softbrands and Lawson seemed to simply be an internal organizational decision and has nothing to do with branding, selling or supporting and Lawson staff does appear to be working closely with their counterparts on the Infor side. Now Approva is being included in the Softbrands/Lawson affiliate company. It remains to be seen whether the Approva brand will survive and what level of integration we’ll see in the coming months.

Summary and Key Takeaways

In summary, CCM is a logical extension to the Lawson and Infor applications. The product itself is complementary to financial applications, and indeed fills a gap that at least some of the company’s customers have noted. This provides opportunity to Lawson/Infor in allowing sales teams to add functionality and intelligence into existing accounts.

Infor is committed to developing and deploying industry-specific functionality, allowing for tighter fit with existing customer base and sales teams while creating a complete solution that is both broad and deep, while still being industry-focused and yet can compete in the office of the CFO.

Yet preserving a level of independence will be necessary if Infor wants to continue to be able to sell stand-alone CCM and also maintain the loyalty of the Approva customer base.

This move was quick and aggressive, given the very recent acquisition of Lawson by Infor. All eyes will be on managing the risks associated with this type of bold move.

 

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SAP’s Latest Acquisition: Right Hemisphere. Score One for Manufacturing

 Yesterday (September 6, 2011) SAP announced its intention to acquire 3-D visualization software maker Right Hemisphere. Based in San Ramon, CA and Auckland, New Zealand, Right Hemisphere provides “visual enterprise solutions,” a software category one associates with 3-D model-based visualization and communication technologies. Sales and marketing types immediately think of visual product catalogs. If you’re like me and hate to shop, what are the chances of buying a product, either from an online or a mailed catalog that does not have a full color picture of the item you are shopping for?  I shopped from paper catalogs for a decade before online shopping existed. Those with black and white drawings went immediately into the trash bucket. I wanted to see what I was getting – a picture of the real thing. That’s easy to provide for ready-made consumer products. Not so when you are buying a product that doesn’t exist yet – say an engineer-to-order manufactured product.

And that is exactly who Right Hemisphere targets – manufacturers that design, manufacture and perhaps service a physical product. Those who have never lived and breathed the world of manufacturing typically don’t fully understand the complexities of this process. Making a standard product repetitively can be challenging, but designing that product, defining the manufacturing process, managing that process, assuring the quality and then servicing the product in the field adds a multi-dimensional aspect that adds significant complexity. When that product is designed to order for a particular customer, the complexity grows exponentially.

Yes a pretty picture in a catalog is useful, but in my opinion, the real value lies in integrating data from a variety of sources throughout the enterprise, and placing that data in context with a realistic visual image. Where does this data exist? It exists in:

  • Computer Aided Design (CAD)
  • Product Data Management (PDM
  • Product Lifecycle Management (PLM)
  • Enterprise Resource Planning (ERP) systems contain the part, supplier and pricing data
  • Manufacturing information is in Manufacturing Execution Systems (MES) systems
  • Sales and Marketing content can be found in Customer Relationship Management(CRM) and eCommerce applications that support online stores
  • Other documents are stored in Document Control and Digital Asset Management (DAM) systems.
  • Actual customer configurations, work instruction are stored in Field Service applications and field manuals

Connecting and communicating it all is challenging enough in a static environment, but when designs and processes change over time, it becomes even harder. Most humans rely heavily on visual communication. Hearing something described and “seeing” it are two very different things. Bringing it altogether and doing that visually requires some underlying technology that brings these together not only visually, but in a way that appears seamless to all: from the design engineer, to the manufacturing engineer, to the customer, to the field engineer.

SAP provides a strong solution for manufacturers with elements of each of these components, some stronger than others. While not exactly in stealth mode (and you will still find Manufacturing under SAP’s “Lines of Business”) the company has not been as vocal about its manufacturing presence since its big push a few years ago when it co-wrote and published “In Pursuit of the Perfect Plant” in 2008. Indeed, today SAP even promotes this acquisition as a cross-industry move in saying, “The addition of visualization capabilities to the core product offerings from SAP stands to help customers across diverse industries accelerate time to market, increase people and asset productivity and improve information quality and processes across all lines of businesses.” Perhaps it is just me, not having been as closely connected to the manufacturing group recently, but I’ve missed the strong manufacturing voice. Whether meant specifically to strengthen SAP’s manufacturing solution or not, it is good to see this kind of move that will directly benefit the manufacturing sector.

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Infor ION at the Center of Providing Immediate Value to Lawson and Infor Customers

On July 5, 2011 the acquisition of Lawson Software by GGC Software Holdings, Inc. (an affiliate of Golden Gate Capital) and Infor was completed. The next day Infor wasted no time in announcing integration plans for the company and some of the combined company’s products. Neither Infor nor its new CEO, Charles Phillips, is a stranger to acquisitions. Infor itself has executed over 31 acquisitions in its relatively short history. Mr Phillips’ prior stint at Oracle, known in the industry for fast and efficient integration of acquired businesses, has prepared him well for his first acquisition since taking the helm at Infor. These veterans of the world of mergers and acquisitions (M&A) know that it is important to immediately send a strong message to all customers that the future of the products they use is secure and that the merger actually brings them value.

MERGING THE COMPANIES

In a nutshell, Infor has combined Lawson with SoftBrands, Inc., an affiliate company which was acquired back in 2009. This affiliation enables Lawson/SoftBrands and Infor to share and integrate technology and partner on product offerings. Look for joint cross-selling, marketing and distribution arrangements in the near future. This represents a bit of a divergence from past acquisition strategies. Until it acquired Softbrands, Infor had generally executed mergers where the staff was fully integrated and the acquired company’s brand was subsumed by the Infor brand. The last acquisition approaching this size was the acquisition of SSA Global in 2006 and you would be hard pressed to find any reference today to the SSA brand and only insiders might know that certain Infor employees used to be SSA employees. The value in combining Lawson with Softbrands is not entirely clear to me; Infor tells me it was simply a structural move to consolidate affiliates. But preserving the Lawson brand does make sense, at least for now. It sounds much like the approach SAP took (quite successfully) with both Business Objects and Sybase. While Lawson does not have quite the brand equity of either Business Objects or Sybase, it has particular significance to the Lawson installed base. And the Lawson installed base should be a prime sales target for Infor. When (and if) Lawson and Infor deliver on the promise of a fast pace of development and delivery of deeper industry-specific features for key industries (manufacturing, healthcare, distribution, public sector and hospitality), the importance of the distinction between the two brands will fade. While Infor and Lawson’s product portfolio both compete with and complement each other, come to find out, the two companies share a significant base of common customers. Infor maintains that 9% of Lawson’s active customers also use Infor products, and 48% of Lawson’s top revenue customers use at least one Infor application. Although Infor does not specify the threshold for “top revenue,” one would think this is a large enough segment of customers to present cross-sell opportunities.

 PRODUCT INTEGRATION PLANS ANNOUNCED

But for many of the Lawson (and possibly some Infor) customers, this is just background noise. What they really want to hear is what the new affiliation will mean to them in terms of the products they run. That means both continued support and development plans. Anticipating this question, the Infor and Lawson product development teams have already begun integrating applications using Infor ION. ION is a suite of interoperability and management services designed to facilitate and manage data regardless of whether the data is stored on premise or in the cloud and regardless of which application (or software vendor) “owns” it. This has always included both Infor and non-Infor applications, which certainly makes bringing Lawson software into the mix. Current plans targeted for release later this year follow.

LAWSON S3 AND INFOR FMS SUNSYSTEMS ENTERPRISE

This first integration project targets organizations that have now or plan to implement a two-tier financial management strategy. Lawson S3 would sit at corporate headquarters and larger divisions, while Infor FMS SunSystems Enterprise could be used at smaller operations, potentially distributed globally. This configuration would support multiple countries, languages and currencies. A hidden benefit is that it would also allow each distributed operation to upgrade separately, often a forgotten consideration.

LAWSON S3 AND INFOR EAM

This is an interesting approach since Lawson also offers an Enterprise Asset Management (EAM) solution. Yet the Lawson EAM solution is much more firmly anchored in the manufacturing and distribution sectors, which is where M3 and not S3 plays. The City of Greensboro, N.C. is an example of a public sector customer that Infor and Lawson have in common. Indeed, prior anticipatory announcements called out Lawson’s expertise in the healthcare industry, a sector in which Infor has not really penetrated. The thought appears to be to enhance Lawson S3 with Infor’s EAM and bring the integrated solution to large hospitals, in addition to government and other public sectors.

LAWSON HUMAN CAPITAL MANAGEMENT AND INFOR WORKFORCE MANAGEMENT

While Lawson has made a bigger name for itself (than Infor) in terms of Human Capital Management (HCM), Infor’s strength is more along the lines of direct work force management. This integration could add Time & Attendance as a complement, for example to Lawson’s Nurse Scheduling application.

UNDERLYING TECHNOLOGY

So all this makes sense from a feature/functionality standpoint. But what about the underlying architecture? It is quite clear that the integration projects and future technology development will be based on Infor ION. But while Infor has been developing Infor ION and some follow-on products like Infor Workspace (which Infor calls a new “consumer grade user interface designed to revolutionize the experience of doing business using enterprise applications”) Lawson has not been standing still. In fact Lawson just released Lawson Mashup Designer, which shares a lot of similar features and functions with Infor Workspace. First available for M3, Mashup Designer was recently released for S3 (MAy 2011). So the question will be, will the (integrated) S3 product line be enhanced with Mashup Designer or Infor Workspace? Lawson Mashup Designer is based on Lawson Smart Office (LSO), which was released back in March 2008. LSO was meant to be an intuitive, personalized user interface that allows users to directly access Lawson and Microsoft applications and update data pervasively and instantly across the applications. Mashup Designer builds upon LSO and extends beyond the realm of Microsoft. LSO is the foundation for Mashup Designer. And finally, underlying both M3 and S3 is Lawson System Foundation, a middleware layer insulating the Lawson applications from the underlying operating systems and databases. Because ION can be used to connect both Infor and non-Infor solutions, it would appear than LSF does not need to be replaced immediately, but it also doesn’t make a lot of sense for the combined company to maintain two different teams and parallel development efforts to continue to develop both ION and LSF or Lawson Mashup Designer and Infor Workspace. So there are some open questions for Lawson customers that have invested in LSF, LSO and Mashup Designer.

 KEY TAKEAWAYS

From all appearances it would appear that Infor and Lawson combined are on track to deliver value rapidly to customers, albeit some will see direct benefits sooner than others. What’s in it for Infor and Lawson? • Scale. The larger the company the more resources for innovation and development • Happy customers. And happy customers mean cross-sell and upsell opportunities What’s in it for their customers? • Scale. The customers benefit as well from more development resources and more innovation. • Security. While Infor has been a private company and not subject to the scrutiny of Wall Street per se, Lawson has always kept a close eye on profits. Even during the worst of the recession, when revenues dipped, Lawson CEO Harry Debes kept operating margins on the rise. So Infor is not inheriting a financial mess – far from it. • More solution. The immediate integration efforts will extend options from expanded solutions, although it appears that the S3 installed base will benefit more quickly and will be more differentiated from other Infor products. M3 will become one of several ERP solutions for manufacturers, but heavily targets some industries where Infor touches only lightly. M3 could benefit from the cross-fertilization of manufacturing talent throughout Infor.

Time will tell just what this means for the brands, but by the time that is decided, it probably won’t matter that much.

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