acquisition

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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Wanted: Lawson Users to Develop New Applications: No Programming Experience Required

In the fall of 2010 Lawson Software released Lawson Mashup Designer for its M3 Enterprise Resource Planning (ERP) solution and announced its upcoming availability for its S3 product line in April 2011. This is  a new tool that helps Lawson’s customers build their own mini-applications without having to write software code. The resulting applications are composites constructed from existing Lawson code as well as other web-based applications, allowing information from multiple data sources to be combined on a single screen.The net result is increased productivity and accessibility to information for data-driven decisions. The reuse of existing business logic and application of existing security results in better and more customized solutions that support horizontal business processes and improved decision making.

 Going Horizontal

“Horizontal” is a new term in the Lawson vocabulary. For the past several years, the company has been vertically focused on several industries which have very specific needs. A few examples are:

  • Food and beverage manufacturers and distributors that must deal with shelf life constraints, grades of product, different units of measure, variable weights and characteristics, requirements of full traceability for safety compliance
  • Healthcare providers such as hospitals and both non-acute care and long term care providers, as well as health information exchanges
  • Equipment dealers and OEMs which must manage not only equipment but also its component structures,  stock availability for parts and components, configuration, delivery schedules, service and warranties… all in the context of manufacture, sale, service and/or rental
  • The fashion industry including the manufacture and distribution of apparel, footwear, home textiles and fashion accessories, or really anything that must deal with the added complexity of a matrix such as color, size and style.
  • Public Sector organizations such as school districts, local governments, public authorities and utilities

So is “horizontal” a new direction for Lawson? No. It is a new dimension to the same businesses it has always addressed. In this case the term horizontal refers to a cross-functional process or view. Enterprises comprised of different departments and functions run the risk of developing silos, and very often enterprise applications tend to support this silo effect.

A typical Enterprise Resource Planning (ERP) application will have a purchasing module, an inventory module (including the receiving function) and an accounts payable module. And perhaps an electronic invoice presentment and payment (EIPP) application has been purchased as an extension to ERP, but is in fact a separate application. But a process such as “procure-to-pay” will span all these and will also be an important factor in overall cash management. Lawson Mashup Designer will allow the executive who has overall responsibility for the procure-to-pay process and the executive in charge of overall cash management to have specially constructed views that will combine all the different transactions, queries and reports necessary to monitor the overall “horizontal” process and still support features such an enterprise search. And if the company deals with foreign currency exchange, perhaps it is also necessary to add a currency conversion application to the view (not a Lawson application at all, but available through the Internet).

How easy is it?

Constructing these horizontal views doesn’t require any specific programming or technical skills, but in order to make effective use of the Lawson applications (either M3 or S3) it does require knowledge of the application. In making use of Lawson Mashup Designer, you are essentially customizing the application. Very often you will be combining different views of data on a single screen in order to put a wealth of data at the users’ fingertips. For example, you might combine data from item records with warehouse data, as well as order details and availability. Or perhaps customer records with credit limits, past and current orders and payment history.  If you don’t know what views are available, you may wind up with an incomplete view.

 In some cases you might be hiding fields that would ordinarily appear, or perhaps making an optional field mandatory or adding an image to the view. Understanding the content you are manipulating is essential to minimizing risk and maximizing the value of potentially very rich content. 

Much of this tailoring can be done by what Lawson calls a “super user,” someone with intimate knowledge of the application. These super users need not be programmers or even part of the IT staff, and need not necessarily understand the data structures that support the application. But they do need to know the structure and inter-relationships of the business application.

To make Lawson applications completely interoperable with non- Lawson solutions may require some programming skills. You must at least be able to think like a programmer and a Software Developers Kit (SDK) is available.

A hidden benefit – Making Data more accessible

Lawson lists increased end user productivity, customization without modification and more robust applications without coding as the three primary benefits of Lawson Mashup Designer. Yet a fourth benefit might also be connecting the executive decision-makers directly to the data and knowledge contained in the Lawson applications. How often do you see a C-level executive actually put their hands on the keyboard to access ERP directly? More often, they rely on subordinates to extract that data for them.

By putting a customized view in front of these top executives, you have a much better chance of getting them directly accessing the data. And once they are directly connected, their support for the ERP implementation is strengthened. With added executive support, metrics are better monitored and measured, yielding better management and more derived business benefits.

While it is unlikely these executives will create their own views, they should play an active role in designing the view, with the help of IT or a super user. However, there is one caveat that might limit the active participation of top management – for now. All of us are more mobile today and climbing the executive ladder often requires access to data from anywhere at any time. Whether traveling overseas, or attending a child’s soccer game, key decision makers need access to data easily and immediately. So the next logical step to draw them in would be making all the results of the Lawson Mashup Designer available on a mobile device. While not available today, Lawson sees this in the future.

Availability

Lawson Mashup Designer is based on Lawson Smart Office (LSO), which was released back in March 2008. The original goal of LSO was along the same lines of thought as Mashup Designer is today. It 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. But the emphasis of LSO initially was on those Microsoft productivity tools such as Microsoft Excel, Outlook, Word and PowerPoint. Mashup Designer builds upon LSO and extends beyond the realm of Microsoft.

Today Lawson Mashup Designer is generally available for use with M3.  LSO, being the foundation for Mashup Designer, is a prerequisite and is available to any M3 customer on release 7.1 or later. The vast majority of those users that have upgraded to (or purchased) 7.1 already have LSO. As of the beginning of May 2011, over 340 Lawson clients had licensed LSO.

The Mashup Designer further requires M3 customers to be on M3 10.1 which was released in April 2010. Since then, 54 new Lawson clients have implemented this release and over 100 existing M3 customers have upgraded or are in the process of doing so. The Mashup Designer is proving to be a major factor in upgrade decisions and over 50 customers are now live.

Lawson also plans to make Mashup Designer available for S3 in May 2011.

Looking to the Future

So how does this news play in light of the recently announced planned acquisition of Lawson by rival ERP vendor Infor Global? Interestingly enough it appears that great minds (at great software companies) think alike. On March 31, 2011 Infor announced Infor Workspace, calling it a new “consumer grade user interface designed to revolutionize the experience of doing business using enterprise applications.” The concepts behind Infor Workspace are indeed very similar to Lawson Mashup Designer. According to Infor Workspace: Work Without Leaving the Comfort of ‘Home’,  “The role-based user experience is akin to setting up a home base of operations from which a business user can comfortably operate all day long, without ever leaving ‘home.’ More than a portal, and more than just a common look and feel for Infor’s products, its power lies in further blurring the boundaries of applications and carrying context between applications of all types.” Sound familiar?

Infor has made use of its ION integration technology as well as Microsoft SharePoint and Microsoft Reporting Services and all applications will have to be browser-enabled in order to take advantage of Infor Workspace.  Most of Infor’s key go-forward products are browser-enabled, as are M3 and S3. For existing Infor customers Workspace is available through their annual maintenance agreement and Infor has tried to minimize the cost and impact of upgrading through means such as pre-built migration kits. So the combined Lawson and Infor will have to compare and contrast the underlying architectures as well as licensing requirements and work out whether to consolidate or keep the two products separate – for now or forever.

Recommendations and Key Takeaways

The key benefits of Lawson Mashup Designer to either M3 customers (now) or S3 customers (soon) are:

  • Increased end user productivity by combining data from different sources all in one view, customized by role and by individual
  • The ability to customize views and even processes without affecting the underlying source code. By keeping the code standard and “vanilla” you remove roadblocks to upgrades and innovation.
  • The ability to bridge the horizontal gap between functions and remove the silo effect produced by the inherent structure of ERP and enterprise applications in general
  • New applications that are faster and easier to build

In spite of the announced acquisition, Lawson Mashup Designer appears to be a safe and logical step for M3 customers running M3 10.1 right now. For those M3 customers looking for more incentive to upgrade, this could be justification enough to move. For S3 customers, it would be prudent to take advantage of some significant incentives that are currently available from Lawson to prepare by acquiring LSO (contact your customer service representative for details) .

As to the future, both Infor and Lawson have committed to the same concept and the synergy of the combined companies should only accelerate the feature/function and technology innovation.

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In the End, Infor Gets Lawson

Exactly 6 weeks ago today (March 15th) I posted an entry highlighting Infor’s bid to acquire Lawson. At the time and for several weeks afterwards, there was much speculation about the price, whether or not there would be additional bidders, as well as the probability of Lawson staying independent. Shortly after this announcement, Harry Debes (CEO of Lawson) addressed a large flock of Lawson customers at CUE 2011 (CUE stands for customer user event) and acknowledged all the speculation as the “elephant in the room.” He said the company was considering all possible options, including staying independent.
I don’t think a lot of people put money on independence as the future outcome, but there did seem to be a lot that counted on other bids popping up… maybe not a real bidding war, but at least a second bid that might drive the proposed price higher. Why do I think this? Quite simply, the stock price went up. At the close on the Friday just before the weekend when the initial offer for $11.25 per share was made, the stock price had been $11.55. Instead of going down as a result of the bid, it continued to go up. Someone was betting they could turn a profit on prices between $11.55 and over $12 a share. I don’t profess to be a trading whiz, but I do know $11.25 is less than $12. And $11.25 will be what they get when the deal is sealed. There won’t be an opportunity to watch the stock go back up because it will no longer be on the market. Infor, at least for now, is a privately owned company. Indeed the offer is really being executed by GGC Software Holdings, Inc., an affiliate of Golden Gate Capital, which is one of Infor’s investors.
So, now that the deal is really going down, what does this mean to the customers and employees of both companies?
There is always a certain level of uncertainty concerning the workforce of any acquired company. Those in Lawson’s development organization should take heart in knowing that Infor already announced its intention to hire 400 additional software developers. So my guess would be that good developers are safe. Poor performers in any department should probably be looking over their shoulders as an acquisition is the perfect opportunity to clean house. Let’s just hope Infor is able to distinguish the good employees from the underperformers. No offense intended, but that distinction is often much harder to make than it would appear to be. And in any acquisition, there will be some level of redundancy, particularly in the back office.
What about the impact on customers? My initial take is that the customers from both camps will benefit directly from this move. There will be more innovation and I hope this provides some impetus for some rationalization and cross fertilization of product lines because Infor’s reputation and brand has suffered as a result of having too many.
 In an open letter to Infor and Lawson customers, partners and employees, Charles Phillips, newly appointed CEO of Infor, highlighted several benefits to the deal, which also imply some plans. In fact he even starts out by saying, “Lawson customers can rest assured:  Product investment, innovation and customer success will be our key areas of focus” and references Infor’s previously announced plans for accelerated innovation, including those 400 developers he intends to add.
In this letter he highlights the following points:
Complete ERP suite: As the boundaries of ERP continue to be stretched, the top ERP contenders continue to expand their footprints.  Mr Phillips references Lawson’s enterprise financials and human resources products as standalone products, across multiple industries and the intent to integrate them with Infor’s manufacturing, supply chain, workforce, and asset management products. I “get” the reference to human resources as Lawson has developed this area further than Infor has, but Infor has financial management products that are available as stand-alone products as well, so the implication I see might be a rationalization of products, with Lawson’s S3 forming the basis over the SunSystems or Masterpiece product lines?  But just cross-selling independent extensions to ERP without truly integrating them doesn’t get you a “complete suite.”  So there is some real work to be done here.
Complementary products: Mr Phillips states, “The product lines are complementary, not overlapping.”  Complementary yes, but I diagree…they are also overlapping. Consider the financial product I mention above and Lawson M3 competes directly with several of the Infor ERP solutions for manufacturing. But I will say that Lawson has stuck to its knitting in terms of declared verticals. This means there is less overlap, but there is still a lot. However, the example Mr Phillips uses: ”… Lawson’s expertise in the healthcare industry will be enhanced by Infor’s Enterprise Asset Management which will be targeted for large hospitals and Time & Attendance product, complementing Lawson’s Nurse Scheduling application.  This is truly a scenario where 1+1=3.” But don’t forget Lawson also has an EAM solution.
Standards-based integration:  Infor’s underlying architectural strategy has undergone some changes over the past year, and appears to still be transforming itself somewhat, but the path seems to be towards openness and a commitment to stay out of the middleware market. This will pave the way for integrating the two new product lines with other Infor product lines.
Re-inventing the applications experience:  Both Infor Workspace and Lawson Mashup Designer have similar goals here. It will be interesting to see if and how these two separate products are rationalized.
The remaining points refer to expertise in key industries (of which neither company lacks in both complementary and overlapping industries), innovation and investment (as evidenced by prior announcements and growth plans for R&D) and scale. In terms of scale, Mr Phillips makes reference to 75,000 customers and concludes with, “Having more customers allows us to invest more, identify more requirements and develop a large partner ecosystem.” I agree with the premise, but Infor already claimed to have 70,000 customers, so I am a little puzzled by such a small (7%) increment.
I do believe Lawson customers in particular will benefit from the increased focus on innovation. While Lawson has indeed brought innovation to the table, even as revenues were down during the recession, its profitability stayed strong, which was commendable for a public company with an obligation to its shareholders. But it also limited its investment.
My conclusion… while I hate to see the number of distinct and competing ERP vendors shrink once again, I believe that if the combined companies are not afraid to make some bold steps to consolidate strategies, perhaps rationalizing product sets, the customers will be the clear winners.
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