acquisitions

Why Is Infor So Quiet?

We live in a world of extreme hype, a world where technology vendors routinely boast of being the best, the brightest, the fastest, the most innovative. You can’t open your Inbox or your web browser without being inundated by what these technology companies think is the latest and greatest. If this new “thing” is not yet a “hot topic,” rest assured that with all the hype, it soon will be.

So after spending a couple of days with Infor and its partners recently at the Infor Americas Partner Summit, I started (alright, I confess, I continued) to wonder why Infor doesn’t seem to be jumping on the hype bandwagon. Sure there was lots of press when former co-president of Oracle, Charles Phillips took the helm. But that and his management changes are fairly old news now. And otherwise, apart from the occasional press release, Infor just isn’t all that vocal. Those not familiar with Infor (and there are still plenty that aren’t) might suspect it is because after years of acquisitions, Infor really doesn’t have anything new or newsworthy to boast about. But in reality, that assumption is far from the truth.  So in this world of extreme hype, is it possible that innovation can be under-hyped?

The Partner Summit wasn’t the first time this thought occurred to me. During one of the main stage keynotes at Inforum 2012 in Denver last April, Infor Workspace was demonstrated. Sitting down front to one side in the auditorium setting afforded me a great view of the audience. Workspace, which uses Infor’s ION (lightweight) middleware (developed by Infor’s technology Innovation Team), was definitely well received. But I got the distinct impression that this was the first time most had seen it or even heard of it.  I can understand why the customers newly acquired from Lawson might have missed the announcement of Workspace in April 2011, but if the majority of Infor customers did, that tells me Infor just isn’t making enough noise.

And one of Infor’s partners from Columbia echoed this thought during the Executive Q&A, asking if Infor was spending money to raise visibility in order to help the partners compete against the likes of Oracle and SAP. It is clear that Infor is investing. It added 600 new developers last year, which means it is clearly investing in the products. But what about marketing and PR? Stephan Scholl also responded by saying “size and scale matters “ and “we need more feet on the street.” Infor added 130 new sales reps in growth markets alone (including Brazil) in the past year. Management felt they needed to beef up sales (and presales) first because they “can’t market what we can’t sell.” That might indeed be true for countries like Columbia and Brazil, but in the United States?

So what has Infor done that merits a louder voice?  I’ll get to that in a minute, but first I should preface it by saying, while other vendors have been jumping on the “hot topic” bandwagon, Infor has taken a different approach. As Stephan Scholl told the Infor partners, “Big data and other buzzwords are important but we’re focused on reducing cost and time to implement, with solutions that minimize services and requires no modification.” It is combining industry specialization with enabling technology in order to be able to deliver a best-fit solution with no (or minimal) customization. Some might say it is not a “hot” approach but I think their customers will appreciate it.  No need to be shy.

Here are a few things I’ve picked up in my conversations with Infor and at the Partner Summit that just might be worth shouting about.

Built for consistency, durability and speed

If you talk to the Infor folks, this is a phrase you will hear a lot. What does it mean? In a nutshell, it means

  1. Infor developers and its partners can develop functionality once and allow it to be used across different Infor products and product lines. This is a big deal. Its Intelligent Open Network (ION), “lightweight middleware, providing common reporting and analysis, workflow, and business monitoring in one, consistent event-driven architecture (EDA)” is the secret sauce that enables this.  This is important for any enterprise application solution provider today, but even more so for Infor which has accumulated a very broad portfolio of potentially overlapping products.  While Infor has been talking about this concept since 2006, we’re now really seeing it being delivered.
  2. Adding functionality in a way that doesn’t “break” when you go from release to release. Localizations are a perfect example. In the past they have been developed not only for a specific product, but also even for a specific release or version of the product. They often hold customers back from consuming the latest innovations. Local.ly, Infor’s new platform to deliver localized statutory reporting, accounting and tax content by country via a loosely coupled architecture is the perfect example of a way to add durability. Local.ly extracts information from any one of a number of Infor’s core ERP engines, isolating the “special” code from the individual ERP products. As a result, upgrades are unlikely to break the localizations. This alone has a huge potential for changing the game when it comes to being able to support different legal, accounting and compliance requirements around the world. But there is no reason why the same concepts can’t be applied to any custom or standard development effort.
  3. Add new features, functions, modules or entire applications quickly. Infor set out to deliver two years worth of new features, functions, products in one year. Of course the 600 new developers helped, but some of the underlying technologies also contributed and they delivered 5000 new features in 2012 and 200 new integrations. They also released Infor10 Mongoose, a high productivity development framework that accelerates development, minimizes coding and programming and also facilitates the re-use of code.
  4. Consistent look and feel. Let’s face it, with so many acquired products, it was impossible in the past to have a consistent look and feel across all Infor products. This presents a bit of a problem in trying to boost deals involving multiple products (a stated goal). Layering Workspace on top certainly adds a layer of consistency, but even better: Build software on Mongoose and it automatically looks like an Infor product.

What about those “Hot Topics?”

While you don’t hear Infor talk much about “big data” per se, but they do talk about their ION Business Intelligence (BI) applications and they also talk about ION enterprise search: which is an important element in navigating the growing volume of both internal and external data used for decision making today. ION enterprise search can dramatically shorten the time to actionable data. Users don’t have to know where to find data and even poorly constructed queries are extremely fast. More importantly, search results include context of the data. And in accessing enterprise data, search results are secured. So while “big data’ may not appear in the Infor vocabulary too often, the means of handling big data does.

What about mobility? In case you missed it, here’s what I wrote about Infor10 Motion back in January.

And cloud? Infor isn’t any stranger to the cloud or Software as a Service (SaaS). While not every Infor product is available via the cloud, some very strategic offerings are, including Syteline, EAM and of course its Inforce Everywhere, which adds valuable ERP data to Salesforce.com to complete the 360o view of the customer.

Infor has also teamed up with Amazon Web Services (AWS) to provide Infrastructure as a Service (IaaS).  Infor uses AWS’s capabilities to help customers leverage the cloud for any number of purposes including deploying production environments as well as deploying and testing new versions of Infor solutions, or testing customizations before applying the customizations to a production environment. AWS is also available to new customers who may want to start an implementation immediately instead of having to wait until servers are ordered, shipped, and installed for on-premises deployments.

Also, Mongoose also operates in cloud. So Infor can also sing the cloud tune, even though sometimes they may only appear to be humming softly.

So, Infor, with all this  cool stuff going on, with all this new enabling technology, with all the new development…  why are you so quiet? When are you going to start making more noise?

 

 

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KeyedIn Solutions: A Mixture of Old and New with Veterans Klaus at the Helm

You might not have heard of KeyedIn Solutions yet, but if you have been following the enterprise application/ERP space for any length of time, you will have heard of the founders of the young company: George and Lauri Klaus. George is the former Chairman of the Board and the CEO of Epicor Software, where he led that company from $30M to a valuation of $980M as it was acquired by Ajax Partners and merged with Activant. Lauri, who is George’s wife, was also at Epicor, most recently as Executive Vice President, Worldwide Sales and Services. George is now Chairman of the Board and Lauri is on the front line as CEO. As a former Marine, George always impressed me with his management style and leadership ability. I never really got to speak at length with Lauri, but she seems to have many of the same characteristics of her husband, including a concern for customers, the team and investors – in that order.

This makes their new company similar in philosophy to their old company. Back at Epicor George was known to say, “Some things shouldn’t and won’t change, including our priorities: customers, employees and shareholders.” He and Lauri have brought those priorities to their new startup. Other similarities exist as well. Epicor was (and still is) largely an ERP company which grew through acquisition. Early indications are that KeyedIn Solutions places itself in the ERP space, although not squarely in competition with Epicor. But only six months after kickoff, it just announced its second acquisition.

Following its announcement back in December of its majority ownership of Datacom International, on January 24, 2012 KeyedIn confirmed a formal, recommended offer for the acquisition of Atlantic Global PLC for $8M. Datacom provided KeyedIn with an initial product to sell – a solution for custom sign manufacturing, while Atlantic Global PLC, is a provider of Professional Services Automation and Project Portfolio Management solutions. Even the Datacom acquisition sits a bit outside of the traditional ERP market, although two more traditional solutions (dataSTOR – for discrete manufacturers and dataFAB – for metal fabricators and job shops) are planned for Q1 and Q2 2012 respectively. But Atlantic Global definitely sits on the periphery and I would argue is not ERP, but more PPM (project portfolio management).

Earlier this month I spoke with Karen Adame, CFO of KeyedIn. Karen also plays the role of CMO, which at first glance seems a bit odd. However, it made more sense when I learned Karen is an accountant by trade, but spent many years (also with Epicor) in product management and product marketing roles. After having worked directly for Lauri, it is also not surprising that KeyedIn positions itself as both a software and services company. Remember Lauri ran sales and service for Epicor.

Karen explained KeyedIn’s growth strategy was to attack specific micro verticals and expand. The custom sign market is indeed a microvertical. Professional Services is a bit broader, but still focused. Metal fab and job shops are certainly more “niche” than discrete manufacturing. But I wouldn’t blame KeyedIn for taking somewhat of an opportunistic journey.

KeyedIn’s intent is to provide an end to end solution, which today includes manufacturing, warehouse management, financials and CRM, but it will also consider partnering with other solutions such as Intacct and Salesforce in the future. You see, like Intacct and Salesforce.com, KeyedIn solutions are offered exclusively through a SaaS deployment model. These partnerships seem more in line with expanding the footprint that Atlantic Global now occupies with PSO organizations.

With veterans like George and Lauri Klaus at the helm and two acquisitions announced very quickly, KeyedIn Solutions certainly bears watching in both the near and distant future.

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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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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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The Sage Brand – Will it become a household name in NA?

Sage North America is taking its brand very seriously these days. In Europe, Sage is a household name, but when Pascal Houillon arrived in the United States from Paris, he found himself in a very different situation. Mr Houillon recently took over as President and CEO of Sage North America when Sue Swenson retired. Sage Software is a $2.24 billion global company. Sage North America boasted revenues in 2010 of $857.8 million, supporting more than 3.2 million customers in the U.S. and Canada with ERP and CRM and other business applications that support accounting, payment processing, human resources, and the specialized needs of the healthcare, nonprofit, manufacturing, and construction and real estate industries, among others.  Other numbers behind the scenes are equally impressive:

  • Revenues for the first half of 2011 were $1.18 billion globally and $430.7 million in North America
  • More than 40,000 customer calls are managed daily
  • More than 27,000 Value Added Reseller (VAR) business partners worldwide; 5,000 VARs in North America
  • 20,000 members of Sage Accountants’ Network in North America
  • 13,600 employees worldwide; 4,000 employees in North America
  • Over 4,000 attendees at its Sage Summit 2011 customer and partner conference (underway in Washington D.C.  as we speak)

In spite of this, and partly because many of these customers are very small businesses, Sage continues to fly under the radar of many. Based on the premise that a weak brand limits growth for both Sage North America and its partners, Mr Houillon and his management team are on a mission to change that.

In addition to serving a very small end of the market with products such as Simply Accounting and ACT! this lack of awareness  stems in part from Sage having grown largely through acquisition and having preserved many of the brands along the way: ACCPAC, MAS, Adonix and X3, SalesLogix, Simply Accounting, Peachtree, ACT!, ABAS, etc., etc.  Some of these have (and still do) have better name recognition than the Sage brand.  While keeping those brands alive was likely a smart decision at the time, now in order to strengthen the Sage name, the Sage management team has decided to eliminate them. Yes, all of them. While currently products are grouped and managed internally by software category (e.g. ERP and CRM), each with multiple brands and product lines, the thought moving forward is to simply group them by target of company size.

While nothing is yet cast in stone, there will likely be a Sage 50 targeting the very smallest companies, Sage 100 coming up market, Sage 200 even further up… You get the idea. Under Sage 50, there might be accounting solutions, as well as contact management and other categories of solutions. Similarly, there will be products in the Sage 100 line that will satisfy different market needs (ERP, CRM, Human Resources, etc.)  While the concept is simple enough, execution will be far from simple, since there are multiple products in the same category targeting similar size companies. Most specifically on the ERP side of the house, company size is not the only qualifier that determines which solution is offered.

For example, Sage Accpac targets small to lower midmarket multinational businesses in several specific but quite diverse verticals: Finance, Service, Mining and Hospitality. Without the underlying base of MRP it is not really a fit for manufacturers, but Sage has other products that target manufacturing (Sage X3 and Sage MAS). Sage also distinguishes between “global” and “multi-national”. While Sage Accpac can deal with multi-currency and multi-language environments, it is assumed each legal entity in each country will run its own instance of the software, rather than running a global centralized, single instance. X3 is a better fit for the latter. Therefore, because the decision is not always based on company size, there will be some overlap and perhaps some hard decisions as to where to “put” some of the products or how many different Sage NNN product lines are created.

And once these product lines have been created, what will Sage call the different sets of code that fall under each umbrella product? Will they be products, options, flavors, categories? Or will another name (i.e. brand) creep back in? To some these might seem like small, inconsequential issues. But when branding is the goal, they are far from insignificant. For customers that bought Accpac or ACT! 15 years ago, it will be quite hard to get those customers to call those products anything but what they have always called them. One might ask if that really matters. After all, they already bought the product. But the answer is a resounding, “Yes!” Brand equity also translates to brand loyalty and brand awareness. And if the existing customers are loyal to the product, with no loyalty to the company that now owns it, the brand is diminished.

But the existing customers will make the transition if they perceive that they are actually getting something “different”, and “different” usually means “more.” So far there has been no talk from Sage North America that any of these products are going away, no talk of rationalization or consolidation. So if the products continue, just with a new name, Sage will need to find a different way of adding enough value to justify the shift in thinking to a new brand.

Some of Sage’s “Connected Services” may be just the ticket for this.   Connected Services are online, web- or mobile-based services, integrated with a Sage product and designed to solve specific business issues for Sage customers. In some instances, they are provided at no charge, in others, they can be purchased on a subscription basis or included with a Sage Business Care Plan. Sage groups these into various categories as follows:

  • Employer Services: learning management service, performance management service, recruiting service
  • Financial Services: payments service, credit checking service, billing service
  • Operations Services: payroll service, direct deposit service, tax service, compliance service
  • Sales and Marketing Services: E-marketing service, business information, business intelligence services
  • Vertical Services: Healthcare patient and physician services, construction project management services, fundraising and grant management services

There is a distinct advantage to offering these as separate services. By creating these as add-on, external components, Sage can develop them once and make them available to all product lines, rather than having to develop employer or financial (or other) services for each of its separate products. Combining the original product offering with a host of services such as these, Sage  may just be able to get its existing customers to make the paradigm shift from being Accpac, Adonix, ACT!, SalesLogix (etc., etc.) customers to being Sage customers.  And then they will be well on their way to being a real “name” in North America.

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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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My initial take on Epicor, Activant and Apax Partners

Yesterday Epicor announced it had agreed to be acquired by Apax Partners. While I am not personally familiar with Apax, its website tells me it is an independent global private equity advisory firm and holding company for the worldwide Apax partnership which is the lead investment adviser to the most recent Apax Funds. Apax Funds buy both majority and minority stakes in large companies that have strong, established market positions and the potential to expand. It has a strong heritage of technology investment.
At the same time, it was announced that Apax would also acquire Activant Solutions and merge the two companies. The combined entity will operate under the name of Epicor Software Corporation and become a privately held company. Of course it is too early to tell exactly how the merger will be executed, but Epicor itself has a history of acquisition and is the only ERP company that has grown through acquisition and successfully executed a product convergence/consolidation strategy. Epicor 9, released in December 2009, is built on Epicor Internet Component Environment (ICE) 2.0, a second-generation Service-Oriented Architecture (SOA) and Web 2.0 technologies and is generally recognized for its visionary architecture. But just as importantly, Epicor 9 merges capabilities of nine different products (hence the “9” in the name).  If Epicor remains true to past strategies, I would expect it to treat the Activant products similarly.
But then again….maybe not. Activant serves some very specific vertical industries including:
·         automotive aftermarket
·         farm-home
·         hardware and home centers
·         heavy duty truck and trailer
·         lawn, garden and nursery
·         lumber and building materials
·         painting and decorating
·         pharmacy retail
·         specialty retail
·         wholesale/distribution
While Epicor also serves retail and distribution sectors, Epicor also has products which complement ERP in support of a retail environment, and has never been that “niche” oriented.  It remains to be seen whether these industries are best served by separate product lines or whether Epicor will decide to continue the convergence and turn Epicor 9 into Epicor 10, or maybe even Epicor 11 or 12.
For now it is safe to assume the transaction will be good for Epicor and allow it to fuel more aggressive growth in the market. As for Activant, customers should take comfort in knowing that Epicor’s strategy has been very customer-centric with a motto of “Protect, Extend and Converge.” Whether convergence is in the future or not, I have a lot of confidence in the resultant management team preserving the part about protect and extend.
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