For some observers of the software industry Infor is still an unknown quantity, famed for a series of spectacular acquisitions which swept up some of the industry’s best brands and built them into one of the world’s largest software houses from a standing start some six years ago. Unsurprisingly, some regard Infor as a ‘consolidator’ – a private equity vehicle more concerned with financial restructuring than software engineering but there are signs that it may be turning the corner? Can Infor persuade customers and analysts that it has a compelling product road map and that it is fit to compete on the global stage as a cohesive business software house? Gary Simon, FSN’s managing editor visited the Inforum event in London last week to meet the management shaping the business.
The Inforum started in brash way with a video of a rock band and orchestra playing too loudly and for what seemed like an indeterminable length of time. It left some of the Infor faithful wondering what has this all had to do with software but Keith Deane, Infor’s EMEA president was on hand to explain. “In music and in business, we have a huge array of unique skills and resources to draw upon. And, when you skilfully synchronise those resources, the performance can be awesome,” he said.
So much for the hype but can Infor deliver business solutions? What is its basis of competition? Deane acknowledges that the group may have been viewed as an industry consolidator but the Inforum event set out the group’s stall and despite the introductory razzmatazz there are signs that after a period of digesting all of the acquisitions Infor may be beginning to find its feet.
Clearly after so many acquisitions (at one point more than a dozen in a two year period) a convergence strategy is not on the cards. Infor has a diverse product portfolio, with interests ranging from Business Intelligence and Performance Management to financials, ERP and specialised manufacturing. Famous brands such as System 21, SunSystems, SSA , Baan, Maapics, GEAC, Extensity and Pegasus are all in the mix somewhere. But in uncertain times having ones eggs in an assortment of baskets can be a source of strategic advantage. Whether by luck or judgment the group says that the acquired products give Infor a geographical, vertical and horizontal product balance that enables it to smooth trading peaks and troughs in a fiercely competitive environment. True to its word Infor does not appear to have discontinued any products either. Deane adds that a diversified portfolio has helped sustain revenues and while the group is highly leveraged he told FSN that the debt was negotiated well before the credit crunch and on very favourable terms. Unlike other highly leveraged businesses post credit crunch Dean says that Infor has no need to re-structure its debt.
So what is Infor doing for its customers? Well the approach seems pragmatic and realistic. In today’s economy companies are not looking to place big bets on the table, rather they are seeking to maximize the value of what they already own, or as Deane puts it, to lower their cost of ownership while getting greater business value from their investment. To meet this objective Infor has come up with a “componentised” approach, in which small modules of functionality (there are 3 announced and 19 planned before the end of 2009) are made available to customers across the portfolio to pick and choose as they need.
Considering the number of platforms that Infor has to support this is quite an undertaking. In fact the group has earmarked around $325m dollars over the next four years for brand new application development - a clear sign that Infor is now gripping its acquisitions and its destiny by the horns.
The first three components appeared to be good, solid deliverables that put Infor on the same page as some of its larger global competitors with deeper pockets. Infor has bought into the roles-based approach to user interfaces – a message popularised by Microsoft. Bruce Gordon, its CTO (Chief Technology Officer) recognizes the overwhelming importance of integrating “Infor Myday” (the roles based component) with the Microsoft environment if Infors’ customers are to reap the maximum productivity possible from their investment.
“Infor Decisions” a second component, provides pre-packaged KPI reporting and business intelligence capability on transactional systems. Again not an entirely novel concept when viewed through the lens of a user but nonetheless important functionality that might quickly add value. “Order Management”, the last of the newly announced components is designed around complex cross-border inventory management and underpins Infor’s commitment to enabling its customers to take advantage of the rapidly growing networked economy.
An added attraction is that Infor has attempted to future-proof its investment in components which are all deliverable over the web and can be used as part of an on-premises or hosted solution. Infor’s Deane thinks that the much discussed ‘Cloud’ computing in which applications are made available on-demand over the web may be some years away, but the group is at least planning to be able to take advantage of it when it materialises.
The strategy seems right for moment. Customers are cautious; they don’t want to change horses at this stage – something that may have helped Infor retain its customer base while it digested its rapidly acquired user base and knocked its management structure into shape.
However, one of the consequences of the earlier acquisitions is the unevenness of the partner and re-seller channels – something that Infor’s management know they are going to have to bolster if they are to increase market share. A partner network is also a good source of additional ideas that might help it expand its product portfolio, for example into niche vertical sectors, more rapidly.
Infor is currently portraying itself as an innovator and the component based approach is certainly different to other notable players – but then nobody else of consequence has quite so many ERP and other products in the stable. What lies within the components has potential but is hardly going to set the world alight. Infor’s basis of competition probably does not lie in innovation. Where it is likely to hit the mark is in the mid-market £25 m to £750 m companies that are looking for solid delivery capability that is extensible and affordable. As Deane says, most of their deals are around the £50,000 to £150,000 mark and low cost of ownership together with rapid implementation timescales are key. This is where Infor may have an advantage – but it’s a difficult message to promote when all of your competitors are saying exactly the same thing.
Nevertheless, Infor appears to be making the transition from industry consolidator to software group. It just has to remember that it will take more than loud music to make its customers’ businesses rock.
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Vendors battle it out for share of mid-market Business Intelligence (BI)
