Infor's CEO, Jim Schaper, has published an open letter to customers
to reassure them that their "investments in [Infor's] software, services, and maintenance are safe and secure for the long run."
Reading the letter, one wonders if there is really a recession going on. Schaper reports 94% of customers renew their annual maintenance agreements. In addition, he claims that over the past four quarters 495 former customers were brought back onto maintenance and 2,165 new customers were added.
Concerning Infor's financial viability he writes,
We generate significant cash flow and have a solid cash balance. While we have accumulated debt to finance some of our acquisitions, we were fortunate to have financed at the height of the debt markets in 2007, affording us low-interest rates with flexible terms. We are also backed by Golden Gate Capital and Summit Partners, two of the leading private equity funds in the US with over $19 billion of capital under management. Our global scale, leadership position, profitability, current liquidity, and access to additional capital markets make us a viable and a secure partner for the future.My take.
I have no reason to believe Schaper is not presenting an accurate picture. If Infor is in relatively better shape than many enterprise software vendors these days, I think the cause is two fold:
- As Schaper points out, Infor is still privately-held. Golden Gate and Summit Partners, of course, still want to see results so they can take Infor public at some point. But for right now, Infor doesn't have to worry about Wall Street expectations.
- More significantly, though, I think that Infor's reliance on maintenance revenues is serving it well right now. Although Schaper claims over 2,000 new deals in the past four quarters, I would suspect many of those are small deals for Infor's complementary products or for its smaller ERP systems, such as Lilly or Syteline. Nevertheless, living off maintenance revenues is not a bad place to be right now. It's an annuity business and much more resistent to recession than new license sales are.
On that latter point, Oracle and SAP are in much the same situation. Even though their new deal pipeline is slowing and both vendors are conducting layoffs, both vendors are in pretty good financial shape as their large installed bases can carry them through these hard times.
So, if I am a customer of any of these vendors, I wouldn't be concerned about their financial viability. But I might be concerned about their ability to support me as they conduct layoffs.Update, Jan 30.
A reader reports a layoff among Infor's professional services staff yesterday. A check with Infor's PR group, however, finds that this number is part of the 5% reduction in force that was reported on December 8. The 5% is being phased, apparently.Related postsLayoffs at Oracle, SAP, and InforInfor layoffs, Dec. 2008SAP layoffs, January, 2009Layoffs at Infor and Sage