Thursday, June 02, 2005

Lawson acquiring Intentia

Another enterprise software vendor consolidation is in the news this morning: Lawson Software is acquiring Intentia.

The rationale
I'm familiar with both companies and find the deal an interesting combination for at least three reasons:
  • There is little product overlap. Lawson is well-regarded for its financial and HR applications in healthcare, retail, education, government, and other verticals. Intentia's MOVEX is a hard-core industrial ERP system, with specific focus on fashion and apparel, food and beverage, wholesale distribution, and asset-intensive industries.

  • There is little geographic overlap. Intentia, based in Sweden, has strong international coverage in Europe with some presence in Asia-Pacific. Lawson serves markets primarily in North America, a territory that Intentia has tried and failed to penetrate over the past decade.

  • There is technology compatibility. Both vendors are strongly aligned with IBM and base their development platforms on IBM technology. Intentia was the first full ERP vendor to introduce a 100% Java ERP suite. Lawson's recently announced service-oriented architecture (SOA) framework, code-named Landmark, should work well with Intentia's code base.
There have been rumors for about a month concerning a Lawson/Intentia acquisition, but I was unable to obtain confirmation. Bottom line: on the surface, at least, the deal makes a lot of sense.

Management changes
Along with the acquisition, there are major personnel changes. Jay (it's Oracle's fault) Coughlan is out as Lawson's CEO, to be replaced by Harry Debes, a software industry veteran who ran Geac's Asia-Pacific region and J.D. Edwards U.S. sales and services organization.

Bertrand Sciard, Intentia's CEO, will become COO of the combined company. Sciard is another Geac veteran prior to taking over at Intentia. As I've written previously, Sciard has been looking for an acquisition for Intentia as part of his turnaround strategy. In this case, the deal was to be acquired. I suspect it was probably Sciard that introduced Debes to Lawson, although it's interesting that Sciard is effectively reporting to Debes.

Richard Lawson, Lawson's founder, and Romesh Wadhwani, Intentia's chairman, will serve as co-chairmen of the combined entity.

The new management team will have their work cut out for them. Neither Lawson nor Intentia have been stars lately in terms of financial performance. Lawson has been struggling and has been cutting costs for months. Intentia has been on a losing streak for years. For Lawson, that means the assets of Intentia could be acquired at a good price--about 1.2 times Intentia's revenue.

The new management team will need to score some early wins to demonstrate the synergy of the deal. The primary opportunity will be to quickly develop the necessary integration to push Lawson financials into Intentia's installed base and Intentia's manufacturing modules into Lawson's.

But, if Lawson is successful in selling Intentia's apps in the U.S., I would be concerned about Lawson's ability to support them. There are few trained Intentia implementers in the U.S. Intentia has been trying for about 10 years to build a U.S. sales and services organization, but it doesn't have much to show for the effort.

Both Lawson and Intentia have adopted a strategy that is highly focused on specific industries, which in my opinion is the only way to compete these days against SAP and Oracle, who dominate the top tier. This strategy could be successful, and it would give customers in those industries another choice. The challenges are significant, but I hope Lawson is successful.

The press release is on the Lawson website.

Update. The financial markets are not thrilled with this deal. Lawson is down over 11% in very active trading.

Update, Jun. 4. ARC Advisory is pointing out that one immediate opportunity for the combined entity is the J.D. Edwards World installed base. Lawson has been actively soliciting these customers to leave Oracle, but Lawson's pitch is limited because Lawson, to this point, has lacked manufacturing and asset management functionality. The Intentia acquisition addresses both needs. The majority of Intentia's customers run on IBM's iSeries platform, which also fits with JDE World customers.

Related posts
Blogging from the Lawson user conference
Intentia, MAPICS, SSA, and Geac--what's the deal?
Second thoughts on Geac and Intentia
Intentia reaches for revival
Lawson fires 100, blames Oracle

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