Monday, July 23, 2007

Update on Lawson's strategy

I interviewed Barry Wilderman, VP Business Strategy at Lawson Software, yesterday. I haven't written much about Lawson recently, so I thought it would be good to get the story from Barry, apart from the usual press releases and announcements.

Barry was named to his post this past January. Previously, he was a senior VP at META Group, where he was an ERP market analyst. I've met Barry in the past and have appreciated the analysis he did at META on the total cost of ownership (TCO) of ERP systems. He was a good catch for Lawson.

Some of the key points from our phone discussion.
  1. We discussed Lawson's SOA framework, Landmark. Introduced over two years ago, Landmark incorporates pattern, or domain-specific language, to allow business analysts to build applications without knowledge of programming. So far, Lawson's human capital management (HCM) offering is built on Landmark as well as its new strategic sourcing application. Eventually, all of Lawson's products will transition to this new technology environment.

  2. Landmark is built entirely on IBM technology, such as Websphere. I've long felt that application software vendors have no business building application development tools, so I agree with this strategy. At the same time, however, doesn't this reliance on IBM pose a problem to Lawson customers who do not use IBM technology? Barry agreed that this could be a problem to a customer that has standardized, say, on Microsoft's competing .NET technology. However, if Lawson is a key component of the customer's application portfolio, it should justify the transition.

  3. I pointed out that many other software vendors have stumbled when they tried to make a major technology transition. Witness all the vendors from the host-based era who tried to make the transition to client-server. For example, the former System Software Associates (SSA) went into bankruptcy as the result of its attempt to move its AS/400 host-based product, BPCS, to a client-server architecture. J.D. Edwards had problems for several years in its transition from its host-based World product to its client-server and web-based offering, One World.

  4. Barry didn't agree with my analogy, however, indicating that Lawson had already made the transition to Websphere for its entire product line, and that the move to Landmark was more of an evolution than a wholesale technology overhaul. So, the introduction of SOA and workflow should be less disruptive and can be accomplished in stages.

  5. How does Lawson compete with SAP and Oracle? These days I'm hearing of many cases where prospects are not considering other vendors and when they do, SAP and Oracle are difficult to beat. Barry indicated that Lawson competes by focusing on key verticals, such as healthcare and retail. When they compete in their sweet spot, they do not lose many deals.

  6. Lawson made a major acquisition two years ago when it merged with Intentia, a Swedish-based vendor that is strong in manufacturing and asset-based businesses, especially in Europe. Has this merger been successful, and how much cross-selling is taking place between customers of Lawson and Intentia. Barry indicated that there have been a handful of cross-sales of M3 (the former Intentia product) to Lawson customers, mostly of Intentia's enterprise asset management (EAM) offerings. There have also been a few sales of M3 in total into Lawson's installed base in the U.S. There have not yet been a lot of sales of Lawson's HCM into Intentia's customer base in Europe, however, largely because of the need to provide compliance with European regulations.

  7. Finally, Barry said that he wants to communicate a more sophisticated message concerning Lawson's total cost of ownership, that Lawson delivers more value per dollar invested. In his view, Lawson installs faster, is easier to understand, and takes less time to implement. Of course, these are claims that are put forth by nearly all enterprise system vendors. Barry's previous work at Meta did show that Lawson (along with QAD) had the lowest TCO of seven or so major ERP vendors. Whether those results still hold true now, five or six years later, are unclear.

  8. All of the major vendors are making significant efforts to simplify and speed implementation, and there is anecdotal evidence that those efforts are bearing fruit. At the same time, much of the cost of implementation is outside of the control of the vendor. A client that is well-organized for the effort, who has a well-trained project team and understands the need for business process improvement and change management will realize a much lower TCO than the client that expects the vendor to do all the work.
Still, Lawson continues to be one of the largest enterprise system vendors that has managed to show enough success to remain independent during this period of software vendor consolidation. Its share price is at its highest point since 2002, which vindicate Lawson's CEO Harry Debes and his email to me earlier this year.

Comparing Lawson's share performance over the past six months with SAP and Oracle (see below), it would appears that the market agrees.

Update, 9:36 a.m.: This morning, Computerworld has an interview with Lawson CEO Harry Debes, where he talks at length about competing with SAP and Oracle.

Related posts
Lawson and IBM team for ERP sales to mid-market
Lawson's performance better than it appears: CEO
Lawson acquiring Intentia
Blogging from the Lawson user conference


Christian Geisert said...

"to allow business analysts to build applications without knowledge of programming"

I'm hearing this kind of promise for years (or even decades) and yet have to see something that works for non trivial stuff... ERP software is a very complex subject.

Anonymous said...

Tie to AS400 and IBM websphere will limit the market of Lawson. If the tool Landmark can allow users to build applications without knowledge of programming, I will suggest Lawson to focus on selling this tool, rather than selling the applications. It will have better market than the application.

Frank Scavo said...

Cy, there's no tie to the AS/400. A tie to Websphere yes, AS/400 no.