Thursday, March 25, 2010

Update on Infor's Flex program: customers win

Infor's Dennis Michalis stopped by my office for coffee and a chat this morning, and it gave me a good opportunity to see what sort of progress Infor has made in rolling out its Infor Flex program to customers.

By way of background, Infor Flex was introduced in June 2009, to allow customers to upgrade to the latest, SOA-enabled versions of their Infor products or to exchange those products for other, newer products in Infor's portfolio--at little or no license costs.

I was bullish on the program when it was announced, as I saw it as a win-win for Infor and its customers: customers get to move to a newer platform with newer expanded capabilities and Infor keeps customers, or gets them back on maintenance, and has a chance to sell them new stuff in the future.

But what have the results been in practice in the nine months since Infor Flex was announced? As it turns out, Dennis is the right person to ask, as he is now the General Manager for Infor Flex (in addition to his work in charge of all Infor partners worldwide).

Driven by customer needs
Dennis explained that the program originated from needs of Infor's customers running on IBM's Series i (formerly, AS/400) platform, to whom Infor's sales folks were trying to sell Infor's SOA-enabled products for asset management, business intelligence, performance management, and the like. The problem, of course, is that many of these Series i customers were on older versions of Infor's LX (BPCS) or XA (Mapics) or other legacy products and SOA-enablement of these products is only available on newer versions.

The challenge, then, was to encourage these customers to upgrade to newer versions. But customers were resisting that path, as there would be additional license fees for migrating to newer platforms in many cases, and cumbersome migration projects would be required to figure out and migrate the many custom modifications that these customers had made to the legacy code. (Side note: I did such an evaluation years ago for a BPCS customer and found they had made well over 1,000 modifications, making an upgrade nearly impossible to justify).

In other words, customers wanted the new stuff, but balked at the cost and effort required to upgrade to the latest version of their legacy systems that would work with the new stuff.

No new license fees, expedited migration path
So, Infor Flex was introduced to make the license cost a non-issue. Infor is letting customers upgrade to newer versions or convert to a different Infor product (like-for-like) with no additional license fees. Infor also promises to keep the customer at whatever maintenance fee level the customer is paying today.

In addition, Infor put together "service kits" to make migrations to the new versions less tedious. Having done these migrations in the past, Infor's professional services group was in a good position to package up conversion programs and use offshore resources where appropriate to handle some of the routine tasks of migration. It could then offer upgrade support on a fixed fee basis.

Results to date
Dennis was high on the results of the program. There have been something like 260 customers so far that have signed up for Infor Flex, and another 60 or so that are technically not within the revenue recognition rules for Infor Flex but nevertheless have similar deals. This would all be since last June, about 9 months ago.

In addition, Infor Flex deals are moving quicker through the sales pipeline, indicating that much of the "friction" in customer decision making has been eliminated by the favorable cost and risk attributes of Flex.

All of which means, of course, that Infor's sales force is making money.

Dennis was also positive on the impact for customers: in upgrading an old customer from ERP Lx (BPCS) for example, he estimates that 80% of customer modifications can be eliminated. And Infor's Open SOA capabilities add value in facilitating integration -- customers are seeing how easy it is to integrate with Infor's newer SOA-enabled products and with third-party systems. Many of these customers don't even realize they are using SOA, but they are realizing the benefits.

Infor is a privately-held firm, so financial results are not publicly reported. But Dennis indicated that Infor is very pleased with the results to date: not just in the license revenue for the new stuff they are able to sell to existing customers, but especially in what Infor Flex is doing to improve customer retention on maintenance contracts and even in winning old customers to come back onto maintenance. For a firm like Infor, which has a huge installed base of legacy customers, moving the needle just a little on these metrics has a huge payback.

My take
As I wrote in the past, Infor has a chance to be one of the "good guys" when it comes to maintenance and support programs. Infor customers running older versions often think they have no choice but to shop for a completely new vendor if they want newer capabilities. Info Flex should give such customers reason to take a second look at Infor.

Update, Mar. 26: In follow up correspondence with Dennis, I'm hearing about some interesting deals Infor is currently working to bring former customers back on maintenance, in at least one case for a company that has "not paid Infor a nickel" in 15 years.

Related posts
Infor juices up its maintenance program value with Infor Flex
Infor's opportunity: value in maintenance and support

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