Infor’s Most Urgent Initiative

After more than a decade of acquisitions, Infor is now the world’s third-largest enterprise software vendor, following SAP and Oracle. In the past, it’s been easy to characterize Infor as a roll-up of older ERP products and point solutions. But that view is no longer fair.

Beyond Acquisitions to Innovation

Under the leadership of CEO Charles Phillips and his mostly-new team of senior executives, Infor is now moving beyond acquiring other products to innovation on several fronts:

• Hook & Loop: an in-house design agency, which has brought a fresh modern user interface across all of Infor’s products, embracing mobile devices as well as desktops. With Hook & Loop, Infor can now also provide design services to its clients, an unusual competency among enterprise software providers.
   
• Infor ION: a light-weight middleware capability, which allows quick integration between Infor’s many products as well as third party solutions.
   
• Ming.le™, a comprehensive solution for social business, process improvement, and analytics.
   
• Deep vertical functionality, covering dozens of industries, sub-industries, and micro-verticals. For example, where some vendors might list “Food and Beverage” as a vertical, Infor makes a distinction between “Beverage,” “Bakeries,” and “Confectionery.”
   
• CloudSuite: Industry-specific suites of Infor products pre-integrated and deployed as cloud services,  comprising five industries today with more on the way. It also includes the newly-announced Cloudsuite Corporate, which covers horizontal applications such as finance, human capital management, and purchasing.
   
• Data Science Lab: a newly formed group, which will develop advanced analytics capabilities across Infor’s product suite as well as offer data analytics services to Infor customers, which might otherwise be out of their reach. The group is based near MIT and includes data scientists, mathematicians, economists and other analytical skills that are beyond the reach of many Infor customers.

These strategic initiatives go beyond market messaging. In fact, until now, Infor has been deliberately muted in its market communications on these innovations, waiting until it had substantive product and capabilities to deliver. Expect to hear more from Infor in its public messaging on these innovations. 

But Infor is Losing Customers

Nevertheless, while Infor is newly invigorated around innovation, the majority of its customers are stuck in the past. Many of Infor’s products were originally developed over 20 or even 30 years ago, and it is safe to say that a good percentage of the customers of those products have not upgraded them since Infor acquired them.

The first and obvious risk to Infor is that such customers may be lost to competitors. Infor does not publish attrition numbers, but some simple arithmetic shows that Infor has actually lost customers over the past four years.

Here’s the calculation. When Charles Phillips was named as CEO in October 2010, Infor indicated that it had over 70,000 customers. At this year’s Inforum, exactly four years later, Infor gives its customer count as 73,000. However, during these four years, Infor has made a number of acquisitions. The largest of these was Lawson Software, which Infor acquired in 2011. At that time, Infor said that Lawson had more than 4,500 customers and that 9% of Lawson’s active customers were also users of use Infor products. That would be a net addition of approximately 4,100 customers. 

So, if we add the 4,100 customers from Lawson to the 70,000 customers Infor claimed in 2010, we come up with 74,100, which is 1,100 more than the 73,000 customers that Infor now claims. The loss of customers is undoubtedly greater, as Infor has done four smaller acquisitions since 2010, apart from Lawson. Bottom line: Infor’s new customer wins are not even keeping pace with existing customer attrition.

Two recent examples from my consulting business, Strativa, illustrate the problem.

• An aerospace and defense manufacturer contacted us last year about doing a new ERP selection. This customer is running an older version of an Infor product that was installed in the early 1990s. The company customized that product with changes to deal with the Y2K century-dating problem, and it has not upgraded since. The company may consider a migration to the current version of their Infor system, but it also wants to look at other alternatives.
   
• We recently completed an ERP selection for another company, a mid-sized manufacturer, which is running an older version of another Infor product, again, highly modified. Although we short listed Infor products for consideration, there were few advocates among users to continue with Infor. This client has tentatively decided in favor of Microsoft Dynamics and has started a proof-of-concept as the next step.

In briefings with other vendors, nearly every one of them lists Infor’s customer base as a target for new business. In fact, Phillips noted during his recent keynote at Infor's user conference that NetSuite had sent people into the audience to recruit Infor customers. (What’s good for the goose, is good for the gander. Infor apparently had gotten wind of NetSuite’s tactic and had inserted a slide with a special offer for NetSuite customers to migrate to Infor.)

Personally, I think NetSuite's guerilla marketing tactics are more for show than for real prospecting. If NetSuite wants to target Infor customers, the best targets are not the 6,000 attendees at its user conference. Conference attendees represent those customers who are actively engaged with Infor. They are those who are either on current versions or considering to get there—or they are new prospects altogether. The Infor customers that competitors should be targeting are those who stayed home.

Customers Unable to Benefit from Infor’s New Stuff

There is a second problem with so many Infor customers being on older versions, and that is that they are in no position to take advantage of all of Infor’s new innovations. Because they are on older versions, they cannot get Infor’s new user interface, they cannot take advantage of ION for integration, their users cannot collaborate with the capabilities of Ming.le™, and they cannot benefit from the deep industry functionality that Infor has been adding to its products over the past several years.

From Infor’s perspective, these are lost opportunities to up-sell and cross-sell additional Infor products to these customers. From the customer’s perspective, there is diminished value from their past investments in Infor products, making them question why they are paying maintenance. This again opens them to abandoning ship for competing products.

Upgrading Customers Is the Critical Path to Success

If it is not apparent by now, getting customers to upgrade to current versions is absolutely essential to Infor’s success. Infor realizes this, and over two years ago it launched an initiative it calls UpgradeX.

The features of UpgradeX are aimed at making version upgrades a no-brainer for customers:

• Value engineering: Infor will analyze the customer’s existing deployment and quantify the business value of eliminating modifications and upgrading the applications.
   
  
• Version upgrades. The service will move the customer to the current versions of its Infor products, which can be a daunting project for customers that are behind many versions. Infor’s website doesn’t make it explicit, but I believe Infor will allow customers to switch to a more appropriate Infor product.
   
  
• Cloud deployment. Infor uses its cloud to bring up a sandbox version of the new system quickly for the customer to prototype and understand the new version. Infor then migrates and deploys the target solution as a cloud service, assuming day-to-day responsibility for operating the system.
   
• Bundled professional services. Infor provides all the consulting services required to accomplish the upgrade or migration. User training is provided online. The website does not make this clear, but I believe that Infor does all this as a fixed price contract.
   
• Ongoing upgrades and support. UpgradeX will not be a long-term solution if newly upgraded customers fall behind again on upgrades. The offering therefore includes services to keep customers current on new versions.

The UpgradeX program has recently been assigned to Lisa Pope, Senior VP of Infor CloudSuite, who appears to be a great pick for the job. She came within the last year to Infor from QAD, where she was VP of Strategic Accounts. Interestingly, QAD was earlier than most traditional ERP vendors in offering a cloud or hosted deployment option, beginning in 2007. According to my research, QAD’s ERP subscription revenue now is in the neighborhood of 10% of its total revenue, which puts it at the high end of what most traditional ERP vendors have been able to achieve to date. In her role at QAD, Lisa was instrumental in this transition. She will need to build on her past experience and move even more aggressively to accomplish an even greater transformation with Infor’s installed base.

Infor Customers Should Consider UpgradeX

Some Infor customers on older versions are determined to go with a different provider. When I speak with such customers, I encourage them to take a look at UpgradeX. In many cases, they are not familiar with the innovations Infor has introduced, and they do not understand that they may be able to get upgraded quicker than they think.

Even Infor customers who have gone off maintenance should consider UpgradeX. Vendors hate to lose customers. If there is a way to recapture a customer that has gone off maintenance, a vendor is likely to make an attractive deal to do so, especially if the customer is also looking at competing products.

It is often simpler to upgrade a system that users are familiar with than to migrate to a completely new system, which reduces implementation risk. Moreover, with Infor’s value engineering services, the opportunity to eliminate or reduce modifications can also lead to longer term savings, as the customer will no longer need to support those customizations.

One word of caution: I was not able to interview any UpgradeX customers during Infor’s user conference, so I’m not able to verify the results that Infor promises. In any event, UpgradeX so far has only touched a small percentage of Infor’s installed base. For Infor to really move the needle, UpgradeX needs to be rapidly scale up to thousands of customers, not the hundreds it has now. I don’t know of any vendor that has ever been able to make such a massive impact on its legacy customers, but Infor's UpgradeX program certainly has all the pieces in place to do so. For Infor’s sake and its customers, I hope it is successful.

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A Guide for Cloud ERP Buyers

A Guide for Cloud ERP Buyers

In working with clients over the last decade, I've watched as cloud ERP vendors have been steadily encroaching on the territory of traditional ERP providers. As a result, ERP selection projects today are more and more becoming evaluations of cloud ERP providers.

However, buyers need to realize not all ERP systems that are labeled “cloud” are the same. To help buyers better understand these differences, I've just completed a new report for my research firm, Computer Economics, entitled Understanding Cloud ERP Buyers and Providers, based on my experience in selection deals as well as extensive analysis of vendor offerings over the years.

Figure 2 from that report sums up the differences:

In brief:

• Cloud-Only Providers: These are the “born-in-the-cloud” ERP vendors that do not have an on-premises offering and include such companies as NetSuite, Plex, Workday, Rootstock, Kenandy, FinancialForce, Intacct, and several others. These tend to be newer, smaller vendors (although Workday and NetSuite are each in the range of $500 million in annual revenue). Because cloud-only vendors have a single deployment option, they each can focus their entire business—from product development to sales to implementation and ongoing support—on the cloud. As a result, they make fewer compromises and tend to deliver the maximum benefits of cloud solutions in speed, agility, and scalability.
   
• Traditional ERP Vendors: These are larger, more established providers such as SAP, Oracle, Infor, Microsoft, and a number of others. They are growing more slowly than cloud-only providers. They have more complex businesses as they have to support their on-premises customers as well as their hosted or cloud customers. Because they have developed their solutions over many years or even decades, their functional footprint tends to be more complete than those of cloud-only providers.

There is much more in our analysis of the cloud ERP market, which describes these two major categories of cloud ERP providers in more detail. In addition, the report also segments cloud ERP buyers into two categories: first-time buyers looking for their first ERP systems and established companies replacing their legacy systems. As it turns out, generally speaking, these two categories of buyers have different pain points and different criteria driving their decision-making. 

At this stage of cloud ERP market maturity, each of these provider categories has its advantages and disadvantages, and there is no one right answer for a given buyer. Organizations considering cloud ERP need to carefully consider their requirements, their choices, and what tradeoffs they are willing to make. We, therefore, conclude with recommendations for buyers looking at cloud ERP. We also have some advice for providers that seek to serve these two types of buyers.

As a practical aid to buyers, the full report includes two lengthy appendices, which provide profiles of the key ERP vendors of hosted and cloud solutions today, along with an assessment of their market presence. Cloud-only ERP providers profiled include Acumatica, AscentERP, FinancialForce, Intacct, Kenandy, NetSuite, Plex Systems, Rootstock, and Workday. Traditional ERP providers with cloud/hosted solutions include Epicor, IFS, Infor, Microsoft Dynamics, Oracle, QAD, Sage, SAP, Syspro, and UNIT4.

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The Cloud ERP Land Rush

Oklahoma Land Rush

For those unfamiliar with US history, in 1889 the US government opened unoccupied lands in Oklahoma to settlement. Settlers could claim up to 160 acres, live on and improve the land, and then legally obtain title to it. Such an opportunity led to a land rush, in which thousands of settlers raced into Oklahoma to make their claims.

Today, cloud ERP is like Oklahoma in 1889, mostly unoccupied land, and there is a race as cloud vendors rush in. NetSuite and Plex were two early settlers. Today NetSuite has more acreage (number of customers), while Plex has fewer acres but more development of those acres (functionality)--at least in manufacturing. Cloud-only providers such as Rootstock, Kenandy, AscentERP, Acumatica, Intacct, and SAP (ByDesign) are also in the race. Traditional providers such as Microsoft Dynamics, Infor, Epicor, Oracle, UNIT4, and QAD have also entered the land rush, although they are moving more slowly, as they need to pull wagons full of their traditional on-premises software along with them.

In the larger suite of enterprise applications, such as CRM and HCM, the land rush is further along.  Salesforce for CRM and Workday for HCM have already staked out large claims and are rapidly developing them. But Microsoft with Dynamics CRM, SAP with SuccessFactors, and Oracle with its Fusion HCM are also adding to their acreage. Core ERP functionality, on the other hand, is earlier in the land rush. There is still a lot of open territory with a lot of unclaimed land.

FinancialForce Staking Its Claim

One provider that is clearly in the land rush is FinancialForce, which today announced new branding to signal its claim in cloud ERP.

The company is now referring to its suite of enterprise applications as FinancialForce ERP. The new branding is necessary because FinancialForce long ago ceased to be a provider only of financial management systems.

FinancialForce previously added professional services automation to its portfolio and late last year acquired Less Software, which provides inventory management and order. Vana Workforce is another acquisition from last year, which adds human capital management (HCM) functionality.  FinancialForce also added its own functionality in areas outside of financials, such as advanced quoting and revenue recognition. With this broader footprint, FinancialForce now qualifies as a cloud ERP provider.

Building on the Salesforce.com platform, FinancialForce has direct integration to the Salesforce cloud applications as well as to all of the other providers in Salesforce's AppExchange marketplace. The recent evolution of this platform to Salesforce1 gives FinancialForce additional capabilities for building out its mobile deployment options.

How many acres will FinancialForce claim? The signs are hopeful. The company is reporting strong results: 80% growth in its revenue run rate, and 62% growth in headcount year-over-year, bringing it to over 260 employees globally.  FinancialForce now has customers in 27 countries with users in 45 nations worldwide. By all accounts, the company is on a strong growth trajectory.

Plenty of Land for Everyone

The economic and strategic benefits of cloud computing accrue to end-user organization that completely or at least largely eliminate their on-premises IT infrastructure.  Our research at Computer Economics shows that cloud user companies save more than 15% in terms of their total IT spending, and the money that they do spend goes more toward innovation and less towards on-going support. But it is difficult to move away from on-premises infrastructure if an organization's core ERP system is still on-premises. Therefore, the move to cloud ERP is essential if organizations are to fully realize the benefits of cloud computing. You can move your CRM and HCM systems to the cloud--but if you are still running on-premises ERP, you still have one large foot stuck in the old paradigm.

In my view, there does not need to be one clear winner in cloud ERP. Just as there were dozens of on-premises ERP vendors in the 1990s, especially when sliced by industry sector, there is plenty of room for many more cloud ERP providers. There is plenty of land for everyone.

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Glovia Returns to the ERP Market

An ERP sales professional, whom I've know for many years, recently called to let me know he'd taken a new job with Glovia International. I indicated that I hadn't heard anything about Glovia recently. Maybe now I could get an update.

So he arranged a briefing with James Gorham, who heads up Glovia's North American business, for me and two of my senior associates at Strativa, Bob Gilson and Nick Hann.

A Long History

Glovia's roots go back to the 1970s, when Xerox Computer Services launched a time-sharing application for manufacturing companies. The product went through several iterations and was eventually relaunched in client-server form in 1990 as Xerox Chess. The company was acquired in 2000 by Fujitsu, who renamed it Glovia.

For many years, Glovia has been a well-respected mid-market ERP solution for automotive manufacturers, aerospace and defense contractors, capital equipment makers, and other industries. In the past, when I was looking for solid functionality for project-based manufacturers, Glovia would be one of the first to come to mind.

But, as just mentioned, that changed about two or three years ago, when Glovia suddenly fell off my radar. I knew they were still in business--I just never saw them in deals or even in press releases. They wouldn't even respond to my inquiries.

In our briefing with Gorham, we soon found out why. Glovia had undertaken a deliberate strategy three years ago to pull back, abandon all new sales efforts, and invest in rewriting the entire product.

Retrenchment Strategy

Glovia system had been developed in McDonnell Douglas's PROIV 4GL language, which though a good language, was not a platform with a wide developer base. They spent two years to rewrite the product with a service-oriented architecture, migrating the business logic to .NET, developing a new user-interface in Microsoft Silverlight, and providing a full deployment of web services with over 140 integration points. The latest version of Glovia runs on Oracle's database and is being released for Microsoft SQL as well.

Now here's the interesting part: during this retrenchment period, Glovia was profitable and actually grew, through organic growth of its existing customers adding new plants, new acquisitions, and new users. So, retrenchment turned out to be a good strategy during recessionary times: kill off marketing and net-new sales, redouble your service and support for your installed base, and invest in rewriting the product for a relaunch.

This retrenchment strategy (my term) could only work because Glovia had an enviable position as the incumbent for some very large and loyal customers, beginning with its corporate parent, Fujitsu, which deploys Glovia in 43 factories. Fujitsu had the resources to support any fall-off in Glovia's business, but as it turned out, Fujitsu's deep pockets weren't needed. Xerox (Glovia's former parent) is still a customer, as are several other large and well-known global brands, such as Panasonic, Dell, Carrier, Bridgestone, Avery Dennison, Honda, Honeywell, Phillips, and General Electric.

So, now the rewrite is complete. The functionality offered by Glovia for its target manufacturing industries--which was already well established--has grown even more impressive.

• It offers heavy visualization, with real-time graphical information flow.
  
• There is support for assemble-to-order and engineer-to-order, with "available to X" planning calculations, such as available-to-order, to-make, to-buy, and to-service.
  
• Production scheduling and optimization is granular down to the minute.
  
• There is load-balancing at all levels of production: the plant, cell, machine, skill, and person.
  
• The supply chain planning capabilities allow synchronization of supply to demand or demand to supply.
  
• Lean thinking permeates the execution functions, with the Toyota Production System natively embedded in the product.
• For defense contractors, there is the necessary "borrow-and-payback" functionality as well as pegging to contract.
  

The rewrite also gave Glovia the opportunity to build mobility apps, which appear much further developed than many larger and better known competitors. Apps include work orders, financial apps such as expense reporting, purchase requisition approvals, and executive dashboards. Glovia even provides device management capabilities. Apple's iPhone and iPad are supported, as well as Android devices, Blackberry, and Windows Phone. Everything is developed in HTML5 and available through the appropriate apps store (e.g. iStore).

There are even some nods to social business: Glovia gives engineers at different links in the supply chain the ability to collaborate. Planners also have visibility into customer and supplier engineering changes and inventory positions. Integration with Microsoft's Sharepoint is also provided.

What about the Cloud?

These days, no briefing is complete without asking about cloud options. Glovia offers an on-premise deployment (of course) as well as an on-demand option. Although the on-demand version is currently a simple hosting arrangement, when Microsoft Azure is ready for enterprise applications, Glovia will be able to host its system on Microsoft's cloud, assuming customers demand it.

Separately, Glovia has built a set of manufacturing modules on Force.com to inter-operate with Salesforce.com's CRM system. These are full multi-tenant SaaS applications that provide functionality for product configuration, order management, inventory, manufacturing, invoicing, purchasing, and returns. These are separate and independent from Glovia's flagship G2 system.

My own view is that Glovia's current support and stated direction for cloud computing is probably sufficient for now in light of the industries and size of organizations that it targets.

Where is Glovia Headed?

Behind us in Glovia's conference room was the obligatory "customer wall," with logos of Glovia's largest and most well-recognized customer names. My associate Nick Hann asked, "Three years from now, what will that wall look like?"

This led to an interesting discussion. Customer attrition during the retrenchment period was surprisingly low: a loss of any of these large customers would have been huge, and in fact none were lost. The sales team is now expanding to focus on new deals in addition to incremental sales into the installed base. There are also some resellers being added strategically for certain vertical industries.

Will Glovia be successful as it transitions from retrenchment to new sales? So far, some signs are promising. There are some big names in the sales funnel, including one Fortune 100 company. Interestingly, many of these new sales opportunities have come out of introductions by existing customers.

But will that be enough? The market is crowded, as Gorham noted, with SAP and Oracle gunning for the top tier of customers and Infor, Epicor, and IFS hungry for the mid-market and individual facilities of large multi-nationals. Syspro, Consona, and QAD also play in some markets and industries.

The markets that Glovia competes in are not under-served. In addition to the traditional players that Gorham identified, I would be concerned about newer cloud ERP providers: specifically Plex, which has a big bulls-eye on the automotive sector, NetSuite, and SAP's Business ByDesign.

Nevertheless, circling back to the retrenchment strategy: I like Glovia's story. How to leverage a recession to retrench and recover. In warfare, retreat is sometimes a good strategy, and in Glovia's case, the retrenchment appears to have paid off.

I hope Glovia's success continues, because buyers can only benefit by having a greater number of well-qualified choices.

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