There’s never enough solid competition in the enterprise software market, and it’s been tempting to see the top tier of the market as a three-horse race, with SAP and Oracle the dominant players, and Microsoft, in the form of Dynamics AX, moving fast to catch up, particularly in the large enterprise.
It’s looking like that’s about to change.
A little over two years ago, the ERP roll-up king, Infor, brought on board a new management team, headed by former Oracle co-president Charles Phillips, and the prospect of another horse in the race started looking pretty good. And based on a half-day meeting last week with industry analysts at Infor’s stylish New York headquarters, the top end of the enterprise software field just grew another four legs and a tail.
There’s still a lot for Phillips and team to prove before it’s safe to say Infor’s many bets on technology and market focus have paid off, and the race is not always to the swift, however fast they may move. But it’s clear that the notion that Infor is just a collection of products best showcased in the ERP Graveyard has successfully been buried. The phoenix that is rising from the ashes of the likes of Baan, Marcam, Mapics, and more rolled up vendors than you can safely count definitely looks like a force to be reckoned with.
Before I get into the product and technology strategy, I think it’s worth noting that there’s an important cultural side to what Phillips and his top lieutenants – among them industry veterans Duncan Angove and Stephan Scholl – are doing. The most visible cultural component is the executive office – a single office, rather spacious, with a massive square-shaped table anchoring center court where the executive team sits and works when they’re in New York. This is no hidden, inaccessible enclave of absolute power: walk up the stairs from the meeting rooms and you might inadvertently stumble in to the only collaborative executive office I’ve ever seen. Instead of being sequestered in their respective seats of power, the Infor team sits and works together, within sound and sight of the rest of the company.
This office layout isn’t only a refreshing change from the usual mountaintop aerie Office of the CEO, it helps define a culture of openness and accessibility – and an apparent lack of back office politics – that may be an important part of the competitive edge Infor is hoping to have in the market. Certainly it has been a big help in attracting top talent to the company – Infor is doing a good job attracting refugees eager to escape from the internecine, Machiavellian politics of its top competitors. And the collaborative/cooperative nature of the company could be a big part of the secret sauce that helps Infor have a shot at overtaking its bigger competitors – all of whom struggle with balancing competing internal interests that at times seem more problematic than their external competitors.
On to the product strategy. Infor’s major challenge has been to leverage the breadth of its myriad products and provide a coherent upgrade and innovation path for its customer base. This 5000+ company customer base was largely neglected as the old Infor focused on rolling up software companies without a clear vision for the customers’ tech future beyond their role as a source of maintenance revenue.
To rectify this Infor has embarked on an ambitious strategy to create a single user experience, mobile and social platform, and analytics and workflow environment for its top products, which include M3 (nee Lawson), LN (nee Baan), CPM (the former Infor 10 CPM), EAM (the former Infor 10 EAM and Datastream), Syteline, Lawson, Hospitality, and Hansen. The single user experience is perhaps the most significant, and ambitious, part of the technology strategy. User experiences are extremely fluid these days –witness the debates about mobile vs. touch or consumer vs. enterprise – and locking down all its products and industries in a single UX will be hard to build and potentially even harder for the company’s customers to accept.
To this end Infor has created a separate design company, Hook & Loop, to create this experience. So far what they’ve done looks good – is it good enough to tip the user experience battle in Infor’s favor? Time, and user acceptance, will tell.
In addition, the company has been building out a single integration platform, called ION, that provides what Phillips calls loosely-coupled integration between the entire Infor product set as well as third party applications, including a number of Oracle and SAP applications. This means that, rather than build a massively bloated master data integration environment, Infor is opting for a more light-weight XML-based event pub/sub model that is easier to build, easier to maintain, and more likely to actually be used than some of what its competitors have tried, and failed, to build over the years. The success of ION is still nascent – around 1000 customers are using it today, which is a good start. How much they are using ION, and how extensively, will reveal it’s true success.
There’s enough to ION to merit a separate blog post at some point down the line – it supports on-prem, on-demand, and hybrid deployments, peer-to-peer and loosely coupled integration, and it’s based on the OAGIS business object document standard. If ION really fulfills is promise then Infor will have done what Oracle in particular has failed to do: rationalize its portfolio through integration and make the whole greater than the sum of the parts.
Infor is also standardizing localizations and mobile access across the entire portfolio. And the company is further refining its cloud strategy, offering new customers the option of road-testing their Infor apps in the cloud and then, as needed, deploying to an on-premise environment or remaining in the cloud, whichever makes the most sense. This isn’t necessarily the orthodox cloud strategy that the orthodox cloud crowd would like – which is great, IMO. Customer choice should always trump orthodoxy.
In all, it’s a well-thought out approach to rationalizing a huge portfolio of products, most of which were acquired largely without any thought to rationalization.
But even more interesting than this post-hoc rationalization process is the company’s go-to-market strategy, which gives it an interesting point of differentiation in an enterprise software market that frequently lacks effective differentiation. The essence of Infor’s strategy is to tackle what is commonly referred to as the micro-vertical market, as specific vertical industries like dairy or brewing, as opposed to looking at the market through the lens of larger categories like food and beverage.
This makes a ton of sense for a couple of reasons: Infor’s rollup of dozens of enterprise software companies has given the company serious credentials in a lot of very specific markets. Some are familiar markets that don’t seem very “micro”, like aerospace, automotive, pharma, and high-tech. But the others are more micro than macro – like breweries, hospitals, hospitality, and industrial distribution.
Phillips makes this an important distinction, and I think it’s a good one. We tend to think of food and beverage as a market, whereas, according to Phillips, it’s a sector. The micro-verticals – dairy production, brewing, baking, and meat processing – have radically different requirements in terms of how raw materials are acquired and processed, and how finished goods are produced and taken to market. Building software and going to market specifically for these micro-verticals makes tremendous sense. Whereas, building software and going to market at the sector level tends to produce one-size-fits-none software and the need for a lot of customization and configuration.
This focus also changes the competitive nature of what Infor has to do in order to succeed. Instead of taking on the Big Three head on, Infor can go after a micro-vertical market that is dominated by a combination of relatively small companies and VARs, many of which are privately held and not well-known outside their micro-vertical.
This could make life hard for the Big Three. Many of these companies Infor wants to compete against are Microsoft VARs that have been getting a little less love from Microsoft since it decided to focus its partner efforts on building a cadre of larger, more globally effective VARs and going direct to the large enterprise. SAP’s approach to the mid-market – particularly with All-in-One – has lacked a strong degree of micro-vertical focus and could make it vulnerable to Infor’s ability to focus a specific product set on a specific market. And Oracle’s inability to provide an upgrade path to Fusion for many of its micro-vertical customers – particularly its JDE customers – is a point of vulnerability that Infor can attack with this micro-vertical approach.
The Infor team provided some insight into a set of recent wins that highlighted these opportunities, including an impressive number of SAP wins, as well some PeopleSoft and an early knock-out for Microsoft Dynamics. The details were given under NDA, and there was time to discuss only a handful, but suffice to say that they prove a point: Infor isn’t just selling maintenance contacts for aging software– it can compete, and win, against the best.
If they can do that consistently, and keep their renewals up and continue to entice their customers to upgrade instead of shack up with a competitor, Infor will be a great turnaround story and make for a helluva interesting IPO or acquisition (I vote for the latter) down the road.
The great thing about the enterprise software market is that, once you leave the domain of the very largest companies, the number one competitor in most geographies and verticals is “other” – a set of companies too small to be statistically relevant by themselves in any large scale market survey. If Infor has its way they’re going to seriously dent the impact of “other” in the market. And if they do, the non-others – SAP, Oracle, and Microsoft – are going to have another big competitors to worry about.