Over the years, business applications provider Infor has been seen in many quarters as a significant market player, but with more focus on financial management than product development. That perception is looking out of date, thanks to a new common architecture and product capabilities and a fresh user interface. But we think Infor’s progress is being hampered by an overly narrow channel to market.
The scale of the PE-backed company’s acquisitions over its ten-year life has been quite remarkable – Wikipedia lists 35, peaking in 2004 with seven companies. Several of those, such as SSA Global and GEAC, comprised multiple formerly independent companies themselves. The roster of products now includes many one-time industry headliners, such as BaaN, Epiphany, JBA, Lawson, Mapics and SSA. Infor has revenues approaching $3 billion and deep penetration in several key verticals such as aerospace, high tech, pharma and retail, with 70,000 customers in 194 countries.
However, for many of Infor’s customers (most of whom became customers when their supplier was acquired) this M&A-driven strategy raised a big question: Could Infor continue to develop their chosen product or would they be treated as cash-cows, to be milked for maintenance revenues as the user base slowly declined?
This worry was heightened when Infor hired former Oracle President Charles Phillips as CEO in mid-2010. Phillips, with his investment banking background, was widely seen as an architect and key implementor of Oracle’s build-by-acquisition strategy, and it seemed reasonable to assume the Infor acquisition spree would continue.
However, Phillips has taken the company in another direction (although there have been a few more acquisitions on his watch, most notably Lawson, for a reported $2bn). The company has been investing internally in moving its products forward. It has 3400 staff working in development – around 25% of its total, up 600 in a year. We were told that Infor has put more money into developing Lawson’s M3 in Infor’s first year of ownership than the product received in the previous three years.
The result is a new SOA-based architecture, known as ION, and a new ‘face’ for the products. ION allows users to mix-and-match Infor (and other) solutions to combine some of the advantages of the suite approach with “best in class” components. This is also the route for the company to bring the product set into the worlds of mobile and cloud deployment. The new user interface is very modern and appealing – Infor actually created a new, separate subsidiary, a creative design agency, to lead the work, rather than employing an outside consultancy. (Infor calls this “beauty as a competency”).
This move reflects one curious facet of Infor’s strategy – its apparent desire to do as much as possible in-house.
The most evident effect is that unlike its peers, it has a small partner ecosystem with no big SI names. Sales, support and consulting are almost all done direct by its own staff (3600 in consulting, 1660 in support). In our view, that direct-engagement-only model has contributed to the market’s perception of Infor as a rather backward-looking company. This also limits its reach to new potential markets and customers, who are often influenced by their key SI partners. To be fair, Infor made some attempts to address this issue in 2011, launching the Infor Partner Network and announcing a drive to recruit channel partners in October that year. But it doesn’t seem to have had great impact.
In PAC’s opinion, Infor could do itself a lot of favours by working on a new, revised partnership and channels strategy on the back of its new product lineup, and courting SIs, large/generalist as well as smaller/specialist in the areas it wants to target. While it acquired a good number of new-name customers in 2012, it could surely improve by leveraging the big potential ecosystem that’s out there.
Footnote: Subscribers to PAC’s SITSI advisory service can access a full profile of Infor, updated annually, through the regular SITSI portal.