Briefing review - can Infor's partner strategy keep pace with its digital pursuits?

Profile picture for user jreed By Jon Reed July 13, 2016
Summary:
A presentation by Infor's Jeff Abbott raised provocative questions on how services partners can adapt to the massive changes brought on by cloud and digital business models. Here's my take.

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On the first day of Inforum 2016, a small but geographically diverse media group got a briefing on Infor's partner strategy from Jeff Abbott, Infor SVP Global Alliances and Partners. I found the discussion provocative, raising questions on how Infor can ensure that its partners can be instrumental to Infor's customers as they pursue digital transformation and assess Infor's next gen product line (see links to my colleague Derek's stories on each).

Infor's partner network - by the numbers

Infor's partner model is structured in two communities: the VAR channel, which resells to the SMB (small and medium business), and the Alliances program for systems integrators. Partner relations is high stakes for Infor.

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Abbott in presentation mode

Abbott said that one out of every three customer touches is with a partner. That's double the partner touches of three years ago, which Abbott credits to an emphasis on network expansion. More stats:

  • Infor's partners take over 1,000 customers live every year
  • 20 percent of overall licensed sales business is done through Infor's partners

Partner cloud transitions - the announcements

Abbott previewed several announcements that were on deck for today's Partner Summit keynote:

The launch of IPN DGX - yup, that's a lot of alphabet soup, but it stands for the Infor Partner Network, which is launching the Demand Generation Exchange. The DGX allows partners to download Infor's best product collateral and sales assets. Partners can also add industry content to the network, with the goal of building a complete collection of go-to-market materials. Info is also building out an extension of PR agencies around the world that partners can utilize for their own PR.

Partners now have access to Infor Amplify - To help partners with social media promotion - an issue I've seen many ERP consultancies struggle with - the DGN launch also gives partners access to a tool called Infor Amplify. Previously only used internally, Infor's 1,500 partners and their employees who opt-in to Amplify now have the ability to promote Infor/industry content across their networks with a one button click.

The CloudSuite Academy - Infor is expanding its partner training program with what Abbott proclaims as:

The biggest mobilization of enablement and training as a company we've ever done. We're literally putting on a training academy to help companies transition to cloud selling, and to the cloud business.

Abbott plans to avoid the trap of talking about cloud products. The academy is about helping partners to change:

It's a very intensive course. It's not about products. It's about how partners need to adapt their business models and do more remote configurations, remote consulting or turnkey solutions and still make a lot of money, and still add a lot of value. Just like the software industry is going through a transition to the cloud, so too are the advisors and systems integrators and the channel.

Can partners hit their revenue numbers in the cloud?

It didn't take long for someone to ask the money question: how will partners respond to the revenue changes in cloud and will their profits lessen?

Abbott told us that in November 2015, Infor "completely overhauled" their partner compensation model for cloud. Now, "gold level" partners receives a commission on a cloud deal equal to 40 percent of the first year contract value, and 25 percent every year thereafter - as long as the customer remains on board. in perpetuity:

We're teaching partners to create a base of annuities, and to build a value model based on transitioning customers to the cloud.

Abbott says if partners can move from 4-5 on-premises deals a year to 7-8 cloud deals a year, they will see the payoff in long-term annuity streams. I asked Abbott about consulting ratios, a bugaboo for customers who are eager to move off of the 1:5 and 1:10 licenses to services ratios of the on-premises era. Abbott tells his partners to be successful, they better be close to 1:1:

The cloud is demanding that. The cloud is requiring that it be that efficient to implement. I think some partners could get sub-1 on the services side, if they get really good at it. But it's foreign to them.

Abbott talked about ERP partners who are used to making 70 percent of their revenues from services - "and that's the mentality that has to change." At the CloudSuite Academy, partners to offer ancillary cloud services such as security and data protection advisory.

Business models aren't the only obstacle

But new business models aren't the only obstacle. Abbott also wants to rejuvenate partners with digital talent. Yes, classic ERP partners will need to change:

The CloudSuite Academy we're holding this week will teach partners how to skill differently. There's a lot of folks who have been around a long time in those roles. I'm challenging them to bring in younger talent. Even if it's a big investment to transition [that young talent] and teach them to implement software, do it, because they will challenge convention. A lot of them don't even know what client server means, so bringing in that fresh young talent, along with transitioning into more of a turnkey business - less about all the modifications and customizations, and more about turnkey implementations done remotely - equals more deals.

But Infor's aggressive re-invention doesn't stop at cloud. There is also the vertical industry focus. I pressed Abbott on this point because ERP shops sometimes overlook the industry specialties customers now expect. Infor launched the IPN micro-vertical specialization program two years ago to address this. But Abbott acknowledged it's been slow going, until recently:

To your point, it's been very slow adoption - until now. Out of 750 partners, we only had about forty declare their specializations in the last two years. We tripled that number in the last 100 days. Partners are understanding it's either specialize or die.

Abbott conceded that the pressure to specialize does put "considerable pressure on them," but he believes partners do have related expertise they can draw on. He cited the example of a manufacturing partner in automotive that would typically know four or five micro-verticals very well, such as OEM, after-market parts, and primary suppliers - all micro-verticals they could specialize in. To support these partners, Infor created a development platform called Mongoose:

They can actually build extensions and reporting and put their content directly in the solution... It's about enabling the channel to build specialization into standard product. Our product managers look it over, make sure it doesn't violate the upgrade path, and then they stamp it certified. So partners are now saying, "going from generic to specialized - there's a ton of value in that."

Abbott cited his flagship example: a partner who chose to specialize in the medical device field, and quintupled their sales pipeline as a result. The winning combo? Infor's software, the partner's extension, and their in-house expertise:

Their brand is now well-known in med device along the east coast. My goal is to have hundreds - if not a couple of thousand - micro-vertical specialized partners, because that's what wins.

He then laid down the smack talk:

My competitors will throw ten channel partners with a generic product at a customer, and they all go after it at the same time. Then my partner walks in, with a specific solution and specific methodology for that micro-vertical, and beats them all.

My take

One of the most pointed questions raised in the session: now that it's in the digital services business: does Hook & Loop compete with SIs? After conceding that "in some senses it does," Abbott went on to emphasize that SIs and Hook & Loop have a history of working together with customers.

That flags the deeper problem, not unique to Infor. ERP services partners are faced with monster changes that go far beyond the shift in revenue models. Industry expertise is a problem, but so is the infusion of talent Abbott referred to.

The most competitive partners will need to become industry-specialized ISVs, able to productize their know-how into extensions, and also into pre-sales tools that position their expertise. Content and thought leadership becomes another disruptive topic, forcing change in spray-and-pray sales and marketing tactics that used to work - back in the day when people picked up their office phones, or cared about your brochure newsletter.

As Infor grows its partner base, the issue of implementation quality and partner accountability is front and center. When I pressed Abbott on this point, he said Infor is on the case:

We've kept arms length for years, but to your point, we are now getting more involved. When you talk about cloud, an end user customer considers you an extension of the software provider, and they don't want to hear, "Well, they did the implementation, not us."

He outlined a multi-pronged approached to ensuring partner quality, including hiring new executive oversight, and expanding partner evaluation criteria from three core factors to ten nuanced ones. There is a "partner finder" tool, a version of which can be located in Infor.com, that allows customers to search for partners by industry, geography, etc. When I asked Abbott if he would consider opening that system up for transparent ratings, he said that had not been considered.

It's my view that we're headed for that kind of transparency in partner evaluation. There are some fledgling examples, but you only have to look to everything from Yelp to Glassdoor to software review sites like G2Crowd to know that the "rate it and read it" culture is going to eventually get around to enterprise services. Firms might want to consider getting out in front of that rather than have a site they have no control over become the ratings system of record. Perhaps the result is not a totally public ratings system, but one that customers can log into.

Regardless of what form it takes, thinking transparently about partner performance matters. Abbott seemed sympathetic to my line of thinking here, but where that will lead is not yet known.

Abbott hit many of the right notes and his passion for educating partners was convincing. Infor will need to think hard about the developer ecosystem, as that's a key piece of the digital puzzle. I'd encourage Infor to apply their networked community thinking from the Infor Partner Network, and consider how they can help partners make matches with talented developers and digital upstarts. Put those folks in the same room - or virtual room - and now you have the ingredients for a different kind of services firm.

But for now, I like what I'm hearing. We'll see how this unfolds.

End note: I'm sure these issues will get plenty of attention at Infor's channel partner event which kicks off today. However, I'm heading across the pond so I was unable to attend. I will update if meaty clarifications arise.

Updated early am Thur, July 14 with a number of small edits for writing clarity. No factual content was changed.