Following the main keynote sessions at the Infor Partner conference in Barcelona this week - check out Derek's write-up here - , diginomica was invited to sit down for some face time with CEO Charles Phillips.
This is an invitation you don’t turn down. I’ve been interacting with Phillips in various guises for the best part of far longer than either of us would care to admit, from his days at Morgan Stanley as the go-to enterprise software industry commentator, through his Oracle years to his present role at Infor.
Phillips today is the turn-around CEO for a company whose light wasn’t just hidden under a bushel. It had been buried several feet down and cemented over! The Infor of three years ago was an all-too-often unrecognised enterprise behemoth, but one that lacked the attention-grabbing glamor’ of its main competitors, Oracle and SAP.
When Phillips took over as CEO, he instigated some major changes. New senior management was brought in. Product lines were lined up for radical re-design with 1500 new engineers hired as well as whole design and creative agency created in the shape of New York-based Hook and Loop with the brief to “create experiences people love”.
All of this has helped to raise the profile of Infor and effectively to reboot and re-energize the firm. Phillips says:
“The Infor brand is much better recognized than it was three years ago. For the first two years, we purposefully didn’t do branding. The products just weren’t there. So we got the work done first and delayed on that.
“A lot of people said ‘Why aren’t you making a noise?’. But it wasn’t the right time. Now we’ve made the changes to the strategy so we’re spending a lot more on branding.”
And in terms of the transformational journey for the company, he adds:
“We are further ahead of where we told our investors we’d be. We knew it would take three or four years of investment. We’ve got more done in terms of the product line than I expected. Not as much as I wanted, but more than I anticipated.”
But the reality is that Infor’s approach to enterprise software has been revolutionized. Once perceived solely as a highly efficient acquirer of other software firms, assimilating other firms into the mothership like the Borg in Star Trek, Infor has set out to offer its installed base an alternative approach.
It’s one that perhaps has startled some customers. Phillips admits that for example some people were taken by surprise by the latest Infor 10x:
“With 10x, we ran so fast that we ran ahead of the customer. It was an issue to some customers that they weren’t used to so many releases coming out.
“That’s why we came up with Upgrade X. We do it ourselves.”
Upgrade X is in many ways emblematic of the changes that have been wrought at Infor over the past three years. It’s the offer from the firm to its customers to upgrade them all for a fixed fee to the cloud. Phillips sees this is as a major competitive differentiator:
“We are the only company that has announced to its entire installed base that we will migrate them to the cloud for a fixed fee. We can move the customer from A to B. We’ve been building an entire sales force to do just that. We’ve built an engineering practice around that.
“Customers have had a lot of trouble comparing the cost of the cloud to their costs today. You need to factor in labor and machines and so on. But when you compare all those costs to our fixed cost, then people see it adds up. Within a week [of announcing UpgradeX] we had 100 customers for it.”
It’s a far cry from the last time I was in Spain at an Infor event - pre-Phillips - when I met with some of the old Epiphany management team and recall being perplexed and frustrated at the time by their reluctance to face up to the cloud as a delivery model for enterprise CRM.
Flash forward to this week and the cloud is agenda item number one with some bold moves set to be announced at Amazon’s AWS Summit in San Francisco later this month. Essentially Infor is about to make a massive public cloud commitment in the shape of an offering called Cloudsuite. Phillips explains:
“We are going to bet pretty strong on Amazon with Cloudsuite. It’s about taking our industry expertise and moving the entire infrastructure into the cloud. Cloud today is HCM, some CRM on the edge, none of the critical core operations.”
This means a commitment to public cloud on a grand scale, perhaps the grandest of any enterprise applications software company to date. It has other benefits such as eliminating the need for Infor to build data centers of its own:
“All the other cloud companies built their own data centers. But if you were starting Salesforce.com today, the first thing you’d do with your venture capital wouldn’t be to invest it in a data center.”
The relationship with Amazon will also assist Infor to avoid those irritating data sovereignty questions that vex so many US providers internationally. Phillips says:
“Amazon has a footprint that’s big enough for that. The issue has been having to build data centers. You didn’t want to build them but you were slowly forced to do it. Our answer to that is to let Amazon do it.”
Of course, there are however those in Europe at legislative level who are still hellbent on insisting on in-country data centers. On this, Phillips is diplomatic in his response:
“There is no technical need for in-country data centers other than that you guys decide you need that.”
All that said, the appetite for moving to the cloud is unlikely to be universal among the Infor installed base. The forces of conservatism are still powerful, especially among those who have spent years highly customising their existing on premise applications and convincing themselves that they can’t live without all those bespoke touches.
Phillips concedes that there are those who still want to be on premise and emphasises that that’s still an option open to them, although he’s clearly not keen on deployment models such as the one put in place by Salesforce.com and Hewlett Packard last year whereby large enterprises can have a dedicated cloud of their own. He says:
“They had been doing that for a long time. It had become so common that they had to announce it. We’re trying to stay away from that. The reason that customers want to this is to do with customisation or wanting their own upgrade cycle. The whole purpose of SaaS is no customisation.”
So the question then is how Infor persuades the reluctant organizations that the cloud is their best option? Phillips talks about value engineering here:
“Let’s not look at your existing applications that you’ve customised to death. It’s not a useful exercise to go through that.
“Just look at your business processes and let’s put something in a sandbox in the cloud and see if you can run your business with that. That’s much more effective that trying to go back over what you have.
“There has been enough noise about the cloud that people have become slowly convinced. The most conservative ones are in manufacturing and public sector. Amazon has public sector certification and healthcare certification which not many people have.”
There’s also the possibility in the air of another relationship that would put the proverbial cat among the pigeons. Phillips says:
“We are working on some issues around Big Data and we’ve been discussing with SAP about putting HANA on Amazon. We already announced a RedShift relationship with Amazon. There’s no reason we can’t do it with SAP.”
If two of the top three enterprise applications firms were pushing HANA in this way, the implications for Oracle would be interesting to say the least. Phillips smiles enigmatically at the suggestion that his former employer might be on something of a back foot.
But it’s not a done deal yet and this was not an announcement, but the signs seem good as Phillips states:
“We’ve been testing it. The performance has been better than we were expecting.”
The transformation of Infor over the past three years has been a remarkable achievement.
I’m minded of a comment from Oracle’s Larry Ellison to the effect that it’s easy to write cheques, not so easy to write software. (This was before Oracle embarked on the Phillips-led acquisition spree of recent years.)
Benefiting of course from being privately-held and with investors ready to bankroll the metamorphosis, Infor’s turned itself into an innovator as well as an acquirer.
Phillips made the point earlier in the day that acquisition remains an entirely legitimate business model and it’s obviously one that Infor will continue to pursue.
But what’s impressive about the firm today is the work done on the experience of the applications. Phillips talks of enterprise software that has higher design standards than something in the Apple store.
It’s a compelling vision. Watching a demo of a hotel reservation system (see also video below) that just works rather than the ones we’re all used to with myopic hotel reception staff banging away at a green screen terminal brings the idea to life.
There’s still a way to go of course. This is a long journey, but the confidence permeating the company is tangible.