Infor thru the stages- what’s the next phase?

When Charles (Chuck) Phillips and his team took the reins at Infor in 2010, they inherited what was possibly the largest portfolio of enterprise application software products globally that served some 70,000 customers. Unfortunately, many of the brands were (IMHO) unloved and had suffered from years of underinvestment.

Making products like Baan, SSA, Walker Interactive, Software 2000/Infinium, SunSystems, etc. modern and market relevant again would be a major undertaking. The journey for Phillips and team began with these initial first stage activities:

• Bring some new energy and functionality to several of the product lines. This included the acquisition of design/creative talent (i.e., Hook & Loop), new UX, a collaboration tool, a cloud data warehouse, etc.
• Reinvigorate some of the horizontal and vertical solutions with even deeper micro-vertical solutions where possible
• Make some smart bets on some of the product lines (e.g., Lawson)
• Introduce new technical capabilities into the product lines

Stage 1 Background

Stage 1 has been underway for eight years now. The management team remained focused (and mostly intact) during this timeframe. Except for a couple of acquisitions (e.g., the BI tool Birst), Infor has been faithfully executing against the original plan.

There were some adjustments along the way. In the middle of this journey, Infor made a big cloud bet on Amazon’s AWS and avoided some of the data center buildout costs and operational distractions that some competitors faced. Infor also embraced the use of a lot of open source products as part of its new technology stack. On balance, the management team has made thoughtful, premeditated moves in its architecture decisions.

Infor also made a few investments in other areas. It acquired a data science firm to modernize its HR products. Last year, Infor introduced Coleman – its cornerstone AI/ML tool – and is baking it into all kinds of product analytic use cases. Add Coleman and Birst with their workflow, collaboration and other platform components, and Infor has the potential to modernize its products.

Infor executives must have realized that they couldn’t modernize every product line they possess. (For a glimpse into how many product lines we’re talking about, consult this page at ERP Graveyard). So the company decided to place its biggest bets around some of its most popular (and newer) product lines like Lawson, Syteline and Baan. Lawson functionality clearly influenced the new CloudSuite HCM products and figures in the CloudSuite Financials as well.

During the last eight years, customers got the opportunity to upgrade old apps to a newer solution set via Infor’s UpgradeX program. That initiative was launched in late 2013 and provided customers with a cloud-based data warehouse (Ion), Ming.le and other capabilities. The other big aspect of this effort was that customers could move their solutions to a cloud-based product line.

Not all customizations or product lines would be movable initially. According to Infor, “UpgradeX is available now for Infor LN, Infor M3, Infor Lawson, Infor SyteLine, and Infor EAM”. Moving 70,000 customers to the future wasn’t going to happen all at once – it would take time.

Stage 1 Now

According to a slide Infor executives shared at the recent Inforum2018 event, 8,881 Infor customers are now in the Infor cloud.

That number indicates that Infor has a ways to go in getting more of its installed base off of older solutions and onto newer generation products. Is that a surprise? Not really. Many of these customers are only just now getting access to some of the new solutions. Some of these customers are on heavily customized predecessor products and any upgrade for them will be a challenge. And, like with all software companies, some of their customers are just slow (or impossible) to upgrade.

At Inforum 2018, Phillips stated that most new deals going forward will be cloud multi-tenant. The company is not interested in selling on-premises or single-tenant hosted solutions although it will do so in some very specific exceptions. Phillips believes that multi-tenancy on a public cloud will deliver a better experience for the customer as the solutions will always be current. Infor customers verified this. A couple of large reference customers indicated that they were well on the way to getting out of the data center business and application maintenance activities. Instead, they want IT focused on more strategic activities. No customer I heard from showed any interest in perpetuating their on-premises experience.

While I agree with Phillips direction and the new sales strategy to push multi-tenant solutions, this policy and the attendant implementations are going to take time. According to one Infor executive, some Infor modules, like the CloudSuite Payroll module, are still single-tenant. Customers will upgrade to these products on their schedule, not Infor’s.

I wonder how some of Infor’s competitors will react to this as many of them have been loath to push their customers to the cloud, let alone to multi-tenant solutions. Infor’s made the right choice but competitors will likely throw up some FUD in the interim. For more on this, check out: It’s 2018 Why Isn’t my ERP Multi-tenant?

One thing bolstering Infor’s public cloud/multi-tenant push is that it will use aggregated data to provide benchmarks, insights and productivity improvements to its customers. You can’t do this with overly customized on-premises solutions.

Stage 1 Assessment

When a vendor introduces a radically different product line or architectural changes, there is always risk that a big change could trigger existing customers to ‘seek true love elsewhere’ from other software providers. It speaks to the stickiness of Infor solutions that Infor managed to retain most of their installed base during this change.

Proof of customer satisfaction with the recent technical direction came in the following manner: When I asked customers that recently upgraded their Infor applications if they had considered other vendors’ products, the answer was ‘No’. It seems these customers liked their old apps especially those using Lawson products and felt that Infor’s upgrades and the company were worth continued trust. I can’t say I’m seeing this sentiment within the customer base of some of Lawson’s competitors. Bad acts, litigating customers, over-auditing customers, etc. are the kinds of things some competitors are doing to their customers but Infor’s customers didn’t report any of these behaviors to me.

UpgradeX, in my opinion, didn’t seem all that transformative when it was first announced. It did, though give Infor customers a taste of cloud applications and upgrades to some key product lines. In retrospect, maybe that was a proof point customers needed for them to see re-investment in the products was actually happening and that staying with Infor might be a good thing. Subsequent investments into the creation of vertical and horizontal CloudSuite solutions, new UX, new mobile apps, etc. added more gravitas to the new technical direction.

Stage 1 is not complete yet. Lots of customers must still be upgraded. These customers need to get on the multi-tenant cloud solutions. Infor needs to complete any finishing out of the core apps (e.g., payroll) into the multi-tenant deployment method. And, the real proof will come from Infor bagging a slew of net-new, not upgrade, customers using these newer solutions. That will be some milestone.

Stage 2

While Stage 1 continues adoption, it is Infor’s job to make the products more viable in a more digitally driven, big data powered world. This is where Infor’s investments in Coleman, Birst, etc. should start to pay off.

I really doubt that old Infor customers running really old products on-premises can jump all the way to an AI/ML/NLP powered world in one big leap. It’s just a bridge too far. These customers have to approach modernization in several steps – each with its own challenges.

For example, Infor has a significant number of manufacturing customers. Many of these need to:

• Connect the different machine tools they use to one another
• Capture key metrics from machine tools (e.g., digital micrometers, temperature readings, etc.)
• Capture cost accounting data from new kinds of machinery (e.g., 3-D printers, robotic welders, etc.)
• Better understand where their inventory really is
• Know the real-time status of every job, order, etc.
• See the production cost of in-process items in real-time
• Eliminate the need for spreadsheets
• Eliminate magnetic whiteboards and paper notes on the shop floor
• Improve their predictive maintenance abilities to help improve top line, bottom line and customer service metrics
• Introduce data capture (or a digital fingerprint) across the entirety of their value chain and produce
• Scalable technology architectures that can process other kinds of data (e.g., images, emails) than just fixed-format transaction data

Moreover, not all of these firms are large enterprises. Infor’s bread and butter customers include a very large number of mid-sized accounts. That kind of business is apt to have champagne tastes and beer budgets. With those budgets, I suspect the change will have to come gradually and incrementally.

So, one aspect of Stage 2 will be a long process of getting tens of thousands of customers through Stage 1. The best thing Infor could do for these customers is find a way internally (and with the very best partners) to make this transition happen ASAP. Why? The digital divide that is opening between the digitally transformed firms and those still stuck in a prior age is widening and deepening. If Infor succeeds in this endeavor, it helps companies remain competitively relevant and fuel outsized organic growth. If Infor doesn’t, they could accelerate the obsolescence and lack of competitiveness of their own customers. Closing this divide should be a strategic priority for Infor.

How that divide gets closed is a puzzler. For mid-sized firms, they won’t necessarily possess the staff with algorithm skills, data science skills, etc. Do you really think they’ll be able to compete for these scarce and expensive people in the market? And, will they do so in volume? No – mid-sized companies will need:

• Canned analytics
• Pre-built workflows
• Easily tunable and teachable machine learning tools
• Transparent solutions (not opaque black boxes)

Infor is working on some of this now but it’s still early in the development phase. We saw many proof of concept demonstrations but full blown, easy to configure solutions may take some time to appear en masse. Remember, all of these new capabilities will need to get created/tuned and deployed into the dozens of industries and micro-verticals that Infor supports.

The guts of Stage 2 have to include a focus on things beyond the basics of business transaction processing. The new solutions will need to use social sentiment data, weather data, geo-location data, sensor data and much, much more. The implication is that new Infor systems must:

• Have a new data model
• Support many different kinds of file structures/databases/access methods
• Operate in-memory and parse billions of records in nanoseconds
• Come in a scalable technical environment
• Have apps that can be turned on/off like smart phone apps
• Support many new kinds of users
• Integrate with an extraordinary number of new and existing and systems

But the users of these new systems will need to be:

• Quite savvy in the use of advanced technologies (e.g., AI/ML)
• Great at re-imagining and designing new processes – especially processes that start with big data
• Designers of radically different and constantly morphing workflows
• Interconnected and integrated with all manner of new and different kinds of technologies, cloud data stores, sensors and more

For Infor to win Stage 2, they’ll need to develop a lot of new capabilities themselves. The implementations of Stage 2 solutions will be transformative and not transaction based. Should Infor want partners to help with this (for some of the deal flow), they may find some of their existing partners lacking and some of their larger partners unwilling to assist mid-sized firms. For this to be a success, Infor’s got to develop a lot of initial capability themselves. If Infor could acquire net-new design talent (similar to the way they acquired design talent for Hook & Loop), then they should also be able to do so for these cutting edge capabilities.

Because the life-cycle of new solutions may be short-lived and constantly morphing, buyers will want solutions that are proven and immediately usable. Multi-year and multi-million dollar implementations will not work.

The new Infor partners for Stage 2 will also have to ‘share’. The days of an integrator hoarding best practices, process designs, workflows, etc. are over. These designs, algorithms, dashboards, widgets, mini-apps, integrations, etc. need to be available to all customers as hoarding does not allow for rapid adoption of innovations within the installed base. Reusable libraries must be part of the Stage 2 future.

My take

It’s not hard to craft a logical game plan for Infor. The issue is whether the vision will actually come to life. There are three potential challenges to any strategy. These challenges include ownership changes, management changes and a lack of movement within the installed base.

Readers must remember that Infor’s owners include a private equity firm and a major customer (Golden Gate Partners and Koch Industries (via Koch Equity Development LLC)). Should one of these firms push for a liquidity event, it could trigger a number of changes that could change the company’s product direction.

Management changes could also affect Infor. A couple of Infor executives have recently left. Their replacements and/or other departures could put current plans into flux. While I’m not expecting any imminent material change of control, customers should always be alert to the possibility of one and its implications.

The scale of change Infor must coach its customers through is significant. Newton’s Second Law of Motion states that Force is equal to Mass times Acceleration (F=M*A). Infor’s installed base is huge. To move that many customers to a new future ERP state takes more than a village. After eight years, Infor has many of the technical components in place to trigger a big shift but assembling the tools is but one challenge.

Overcoming the inertia within the installed base could be a monumental challenge. Long-term, Infor’s success in the marketplace will be determined by the way and speed with which it affects such change.

I’ll be watching…