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Infor's product update - what buyers can expect to encounter

Brian Sommer Profile picture for user brianssommer March 29, 2024
Summary:
ERP vendor Infor last week provided an update on the new innovations the firm has been working on in recent years. The 1.5-day event at its New York HQ had just under 200 slides worth of content alone. Here’s the short recap from that.

infor

Last week, ERP vendor Infor held its first in-person analyst event in recent years. The last briefing being pre-COVID. Thankfully, the company provided lots of product information, access to customers and had few NDA restrictions.  

The key takeaways from this briefing were:

  • Infor will be releasing a flurry of product announcements starting next month and continuing into the Fall. 
  • Infor’s vertical/micro-vertical focus has been a key activity within the firm’s development and implementation teams. It is also a key competitive differentiator for Infor.
  • Industry functionality is one of Infor’s tools to make their solutions highly tailorable to current and prospective customers. That vertical functionality is being paired with other technology stack tools that include process mapping, no/low-code workflow automation, best practice and process workflow templates and more. 
  • Advanced technologies (notably Business Intelligence, Process Intelligence and Artificial Intelligence) are part of all Infor vertical solutions. 
  • Infor no longer resembles a firm comprised of numerous acquired software firms. We went almost two days without hearing names like: Lawson, Baan, SSA, Walker, etc. The focus is on verticals now – not acquired technologies.
  • Infor’s private ownership, by Koch Industries, will likely drive different investment decisions that other software vendors face from private equity and venture capital owners/investors.  Specifically, readers should expect Infor to reinvest earnings and focus on long-term growth items.

The vertical story

Infor’s key verticals are: Aerospace & Defense, Automotive, Industrial Manufacturing, Public Sector, Healthcare, Food & Beverage, Fashion, and, Distribution. Across these verticals, Infor also supports some 2,000+ micro-verticals.  Infor functionality in its Financials, HR, discrete manufacturing, process manufacturing and distribution modules provides key capabilities for these vertical solutions. 

Five years ago, Infor was rolling out its horizontal, cross-industry Finance and HR CloudSuite products. With its depth in verticals now, the company’s sales efforts are now vertically directed and not on horizontal applications. 

Infor believes its vertical applications are functionally deeper, broader and more relevant than those of competitors. We saw several slides detailing specific industry functionality for each of their target vertical markets. There is a lot to these vertical applications.

Infor’s vertical industry solutions are composed of four types of technologies/capabilities under the banner of the Infor OS or Industry Cloud Platform (see graphic below). 

infor

Infor’s nomenclature is, in my opinion, overly complicated, somewhat redundant, and, at times, tough to follow. The company has three multi-tenant cloud platforms: discrete manufacturing, process manufacturing and distribution, and, service industries. That’s in addition to the Industry Cloud Platform, Infor OS, all of the CloudSuite branded items, Infor Cloud, etc. It also has products running on private clouds, old on-premises platforms, single-tenant clouds and multi-tenant clouds.

And, of course, there are the prior brand names to reconcile: LN, Baan, etc. While Infor does possess one of the largest portfolios in enterprise application software, prospects may need a program to keep its brands, products, etc. straight. Infor really needs to streamline its marketing. 

AI and analytics

We also got an update on Infor’s AI and analytics efforts.  Infor’s analytics continue to get ‘smarter’ as AI capabilities are getting incorporated into the analytics. Analytics are also showing up in the ‘persona’ based UX (user experience) screens users get delivered with the software. Screens are tailored for the person and their role. 

On the AI front, many functions are being enhanced with more traditional ML (Machine Learning) functionality and this is most evident in all of the RPA (Robotic Process Automation) functionality throughout the product line. Generative AI demos and discussions were not as pronounced but the capabilities are definitely in the product line and can be used for enhanced forecasting and other use cases. 

Pricing for the AI capabilities was situational. Some AI functions/capabilities will be part of the underlying technology stack/architecture while others will be separate line/cost items for customers.

I asked if Infor is using the code generation capabilities of AI to reduce Infor’s cost structure. Currently, Infor is not using it AI internally to generate code. It might be used to check the accuracy and completeness of code though. 

Carrying the AI theme further, Infor executives noted that Infor is seeking to infuse PI (i.e., process intelligence), AI, BI (i.e., business intelligence) and Industry intelligence into all of its offerings. In doing so, they can make applications more impactful, insightful and more efficient. 

The importance of implementations & partners

Infor spent time with us covering implementations. They, correctly, believe that helping customers get value from their implementation fast is a key step in retaining customers and driving customer satisfaction scores up. To that end, Infor is standing up customers with best practices, pre-supplied RPA enabled workflows (that are built on best practices), low/no-code tools, and, industry-specific software to provide a more complete functional answer that also creates a successful implementation. 

Infor’s partners (they have approximately 4500 service partners globally) are also a key to this continued success. Given the numbers of new and existing customers, Infor has to rely on partners to help sell, configure and implement its solutions.

After the briefing, I checked in with one Infor partner firm. They remain bullish on Infor and had recommended a client add Infor to their software selection shortlist just an hour before my call. In that case, the recommendation was due to Infor’s distribution product expertise.

We also saw several examples where a customer’s processes could be changed post-implementation when different process workflows might be more relevant for certain subsets of transactions (e.g., for low-dollar transactions, for routine transactions, etc.). These alternate workflows might surface as a result of Infor’s process mining technology.  Interestingly, Infor likes to review these workflows as part of the sales/discovery process as it helps differentiate their offerings.

Infor’s deal mix and target markets are interesting. According to their CEO, the company has around 60,000 customers in approximately 175 countries. Customers can be small SMBs to large enterprises and lots in-between. 

Infor spent time on the partner ecosystem as it sees four challenges in the sale and implementation of ERP solutions. These included:

  • Difficult sales cycles, void of mutual benefit
  • Long, complex and disappointing implementation process
  • Lack of flexibility post go live, resulting in heavy technical debt and lack of agility 
  • Underwhelming support and partnership

Infor has clearly been working on the second point (i.e., improving the implementation process) and its new no/low-code and RPA technology is going to help this significantly. Showcasing value to be derived from the new solutions will likely fall on the partners for the most part. However, the libraries of best practices, pre-configured workflows, industry functionality, etc. should significantly help with this.  If these new capabilities and products are as good as Infor suggested, then we should hear a number of new customer acquisition stories at the next briefing. 

The numbers

I compared Infor’s growth from calendar year 2021 to the data they shared last week. The quick comparison shows:

CY2021

  • Total Revenue: $3 billion
  • SaaS Run-Rate/Annual SaaS Revenue: $1+ billion

CY2024 

  • Total Revenue: $3.4 billion
  • SaaS Run-Rate/Annual SaaS Revenue $1.5 billion

Attrition/growth

  • SaaS Growth over 3 years CAGR = 28.3% (2020 – 2023) 
  • SaaS Attrition has dropped from 8.4% to 3.5% (2020-2023) 

As the data indicates, subscription sales are clearly the bulk of net-new deals and revenues. Services revenues are not the big revenue driver.  YOY SaaS revenue growth was the greatest in LATAM and EMEA. The greatest industry growth was in hard industries (i.e., manufacturing, distribution, etc.). Aerospace & Defense posted the largest gains of all industries.  Healthcare, already a big vertical for Infor, posted good growth but not like that in the hard industries.

Many readers may be surprised to learn of Infor’s global presence. It is actually quite significant and has solid representation in most parts of the world. 

Marketing  

Infor, compared to other ERP vendors, may just be too quiet in the ERP space. ERP is a noisy space and the company’s messages, innovations, etc. may not be getting the attention they deserve. While you’d expect a lower profile from a capital-strapped start-up vendor, Infor does not fall in that camp. Infor may need a greater market presence and awareness to more effectively capture the mindshare it needs vis-à-vis larger ERP competitors. 

Infor also likes to tout its technology. It doesn’t seem to know how to discuss the softer, experiential side of Infor and what it does for customers. Lots of technology companies, unfortunately, do this. It’s what you’d expect from a firm with lots of technical, engineering types in its employ. They can speak ad nauseum on geeky matters but find ways of communicating the intangible aspects of a customer’s experience with the vendor to be next to impossible. 

At a customer panel, one customer gave Infor a million-dollar gift. I asked the panelists to collapse the Infor experience for their firm into an eight word or less bumper sticker statement. One customer blurted out, “Infor knows my industry”. That message spoke to the value the customer is getting from their Infor solution (and it’s not about Infor see its own tech) – it’s about Infor’s IP around that customer’s industry that’s adding value. I loved that comment. It hit on a critical buyer value in a short effective manner. I hope Infor embraces something like that going forward.

Koch Industries – the parent company

Koch Industries is a massive firm with revenues estimated to be around $127 billion annually. It is a privately held conglomerate that has businesses in the asphalt, chemicals, energy, fibers, fertilizer, oil & gas, ranching, paper and other industries. Infor is a bit of an outlier compared to so many of Koch Industries natural resource or industrial product lines. 

Koch Industries generally invests in firms that exist in the initial parts of a value chain. These companies often have long-term prospects and provide the materials that other firms need to make, transport, package, supply, etc. their customers. 

The company tends to hold onto its businesses for a long time. Unlike technology firms that were financed by private equity or venture capital funds, Koch Industries isn’t necessarily looking for a liquidity event within 5-7 years of buying into a firm.  They may end up owning Infor for decades and Infor prospects that have been burned by material change of control aftereffects from other software firms might value this ownership certainty/stability.

Koch utilizes decision rights and other managerial principles to manage/guide its portfolio companies. (See this short one-page pdf on Koch’s five management dimensions). The subsidiaries executives operate their business unit with lots of autonomy. 

Readers should expect Infor to plow excess earnings back into the company, propel further growth, expand market share (globally and locally) and help other portfolio businesses from time to time with needed capital, if so required. 

Given the preponderance of software firms who are under the control of institutional investors, private equity firms and venture capitalists, Infor will likely make different capital and growth decisions than its peers. That could actually be a welcome change in the software space. 

My take

It’s hard to collapse so much news in a short write up. Updates are plentiful throughout Infor’s product lines and vertical solutions. Buyers should evaluate the Infor of today and not the products of yore.

Readers should take away the following:

  • Infor is no longer a caretaker of dozens of old software products and brands. It has re-tooled and developed anew vertical applications with a common, modern architecture.
  • Infor comes off as understated, but that’s okay as the technology appears to possess modern capabilities (e.g., AI, RPA, analytics, etc.).
  • The global partner network is key to Infor’s success and could be to a prospect’s implementation, too. Picking an Infor solution may require buyers to also choose a relevant, quality partner to help with the product/process configurations, too.
  • Older Infor customers may need to decide when they’ll accept new technologies (e.g., AI), newer application software, etc. from Infor. Part of those decisions will likely trigger discussions as to the adoption of SaaS products, multi-tenancy, hosting, etc. 

More details will likely be forthcoming in future briefings. 

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