Can Infor overcome the resistance of its customers fast enough to move them into the cloud era? If the enterprise software vendor can get them there quickly, the rewards will be huge, as Infor president Stephan Scholl told me this week:
If you can convince a customer to move mission-critical applications to the cloud, that's the biggest battleground of the future. Why? That's where the most money got spent, that's where the most activity is, that's where all the risk is.
Mission critical apps in the cloud, if we can conquer that, we'll become the biggest, most important enterprise company in history.
Hence the introduction of the 'Lift and Shift' initiative announced at its Inforum conference this week in Paris, through which Infor aims to remove the objection from overburdened IT departments that there's no resource available to make the move.
They all look at this new stuff. Everybody looks at it and says, 'Wow! How do I get there?' The reality is, it's actually not that hard. They're just not equipped to do it.
First lift, then shift
The first step, the 'Lift', moves the customer's existing applications unchanged into Infor's infrastructure. For many customers, just moving off their existing technology infrastructure is a significant project in itself.
Once Infor has the applications in its infrastructure it can then analyze the customer's instance to see what needs to be done to complete a migration to its latest cloud applications. Most of the original modifications to the old client-server code are no longer needed because the functionality is already there in the cloud version, said Scholl. The few that remain can be handled either by process re-engineering on the customer side or, where necessary, by adding one or two custom extensions.
You can do a few modifications to meet some specific needs. We manage that in a separate server in a separate database to do that for the customer. All to gain confidence for the laggards to say, 'You already took it off of my hands, you're running my business for me, you did the technical upgrade phase one.'
That's all part of that 4-to-6 weeks lift, and then we shift to the new release over 2 months to 24 months. With the end result being you're on the CloudSuite, multi-tenant, latest and greatest solution and then you're ours.
The all-important objective from Infor's point of view is to bring the customer onto its latest sofware platform rather than have them looking around at other cloud-based options in the marketplace. So it's not just a question of bringing customers into Infor's infrastructure — it's really about accelerating their migration to its all-new, AWS-hosted CloudSuite application portfolio, where the vendor believes it has its strongest competitive advantage. Scholl told me:
I don't want to put lipstick on the pig. I don't want to just run their environment and then count it as subscription revenue and then do hosting but it's called subscription. No, no, no. I'm doing that part because I want to get you to the new stuff as fast as possible. Then it's cheaper for me to run it too.
In the [Lift and Shift] contract I'm putting in, the faster you move, the faster your price goes down.
That's our agreement. Lift it. I'm going to charge you for it. Not going to be cheap, but the faster we migrate, your bill's going down.
Transfer of accountability
It also changes the relationship to one in which the vendor assumes much more responsibility than in the old world of on-premise software, he added.
What Infor is offering up is a complete different relationship. We're coming in and saying, 'I'm going to take your stuff, I'll get you current.' If I release product in six months at a much faster rate, it is now my responsibility to get you up and running on the latest stuff. Not yours. I'm signing up for SLAs on uptime, for performance guarantees on availability of product, all those things.
Think of that transfer of accountability. Just like the manufacturers are doing. Contract manufacturing, outsourcing to China and everything. Why wouldn't you do the same thing on the IT side?
CEOs see the merits of this argument but Infor often has to counter reluctance from CIOs, said Scholl.
My frustration is the CIO wizzles the CEO into all this security speak.
What AWS [Amazon Web Services], what Infor Labs and what we do, there isn't an IT shop in the world that can compare to what that collective organization brings.
Case in point. Some of the biggest banks in the world, who have IT budgets bigger than any company here [at Inforum], are getting hacked. They're losing customer data. These are on their own data centers. AWS has Homeland Security, has organizations and government all around the world running on AWS today. We've even gone a step further with our own Infor Labs solution.
That's why I try and get to the CEO and the CFO as much as I can, because the economics are pretty powerful. Why wouldn't you transfer the risk over to us?
Infor is happy to leave infrastructure to others, he said, even to the extent of being willing to consider other platforms in the future.
What we've woken up to is open standards. If [SAP's] HANA is going to become the best thing since sliced bread in two years from now, I want to work on HANA. If it's IBM or HP or Oracle or anybody, why do I want to get into that game that's becoming so commoditized? That's why we're going to get so good at the application layer.
Now Infor can point to companies like carmaker Ferrari and aerospace giant BAe that have upgraded to new software versions without having to add custom modifications, said Scholl. That investment in application functionality makes it easier for Infor to persuade customers to entrust the vendor with operating the software in the cloud.
You can then say, 'Well why wouldn't you let us run it for you in the cloud?' That's the evolution. You can't take heavily modified product and run it on the cloud. That's why we're so aggressive. We do want to get customers to the latest release, but you have to have the product strength to do that.
Massive compute power
Once in the cloud, there's scope to do more that isn't possible on-premise. For example, running on AWS gives Infor the scalability to support big data analytics that enterprises don't have the resources to do on their own in-house infrastructure. Scholl cited the example of Whole Food Markets, the US grocery chain which is implementing a retail-specific version of Infor CloudSuite.
To do basic analytics around their customer, crunching that data on a Friday afternoon after the week's sales are done, you couldn't put up the infrastructure in your own environment. I'll pay Amazon for those 3 hours rather than have [my customer] spend 100 million dollars in infrastructure for 3 hours a week.
What cloud, what AWS brings with it is massive compute power. There's no company in the world, no Exxon, no General Motors, that has that kind of compute power.
Now if you leverage that for a Whole Food as a retailer, think how much smarter they can become around what products they sell, where they set the pricing. Retailers want to get into dynamic pricing — peak hours of the day, freshest fruit in the morning — there's so many variables of when we go shopping, they want to change the world around that. You can't do it in your own little cocoon world in your own data center.
Although Infor is ready to move customers as quickly as possible to the cloud, the vendor realizes not all customers are ready to make the leap. Lift and Shift allows them to migrate at their own pace, said Scholl, with connections back to IT that remains on-premise.
There's variability and flexibility because we're always afraid to force somebody, to say, 'Hey you go from old, all the way to cloud and there's nothing in between.' Customers need help. That's the truth.
They have different priorities and different risk profiles. When you think of the biggest challenge of cloud, it's change management on their end. It's a different world. Some just don't have the appetite to adopt that much change. That's a reality of our customer. We have to go at their pace.
Infor has long realized that persuading customers to upgrade to the cloud-based generation of its software is the key to maintaining and extending its revenue growth. The Lift and Shift initiative represents a substantial investment in accelerating that progress. It's an astute move that other vendors with an extensive legacy installed base should examine carefully.
Image credits: Forklifting containers with sky background © somkanokwan - Fotolia.com; Stephan Scholl headshot courtesy of Infor.
Disclosure: Infor, Oracle and SAP are diginomica premier partners.