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In 2000 a group of investors led by Golden Gate Capital in San Francisco decided to start an enterprise resource planning company, Infor, in an era when ERP providers were trying to determine their future in an emerging Internet-based world.
Fast-forward to 2006: Infor has bought 19 software applications companies and is on the hunt for more. Its acquisition of SSA Global in August catapulted the company to the third-largest ERP provider in the world, behind SAP and Oracle, respectively.
With its combined acquisitions Infor now has 70,000 customers, 8,100 employees and $2.1 billion in annual revenues. But the company has some major hurdles to overcome if it wants to be considered a top tier provider for the midmarket—Infors sweet spot. Chief among them is interoperability between its many products, and overcoming the perception that it is a software provider engrossed with acquisitions rather than customer success.
Infors chairman and CEO Jim Schaper spoke with eWEEK Senior Writer Renee Boucher Ferguson about his vision and plans for the coming year.
Infors only been around for a little more than four years. Whats been the impetus for acquiring so many companies?
I get asked that a lot, “Why start a software company when no one was buying software?” When we looked at the market we looked a couple of areas and we decided on ERP and supply chain—different but parallel markets. This is a large market that is very complicated, going through a significant change, and was ripe for consolidation.
Once we made the decision [of a strategic direction] we spent a year looking at the way customers bought software, and what impacted them. We came to realize that companies buying software had two choices—not bad ones, just different.
One was to go with niche providers that are subscale in nature—great products, but they lacked global distribution and the wherewithal to build that. The other was to acquire products from large, horizontal providers.
They can distribute around the world but lacked industry-specific domain expertise. There really were only two options, and there are only two today.
We believe there was a hole in the market. So weve taken the best of both: industry specific niche providers and built a global, financially stable company that can implement anywhere in the world. Because were private we can [look to add] further support and look to additional acquisitions.
Where are there holes in your business that you would like to fill with either acquisitions or organic growth?
There are two different opportunities, or categories. The first is we are continuing to look for those applications that are both extensions to integrated ERP suites, as well as a product that can be sold as stand alone and integrated with our competitors software. For example: asset management, CRM [customer relationship management], warehouse management, and analytical performance management. These are several areas we are expanding into in the coming months and years. I would love to find an appropriate manufacturing PLM [product lifecycle management] vendor and human resources functionality. Then there are supplemental solutions like different types of reporting or tools around corporate performance management, logistics and transportation management that are interesting.
Second, we are moving into parallel vertical markets to those we already serve today. The reason we entered the wholesale distribution market is we had a lot of manufacturers that needed distribution, and a lot of retailers getting into light manufacturing. We see the same convergence of wholesale distribution with components of retail, POS [point of sale] and multi-channel retail capabilities. The same is true for the public sector and asset management. Well either acquire or build additional functionality around that market.
Development
Q: Where do you see an opportunity for organic development? Will you build a common platform for all your disparate products?
We have plans that are similar and dissimilar from Oracle and SAP around Fusion and NetWeaver. We have no intention of moving to one suite of products. Customers dont want us to do that, it isnt feasible and users end up with a rip and replace [scenario]. Customers have so much invested in their products, it just doesnt make sense. What we are doing is delivering on SOA [service-oriented architecture] that allows interoperability between our applications and third-party applications. Thats very similar to Oracle and SAP. Where we take a different fork in the road, where we diverge, from Fusion and clearly from NetWeaver, is our [solution] is open, its not proprietary, and it will be delivered free with every application we deliver, as long as [users] are staying within the confines of our solutions. If [users] want to move out [to integrate to third-party applications] there will be a very small license fee. Our approach to SOA is open. We do not believe that vast majority of customers want another proprietary infrastructure to launch their applications.
Q: What does that mean in terms of a SOA strategy?
It means breaking our applications down into not only components, but into processes and sub-processes. Were in beta today with the first release that will generally available in January—were releasing to everybody in January. We will have a detailed overview of our SOA strategy and deliverables then—whats going to be SOA enabled, how and when.
Q: Do you think SAP and Oracle are taking the wrong approach by developing middleware platforms to integrate their service-enabled applications?
I would never be so foolish as to criticize our larger competitors strategies. Who is right and who is wrong, history will dictate. But if you look at how we grew up in this business, SAP came out of mainframe then moved downstream into client server, and so their business was built to serve large complex customers. So they are building an entire infrastructure as part of their business.
Oracle has flip-flopped between being open, not open, and partially open. If you look at PeopleSofts orientation [a company Oracle acquired in 2005] and Oracles, theyve come out of tier one accounts, with global financials and large complex environments. Infor is built to serve the [midmarket]. We think what were doing is right for that market. We own the SMB market, with twice as many customers as Oracle and SAP combined. They dont want to implement another platform; they dont want to staff it.
How would you describe the competitive landscape today?
Competitors really fall into two categories: Global competitors, thats SAP, Oracle and Infor. Lawson is not a competitor. Microsoft we see, but not globally, only regionally. QAD we see in China and North America and Epicore in North America, in manufacturing. When I look out, who do I view as a competitor in the midmarket? SAP. They are not necessarily in the markets we are in, but they are taking a radically different approach as I understand it—that for real vertical enhancements [in the midmarket], they are relying on partners to do that. There are some challenges to that. If you rely on the channel, and there is a partner for paint distribution in Philadelphia, for example, how do I get that same thing in China? I dont know how you do that with consistency. Equally, I dont know how you pull all third-party programs forward as you upgrade your platform. Our functionality is built in. Theirs is going to be bolted on.
But you do have multiple platforms to support, with multiple products from different acquisitions…
People say, “Why cant you be like SAP and have one platform?” They have a [separate] platform for high-, mid- and low-end customers. We have different platforms for different vertical industries. [A customer] doesnt have to be low-end, mid or high. We run the gamut. We have manufacturing [software] that is applicable to a $25 million company and to a $15 billion company.
Infor is not historically mentioned in the same sentence with SAP and Oracle. Is that your goal, to be in the tier one category, and what do you think it will take to change the perception of Infor?
Its happening already. We have a couple of inherent challenges. One is were private. Inherently a lot of the generic coverage and publicity that SAP and Oracle get are to a large extent [because] they are both public.
Secondarily, weve only been in this tier for the last four months. Are we getting categorized in the same tier in articles? Absolutely. Are we being considered [in deals]? Thats starting to happen. Our goal is we want to be considered to be in the same thought leadership as SAP and Oracle, and we are making great headway.
What will it take to get there?
I think its going to take a couple things. One, up until six months ago, we were relatively remaining quiet. The practical reality is we didnt want a lot of people knowing what we were doing. We wanted to build the business with the least amount of competition and pay the lowest amount for acquisitions. We liked flying under the radar. When we acquired SSA, everything changed. We became the third-largest ERP provider. We are now taking a much more proactive approach to telling our story. Oracle and SAP talk a lot about SOA but they havent delivered. Were delivering SOA-enabled applications in January. So its happening. It will happen slowly.
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