I spent a couple of days at Infor’s user conference in New York this week. I did a podcast with Jon Reed of Diginomica about the event, and have included excerpts from that conversation and added some other thoughts below.
JR: You've been covering this company for a long time. What do you think?
VM: Let's approach it two ways. One is, how is Infor different from some of the other ERP players like SAP, Oracle, and so on? Then, where are they on their journey, the vision they painted?
If you look at Infor and compare them to SAP, Oracle, or even the cloud players, they have 3 or 4 very significant differentiators. One is they're into a number of verticals that others either don't seem interested in or just haven't played in. Infor is interested in retail, interested in healthcare, interested in hospitality, services. Not just manufacturing or distribution type markets (during the conference I had breakouts with Infor execs from retail/distribution and from manufacturing verticals. The customers in the audience and who were on stage included a wide array of industries and geographies like Albuquerque Public Schools, CERN, First Transit, Hackensack UMC, Kirin Breweries, Sanford Health, Travis Perkins, Whole Foods and Zahid Industries)
A second one is, when you look at cloud infrastructure, 4 years ago they decided, "Why are we putting money into a data center? Why don't we go with Amazon Web Services?" So that's been a significant differentiator for them. As Charles Pjillips, the CEO said a few years ago, "Friends don't let friends build data centers." He's taken some of the money that he would have put towards the infrastructure and plowed it back into application functionality.
JR: You've been a critic of certain ERP vendors that have perhaps overspent on data centers.
VM: And not gotten much for it as a result because they are poorly run and are undersized and so on.
Another way Infor is different is, they have a number of human services that they proudly show off. They've got the Hook & Loop digital agency. (the conference highlighted Hook and Loop Digital which I had written about earlier) It could be a design agency that any customer could hire if they need to. They have a Value Engineering team that does a very sophisticated analysis of payback. They have a group in Cambridge who are Data Wizards. Every software company needs some talent, but they always try to hide the human aspect. But Infor has been reasonably visible about a lot of their human services.
Which leads me to my fourth point. If you walk around the show floor here, you don't see Accenture, you don't see too much IBM, you don't see the big outsourcers here. That's another big difference here. With my SAP Nation thinking, I like vendors that don't surround themselves with too much off the labor intensive model. So, those are 4 things where I think Infor stands out from some of the others.
JR: There's a perception of Infor as sort of a holding company for ERP graveyard products. Infor actually has way more even than Oracle that are under its umbrella somehow. Is that now an unfair stereotype?
VM: That's a good segue to my second point and about progress toward their vision. I think it's still a fair stereotype because close to a hundred thousand customers, most of which are still under legacy brands like Baan or Syteline in ERP and Epiphany in CRM
JR: Names you haven't heard in years, right?
VM: You can look at it as half full or half empty, right? Those are all customers waiting to be migrated or those are customers that are just brain dead. I'd think those customers are waiting for easier migration. So Infor announced at this event, a deal with BackOffice Associates. They specialize in moving on-premise customers to the cloud.
Now does Infor have everything ready in the cloud? No, but they're thinking through a lot of those issues better than I think other legacy vendors that have a significant on-premise customer base.
JR: Their next generation product is known as CloudSuite. It can get a little confusing because they throw their CloudSuite label around a little bit. But before this conference, they announced a general availability of financials and supply chain. Which is big, right? Now I asked Charles Phillips yesterday how many customers. He was a little careful about his answer, but that's legit because it's a new product. Where do you think they should be? How will you chart their progress from here?
VM; I think they need to accelerate both of their product availability in the cloud and migration of their legacy customers. One of the themes from this event in talking to other analysts is, there are very few references. They haven't really migrated a large percentage of their customers. That is a challenge. That is something they need to tackle.
JR: You think migration tools are a key part of it? Making it easier?
VM: First making sure the product is ready. And then the migration. They have so many different initiatives going on and so many different verticals that the risk they have is they're making too many announcements and not enough product availability and not enough references.
JR: What I think you find a lot of times with these next gen releases is that the classic, sort of large enterprise customer is not the first one to move, right? Like a lot of times it's edge cases, smaller shops. We did a interview earlier today with a public services company, basically a water company in California. 150 employees. They had made the move to financial so they hadn't gone live yet, so not a classic ERP customer, right? What was interesting was just kind of pressing him on functionality gaps and hearing that he's pretty happy with the functionality he was finding in the financials. This is a Lawson user. Now Lawson is run in Cobol, so it's ... The backside of Lawson is a little archaic, but the functionality is pretty deep in the financials area there. When you hear something like that, it makes you think that they may be further along in that regard than you might expect as far as the depth of functionality.
VM: But that's just one ... You're looking at a horizontal product on financials. I'm hearing from Infor about their Whole Foods driven retail merchandising strategy. I'm hearing from others at Infor about their hospitality strategy. I'm hearing from others about their healthcare. They have a lot of irons in the fire and the risk is these are all announcements at this point, or onesie-twosies in terms of customers. They need to do a better job prioritizing 7-8 of those initiatives and driving them home.
JR: Right. When you can bring people on stage who are essentially winning in their industry, that helps. Is the product there though? I'm not convinced the product is completely there in some of those areas.
VM: Yeah, like when Whole Foods is fairly well along and they have 2 or 3 other big brand customers. That's going to position them very well in the retail and grocery sector.
JR: When they started talking about digital transformation, my bullshit detector went off. That's only because every show I've been to this year, you name it, that's sort of the griddle cakes that are being pushed on stage, right? Yet, a lot of this is real, right? Like this is not just a marketing fantasy. What is your take on that part?
VM: A customer who is embarking on a digital transformation journey, can go to a Cognizant or an Accenture to help them build that vision. Or they can go to a Ideo, a design firm and say, "Where do we start? New products or enhanced customer experience?" So there are different paths they can take. I think Infor's view is, "We have a digital agency called Hook & Loop. We have vertical expertise in so many areas. We've done a lot of value engineering work. We've got the building blocks. Come to us. Maybe we can show you how to embark on that." Now, they don't want to be a consulting firm. They'll qualify the prospects and see if they are interested in building with them, next generation solutions for that industry. That combination happens when a customer is very interested in a deep transformation, not just a "I want to do sentiment analysis and that's my definition of digital transformation." But a deep business model change, a smart product strategy and so on. Infor wants to position itself as "Think of us. Don't just go to McKinsey or Accenture because we've got some unique assets."
JR: I don't know, Vinnie, if I'm an Infor partner listening to this podcast, I wonder how I fit into this picture.
VM: You have to walk on the show floor and it's not like SapphireNow. There's Ciber, there's HCL. There just isn't that much big, big money around Infor. If you want the $ 50 million projects, keep doing business with SAP.
JR: There you go. The author of SAP Nation speaks up. Okay. You know, it's funny, I didn't think we were going to be able to avoid SAP on this podcast. Just to wrap the digital transformation piece because that was one of their major announcements was that they're going to be providing digital services through Hook & Loop. Do you feel that that theme resonates with customers? In other words, in this industry, is digital transformation more of a vendor creation or is it a reality for customers that they need help with?
VM: I think it varies by industry. Retail, for example, everyone is scared to death of Amazon. Digital is a clear burning platform. You go into insurance, maybe not quite as convinced about that. So it varies from industry to industry. Infor's challenges is, that is a very strategic project. A digital transformation gets boardroom level, CEO level, visibility. Would a CEO approve somebody saying, "I want to go use Infor rather than using McKinsey for the initial project." Or "I want to use Infor rather than Accenture." Good news is, Infor’s not looking for 5,000 of those projects. They're looking for 1 or 2 in every industry. I think they can be pretty well positioned.
JR: All right. Well, they say they're doing another Inforum in 14 months, so we'll check back and see. I'm looking forward to continuing this conversation.