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Wednesday, May 4, 2011
Tuesday, April 26, 2011
Exactly 6 weeks ago today (March 15th) I posted an entry highlighting Infor’s bid to acquire Lawson. At the time and for several weeks afterwards, there was much speculation about the price, whether or not there would be additional bidders, as well as the probability of Lawson staying independent. Shortly after this announcement, Harry Debes (CEO of Lawson) addressed a large flock of Lawson customers at CUE 2011 (CUE stands for customer user event) and acknowledged all the speculation as the “elephant in the room.” He said the company was considering all possible options, including staying independent.
I don’t think a lot of people put money on independence as the future outcome, but there did seem to be a lot that counted on other bids popping up… maybe not a real bidding war, but at least a second bid that might drive the proposed price higher. Why do I think this? Quite simply, the stock price went up. At the close on the Friday just before the weekend when the initial offer for $11.25 per share was made, the stock price had been $11.55. Instead of going down as a result of the bid, it continued to go up. Someone was betting they could turn a profit on prices between $11.55 and over $12 a share. I don’t profess to be a trading whiz, but I do know $11.25 is less than $12. And $11.25 will be what they get when the deal is sealed. There won’t be an opportunity to watch the stock go back up because it will no longer be on the market. Infor, at least for now, is a privately owned company. Indeed the offer is really being executed by GGC Software Holdings, Inc., an affiliate of Golden Gate Capital, which is one of Infor’s investors.
So, now that the deal is really going down, what does this mean to the customers and employees of both companies?
There is always a certain level of uncertainty concerning the workforce of any acquired company. Those in Lawson’s development organization should take heart in knowing that Infor already announced its intention to hire 400 additional software developers. So my guess would be that good developers are safe. Poor performers in any department should probably be looking over their shoulders as an acquisition is the perfect opportunity to clean house. Let’s just hope Infor is able to distinguish the good employees from the underperformers. No offense intended, but that distinction is often much harder to make than it would appear to be. And in any acquisition, there will be some level of redundancy, particularly in the back office.
What about the impact on customers? My initial take is that the customers from both camps will benefit directly from this move. There will be more innovation and I hope this provides some impetus for some rationalization and cross fertilization of product lines because Infor’s reputation and brand has suffered as a result of having too many.
In an open letter to Infor and Lawson customers, partners and employees, Charles Phillips, newly appointed CEO of Infor, highlighted several benefits to the deal, which also imply some plans. In fact he even starts out by saying, “Lawson customers can rest assured: Product investment, innovation and customer success will be our key areas of focus” and references Infor’s previously announced plans for accelerated innovation, including those 400 developers he intends to add.
In this letter he highlights the following points:
4 Complete ERP suite: As the boundaries of ERP continue to be stretched, the top ERP contenders continue to expand their footprints. Mr Phillips references Lawson’s enterprise financials and human resources products as standalone products, across multiple industries and the intent to integrate them with Infor’s manufacturing, supply chain, workforce, and asset management products. I “get” the reference to human resources as Lawson has developed this area further than Infor has, but Infor has financial management products that are available as stand-alone products as well, so the implication I see might be a rationalization of products, with Lawson’s S3 forming the basis over the SunSystems or Masterpiece product lines? But just cross-selling independent extensions to ERP without truly integrating them doesn’t get you a “complete suite.” So there is some real work to be done here.
4 Complementary products: Mr Phillips states, “The product lines are complementary, not overlapping.” Complementary yes, but I diagree...they are also overlapping. Consider the financial product I mention above and Lawson M3 competes directly with several of the Infor ERP solutions for manufacturing. But I will say that Lawson has stuck to its knitting in terms of declared verticals. This means there is less overlap, but there is still a lot. However, the example Mr Phillips uses: ”… Lawson’s expertise in the healthcare industry will be enhanced by Infor’s Enterprise Asset Management which will be targeted for large hospitals and Time & Attendance product, complementing Lawson’s Nurse Scheduling application. This is truly a scenario where 1+1=3.” But don’t forget Lawson also has an EAM solution.
4 Standards-based integration: Infor’s underlying architectural strategy has undergone some changes over the past year, and appears to still be transforming itself somewhat, but the path seems to be towards openness and a commitment to stay out of the middleware market. This will pave the way for integrating the two new product lines with other Infor product lines.
4 Re-inventing the applications experience: Both Infor Workspace and Lawson Mashup Designer have similar goals here. It will be interesting to see if and how these two separate products are rationalized.
The remaining points refer to expertise in key industries (of which neither company lacks in both complementary and overlapping industries), innovation and investment (as evidenced by prior announcements and growth plans for R&D) and scale. In terms of scale, Mr Phillips makes reference to 75,000 customers and concludes with, “Having more customers allows us to invest more, identify more requirements and develop a large partner ecosystem.” I agree with the premise, but Infor already claimed to have 70,000 customers, so I am a little puzzled by such a small (7%) increment.
I do believe Lawson customers in particular will benefit from the increased focus on innovation. While Lawson has indeed brought innovation to the table, even as revenues were down during the recession, its profitability stayed strong, which was commendable for a public company with an obligation to its shareholders. But it also limited its investment.
My conclusion… while I hate to see the number of distinct and competing ERP vendors shrink once again, I believe that if the combined companies are not afraid to make some bold steps to consolidate strategies, perhaps rationalizing product sets, the customers will be the clear winners.
Monday, April 25, 2011
Today I was reading Bruce Richardson’s View From the Inside. Bruce was one of the longest tenured analysts with AMR Research (and its Chief Research Officer) before AMR was acquired by Gartner at the end of 2009/beginning of 2010. Bruce and I really moved in opposite directions. While I spent 30 years working for software companies before joining the analyst ranks, at the time of the AMR acquisition by Gartner, Bruce moved to Infor and is now on the software side. So we’ve both seen the view from both sides now.
The subject of Bruce’s “View” today was “A Tour of the Distribution ERP Market with Infor’s Andy Berry.” It talked about roadmaps and growth of sales to this market. But what specifically caught my eye was the announcement that Infor would be consolidating its multiple distribution products down to two and eventually to one offering. This is definitely a new approach for Infor. Throughout its history of over 35 acquisitions, Infor has avoided the consolidation or rationalization of products, sometimes in sharp contrast to companies it acquired.
The one merger in particular that comes to mind is Infor’s acquisition of SSA Global (August 2006), which itself had been a product of serial acquisitions and had defined a path of rationalization. Having just left SSA myself about 6 months prior to the acquisition, I was intimately familiar with its consolidation strategy. With somewhere around 10 different product lines at the time, SSA’s plan had been to consolidate down to two ERP solutions (LX and LN) and one financial management product, which ultimately would provide the basis of the financial modules in the two ERP solutions. But the company wasn’t too far down the path of execution when the merger happened, and the consolidation message, quite frankly, had not been very well received by its customer base. So abandoning that strategy seemed like a no-brainer at the time.
Add to this a couple other similar situations in the ERP market. Oracle had acquired Peoplesoft and JD Edwards, and also had its own business suite. But its announcement of its Fusion product as a single consolidated product line also met with resistance from its installed base. This was also about the time of Microsoft’s Project Green, which was meant to rationalize the four acquired ERP products (AX, NAV, GP, SL) down to one. Same reaction. Boos from the crowd.
So the case seemed to be pretty solid against rationalization unless you wanted to seriously tick off your customers. And maintenance revenue streams are way too important to an ERP solution provider to risk. So why was one ERP that also grew by acquisition – Epicor - successful in doing exactly the opposite?
On October 21, 2008, Epicor Software Corporation announced Epicor 9, the culmination of an eight year effort to converge its nine different product lines. And along the way, it didn’t seem to alienate its customer base. In fact over the years I have spoken with numerous Epicor customers that perceived a reimplementation as an opportunity, rather than a hardship. What was the difference?
Of course there are a myriad of differences, but I think the one that really mattered was that Epicor made the new destination different enough to really matter. Many installed base customers faced with a reimplementation perceive it as a “rip and replace” only to spend lots of time and effort to get back to exactly where they started. Epicor took a staged approach to delivering on its goal of convergence and did not lose sight of its promise to protect investments along the way. But it also knew that it had to bite the bullet and do a complete re-write of its underlying base architecture. So first it built its Internet Component Environment (ICE) 2.0, a second-generation Service-Oriented Architecture (SOA) and Web 2.0 technologies. Then over the course of several years it converged from nine to four and then to one. Customers weren’t re-implementing on the promise of something new and different in the future. It was already there and they knew if they just tried to re-create their existing environment they would be cementing in place any restrictions they currently faced.
Oracle Fusion and Microsoft Green promised new architectures but they weren’t “there” yet. SSA had no new architecture to promise.
Infor always had the vision, but for several years got side-tracked through attempts to architect its own middleware. Infor has now decided to stick to what it does best – enterprise applications. By 2013 the two “destination” distribution products will share the same functional code base. Infor is already working on building identical user interfaces based on its new Infor Workspace and it is also working on integration with Infor ION, which it describes as “a new generation of business middleware that is lighter weight, less technically demanding to implement, and built on open standards.” I believe Infor ION will be a key factor if Infor is now successful in implementing a rationalization strategy here on the distribution side … and perhaps among its different ERP solutions for manufacturing? For its multiple financial management solutions? There are lots of opportunities for consolidation here and lots of work to be done. But then remember the 400 new developers Infor intends to hire?
And also don’t forget the two major acquisition announcements that emerged recently – that Infor intends to acquire Lawson and that APAX Partners intends to merge Epicor with Activant (ERP for distribution). Fortunately Lawson Mashup Designer and Infor Workspace have a lot in common, at least conceptually. This could help. And time will tell if Epicor 9 becomes Epicor 10.
Tuesday, April 19, 2011
I’ve been watching the buzz that followed the announcement of John Wookey’s departure from SAP. Others have come and gone with hardly a mention but this departure is getting a bit more attention. Quite frankly I think it has more to do with Twitter than it does with SAP or John Wookey himself. That’s how I first learned of his resignation and I would guess most industry observers learned about it the same way. The immediacy of social media, Twitter especially, seems to spur everyone to either weigh in on the matter, or at least pass along the news. I was no exception, even though I am hardly as prolific in tweeting as many of my industry counterparts.
Ordinarily I don’t write much about organizational changes unless I believe they are somehow game changing. In fact I haven’t written a real analysis of a departure since Shai Agassi’s departure in March 2007. I did post a brief entry to my Aberdeen blog when Leo Apotheker left, but even that did not have the potential impact that Shai’s departure had. And John Wookey’s doesn’t even come close. But that is actually to John’s and SAP’s credit.
Yes John Wookey was a voice of the on-demand strategy at SAP, but let’s not forget that initially the “line of business” (which was really the large enterprise) on-demand strategy, which John was in charge of, had nothing to do with the current strategy which uses the Business ByDesign architecture as the overall on-demand platform. But today the revamped on-demand strategy is firmly enough in place and execution has begun in earnest. I don’t believe John Wookey’s departure (or that of any SAP exec) has the potential of derailing the wheels that have been set in motion to carry through on that strategy.
Shai’s departure was much different. First of all, Shai had a far more influential position than John. Prior to his departure he oversaw the development of the SAP NetWeaver platform, SAP xApps packaged composite applications, mySAP SRM, SAP Business One, and the project that ultimately produced Business ByDesign (called the A1S mid-market initiative back then). And there was a massive reorganization when he left. I never really decided for sure whether his departure triggered the reorg or if the reorg triggered his departure. In the end, it didn’t matter all that much.
At the time, as an Aberdeen analyst I wrote, “SAP appears to be far enough down the path of its enterprise SOA strategy to not be derailed by the departure of a single executive, even one as charismatic as Shai. The migration to its new platform and mySAP ERP [which became the basis for the Business Suite] has begun although SAP still has a long way to go to meet the publicly stated goal of 100,000 customers by 2010 [the Business Objects acquisition gave that initiative a big shot in the arm]. And SAP is in the early stages of delivering against the newly announced A1S mid-market strategy [which was made available on a limited basis as Business ByDesign in September of that year].”
Since Shai’s departure there have been a lot of ups and downs, as well as sideways motion on all these initiatives. But all of these goals have since been achieved, in one way or another. At this point I would just wish John well and will keep an eye out for where he lands. I am sure someone I follow on Twitter will tell me as soon as they know.
Friday, April 15, 2011
I was talking to an SAP Business One customer today and came across an interesting use of mobile technology to help manage a workforce deployed to a remote site – think of a construction site perhaps or physical therapists that regularly go to a nursing home or assisted living facility, contract security, temporary locations. This is not a product the Business One customer uses in their own implementation, but rather a product they build and sell.
The name of the company is Advanced Ventilation in the UK and the product I’m talking about is made and sold by a spin-off called U-CLOCK which operates as a separate company. U-CLOCK makes use of mobile phones to manage time and attendance as well as project updates (including material requests), report health and safety issues and accidents and provide an audit trail of all of the above.
Here’s how it works: The U-CLOCK customer purchases a small device that it locates at the remote site. When the employee arrives, he or she enters the 8 digit number that is shown on the device. A free text message is then sent from the mobile phone (employees can use their own personal phones) to a secure online account to register the location and arrival time. The number changes every 30 seconds, so the time entered is precise within a 30 second window. Managers track this on a computer logged into the company’s U-CLOCK account, but aren’t tied to the console. Email notifications can also be sent to the managers’ mobile phones. If an employee doesn’t arrive as expected at the site, the manager knows immediately. They can also report health and safety incidents and requisition materials.
All this information can be exported to a .csv or .pdf file or can be integrated into back office systems for billing and reporting.
In addition- and this is the part I like best - the U-Locate feature is designed for the lone worker. U-Locate is designed to address the needs of people who can potentially find themselves in an "at risk" situation such as, accidents, physical or verbal abuse at work, or dangerous roles with a real and present risk of physical danger. The main issues for employers is to know (with accuracy) where the lone worker is at any time via the worker’s mobile phone. The U-Locate Software, also accessible through the U-Clock secure console, gives the employer complete insight into the current location and past whereabouts of lone workers.
But more importantly it helps the lone workers in reacting to a dangerous situation or an unexpected event and gives them peace of mind knowing they will be missed if they don’t show up where they are expected and in knowing there will be someone at the end of the line who will know what to do. The worker can activate an alert which will be received by a dedicated emergency response center that has the ability to listen in to events as they happen and contact the relevant emergency services to ensure the quickest response possible.
I guess I show my age when I shake my head over kids constantly texting – and some of my colleagues on Twitter and other social media sites aren’t much different from those kids. Not that I am surprised… many of them are half my age. But I honestly don’t care what my business colleagues had for lunch, when they go to bed or what the view is from their hotel room. This seems a much more pragmatic use of mobile technology.
Tuesday, April 12, 2011
I don’t use this blog to make political statements, but being a researcher at heart and using data every day, I couldn’t resist sharing a few data points from a short video a friend of mine sent me. The video was produced by an organization called Government Gone Wild and the title is, “Brother, Can You Spare a Trillion?” (As a registered Independent, I don’t subscribe to this or any political organization, but watch it here if you are interested http://governmentgonewild.org/brothercanyouspareatrillion ).
I’ve learned through my research efforts that specific numbers make much more of an impact on the psyche than generalities. So, per the video, did you know?
· The United States spent $413 billion in interest payments last year
· Since 1988 the total spent in interest payments has been $8 trillion. That’s a bigger number than many of us can comprehend. Just to put it in some context, it would be enough to buy every citizen in the US a Lotus Evora (luxury sports) car.
· The Congressional Budget Office predicts by 2021 (just 10 years away), interest payments will be $1.1 trillion a year, which is more than one and a half times what we spend on defence.
· If our Congress stopped ALL spending today and starting paying down the debt at a rate of $100 million per day, it would take 389 years to pay it off.
No, there is no easy answer.
Thursday, April 7, 2011
What got customers excited earlier this week at CUE 2011 (Lawson’s annual Customer User Event)? The announcement that seemed to cause the biggest stir amongst the M3 customers was Lawson Mashup Designer. It is a new tool that helps Lawson customers build their own composite applications from multiple data sources, on-screen views and business intelligence reports – all without having to write software code. Only having one (quite full and busy) day at CUE this year, I didn’t have a chance to see all I wanted to see. So for now this will be some initial observations, with more to follow.
Lawson Mashup Designer is based on Lawson Smart Office (LSO), which was released back in March 2008. The original goal of LSO was along the same lines of thought as Mashup Designer is today. It was meant to be an intuitive, personalized user interface that allows users to directly access Lawson and Microsoft applications and update data pervasively and instantly across the applications. But while the emphasis of LSO initially was on those Microsoft productivity tools such as Microsoft Excel, Outlook, Word and PowerPoint, Mashup Designer builds upon LSO and extends beyond the realm of Microsoft and has customers fired up about the possibilities. In fact in talking with the COO and CFO of JR Watkins, a Lawson M3 customer, the pair commented that Mashups were “what lit our fire. We can definitely visualize how they could be used in our environment.”
Matthew Allbee, product management director for Lawson describes Lawson Mashup Designer as, “a new way for our customers to build better applications that they can use every day. By combining forms, process flows, data views, reports and business intelligence content into a single user-created application, we're now offering a new level of user customization. But most important, this does not require advanced programming skills. Instead, people who use Lawson every day can quickly start to create their own task- or process-specific applications."
But the keyword here might be “advanced” programming skills. While the intent is to be a tool for line of business versus IT, it is primarily for Lawson power users, system administrators and programmers, not your casual user or users that spend their entire time performing one specific function using M3.
LSO, being the foundation for Mashup Designer, is a prerequisite. Although the Mashup Designer is only available with M3, Lawson also plans to make it available for S3. In the meantime, for a limited time (until the end of August) LSO is available at no charge to any S3 customer with Lawson System Foundation (LSF). Those that take the deal do have to pay maintenance on LSO. For those S3 customers that have already purchased LSO – contact your customer service rep. Sounds like you could get some added incentives.
Details aside, what struck me first and foremost about Lawson Mashup Designer was the similarity in concept to Infor’s recently announced Infor Workspace. This is particularly relevant if in fact the proposed acquisition of Lawson by Infor goes through. You’ve got two companies thinking very much along the same lines in terms of a role based user experience that blurs the boundaries between disparate enterprise applications and web-based tools and applications. It would be great to see this kind of synergy accelerate the feature/function and technology innovation that the combined company could deliver to its customers.