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Infor described this year’s Inforum user group meeting as a coming-out party for a large startup company. Such a debut was necessary because Infor had been operating in something of a stealth mode for the past three years: a limited marketing presence, no unified message and a weak, sometimes inconsistent brand identity. It also needed to formally introduce Infor to customers of Lawson, the ERP supplier it acquired last year. The “startup” designation is meant to signal that Infor has been able to render a decade-long consolidation of dozens of smaller companies into one cohesive entity.

I think the current management team has put Infor – particularly the pre-Lawson portion of the portfolio – solidly on the road to viability. This has been no small feat. It’s hard to amalgamate a mix of smaller applications software companies, none with substantial market share. Unlike bringing together a more homogenous set of businesses (say, metal fastener distributors), achieving operating efficiencies has required from Infor a clever dose of pragmatic technology, notably its ION middleware. Infor has had to create a software architecture that makes it easier for both the company and its users to maintain its applications. As well, ION makes it feasible for users of software to upgrade it or migrate to other portfolio applications and to add complementary applications without difficulty.

One of Infor management’s more important objectives for the conference was to get across to users its new strategy, which I covered in an earlier blog. The keynotes on the first day provided the long version of what I expect will be the company’s core message over the next year or so. To persuade its installed base to stay with it, Infor is promising they can keep what they have for as long as they want. Moreover, it will make it easier and less expensive for them to get a broader set of capabilities, such as analytics, performance managementsocial business applications and cloud-based applications designed to meet their specific needs from Infor rather than going to another vendor. None of these products breaks new ground; all are necessary for the company to remain competitive. For new customers, Infor is offering the promise of faster time to value and potentially lower implementation costs in its targeted verticals. I think this is the right message, but it will require frequent repetition and an aggressive marketing effort supported by a solid roster of willing customer references.

Serious challenges remain for Infor in the business environment and in executing the strategy. After a decade of modest, incremental improvements, the overall pace of technology change is accelerating. The software consolidators of the past decade benefited from limited technological evolution as they tried to stitch together their acquisitions. The slowdown extended the useful lives of enterprise applications, especially record-keeping systems such as ERP. Vendors have been able to keep customers paying software maintenance and had time to integrate the pieces of their portfolios. Now this is changing. For example, companies see that cloud computing can be a better choice for deploying software than doing it on-premises, whether functionally, economically or both. Increasing numbers of people are working with mobile devices, larger sets of data and more sophisticated analytics. Customers’ expectations of how to interact with systems are starting to change as vendors tout the “consumerization” of their business software offerings to make them more like the apps available on mobile devices and more appealing to the social media generation of business users. Infor is responding to each of these, including creating positions for Senior Vice Presidents of Cloud and Speed to promote rapid product development and innovation.

In addition, while Infor is now the third-largest enterprise software company, it is competing with a roster of cash-rich titans (notably IBM, Microsoft, Oracle and SAP). Infor’s recent recapitalization put it on stronger financial footing, but it is still highly leveraged. To the extent that it is successful in generating incremental revenue, it will be able to get cash to pay down its debt. Solid revenue growth also would give it the opportunity to raise equity in the public market and de-lever its balance sheet even faster. The downside to this virtuous circle, however, is that to the extent that Infor is unable to generate “escape velocity” revenue growth, it will crimp its competitiveness because of the need to service the debt. For this reason, how well the organization executes is very important.

In my opinion, Infor faces at least four substantial execution challenges in achieving its objectives. The first is to build broad awareness of the benefits of Infor’s approach and the value of its software. One of Infor’s key strengths is its installed base of midsize companies.  These buyers want software that doesn’t require much customization and implementation effort because they have small IT staffs and limited budgets to buy, implement and maintain the software. Infor’s “micro-vertical” applications provide deep functionality built for specific types of businesses. For instance, this means not just the food and beverage vertical but milk producers, brewers or bakers, each with its own business-specific capabilities, units of measure and workflows built into the software.

A second challenge is to identify, define and refine a set of core sales offers that promote cross-sells or up-sells with the most revenue-generating potential. Infor offers a lot of options, but there are endless permutations of what customers can do using ION and individual pieces of Infor’s portfolio. To accelerate clarity of what’s possible and promote sales execution, I think Infor needs to define offers for the needs of specific sets of users. The new mobile and cloud applications utilizing ION are certain to be attention-getters and likely to be among the most quickly adopted, but I don’t expect them to be big earners.

A third challenge in this chain is that sales execution. Whether it’s inside or outside sales, in each of its traditional areas (ERP, analytics and other software categories across multiple micro-verticals) Infor is now offering a broader, more complex array of purchase offers than before. Training sales people to be able to understand customer requirements and communicate value propositions among all the options will not be easy. Simplifying this with a short menu of predefined offers can make it easier for the sales organization, but it’s just a start.

The fourth issue is demand, which is a function of buyers’ software budgets. Of course, the better Infor is able to articulate and demonstrate the value of its solutions, the easier it will be to close business. Moreover, the company is expanding its presence in rapidly growing countries such as Brazil and China. Yet however compelling Infor’s value proposition may be, other capital or operating budget priorities and spending constraints are likely to be a limiting factor, especially in its core market of midsize companies. This factor to some extent may be beyond Infor’s ability to change.

Infor’s attempt to rationalize and overhaul a sizable portion of the U.S. software business has been a big bet. I’m encouraged by what I saw and heard at Inforum. The real test is whether it will be able to sustain double-digit license revenue growth and its retention rate of existing clients in the mid-90 percent range over the next six to eight quarters. That’s a challenge for any large startup.

Regards,

Robert Kugel – SVP Research

I’ve been advocating more intelligent use of spreadsheets for the better part of a decade. Ventana Research coined the term “enterprise spreadsheet” in 2004 to describe software applications that marry a Microsoft Excel user interface with a business rules server and a relational or multidimensional data store. This approach offers the best of both worlds in the sense of taking advantage of widespread familiarity and training with Excel while substantially reducing issues stemming from the desktop spreadsheet’s lack of data integrity, referential integrity and limited dimensionality as well as limited auditability and control. One example of the enterprise spreadsheet is data consolidation and data reporting software offered by BizNet Software. It enables business users to work within an Excel environment to assemble, manage and deliver periodic reports from enterprise data sources. It offers greater efficiency than stand-alone spreadsheets while effectively addressing the above-mentioned core issues.

The PC-based electronic spreadsheet pioneered by VisiCalc in 1979 has been an indispensible tool for hundreds of millions of users in every function of a corporation. Stand-alone desktop spreadsheets are a good tool for individual, ad-hoc tasks involving modeling, planning, analysis, reporting or application prototyping. Their almost infinite flexibility and the ease with which users (particularly experienced ones) can create and prototype makes them an attractive tool for almost any business task involving numbers.

Yet our benchmark research on spreadsheets exposes many problems in using stand-alone spreadsheets, particularly in repetitive, collaborative business tasks. People often take data available in standard reports created by a BI system, drop it into a spreadsheet and then perform additional analyses and/or create charts. Data frequently comes from multiple systems, data stores or application modules, and it requires multiple manual operations to assemble the analyses, tables and charts. In such cases, care must be exercised to ensure that the data sets are comparable (for example, that “sales” means net, not gross, sales) and that they are synchronous. Despite these issues and a litany of other problems cited by our research participants, only 12 percent said spreadsheets as a drag on their productivity. This is the paradox of spreadsheets. People are so familiar, so comfortable and – in many cases – so adept at using them that they overlook or minimize spreadsheet problems. Spreadsheets are seductive because they are easy to design and set up. It’s when they are applied to collaborative, repetitive processes that they quickly bog down. Nontechnical users have been putting up with their shortcomings because they haven’t seen usable alternatives.

BizNet addresses the main issues that business users – especially those who work in finance departments – face when creating reports from enterprise systems. It allows people to work in a familiar environment and readily create analyses, tables and charts from enterprise data. BizNet provides a collection of tools to help you with using its enterprise spreadsheet based technologies. The BizNetCloud Engine assembles data through a live connection to a company’s databases (such as Oracle or Microsoft SQL Server), data warehouses and enterprise software such as its ERP systems. BizNetContent includes pre-built reports, Excel functions and business intelligence. BizNetWorkstation enables users to quickly create reports that are connected to live data. BizNetBroadcast automatically distributes reports to recipients in Excel, Acrobat or HTML formats. BizNet allows business users to assemble reports from multiple ERP modules, operational systems or other data stores. And because unlike in desktop systems these reports are connected to the data stores, executives and other consumers of the reports can refresh the data themselves. Reports can be pushed immediately to sets of recipients if alert thresholds are reached or other designated events occur and provide the fresh information they need. Setting up and maintaining reports is facilitated by a drag-and-drop approach.

Part of BizNet’s basic value is to enable individuals in business roles to create and maintain reports that otherwise might have had to be done by IT departments. Moreover, since these individuals know what they want – down to the formatting – and don’t have to try explaining this to someone else to implement, it’s faster, easier and less costly to create reports and to update them as business requirements change. Another source of value is increased efficiency in generating the reports. Extracting data from business intelligence systems and copying it into a spreadsheet often is a highly manual process, even for experienced users. Using BizNet business users can take responsibility for some reports that are currently managed by IT departments, making more efficient use of IT department resources and enabling staff to spend less time on maintenance efforts. Also BizNet is a cloud-based offering, which requires little ongoing IT department effort. The software offers in-memory computing, which substantially increases the speed of calculations. Finally, BizNet can cut the potential for reporting errors because there are fewer manual steps and a direct, controlled link between the reports and the source data.

BizNet is not designed to replace a corporation’s core BI systems. But it does address a significant need in enabling most midsize and larger companies to manage their self-service reporting requirements more efficiently and with greater accuracy and security. I recommend that finance and IT departments investigate the degree to which they could benefit from using BizNet to replace their current desktop spreadsheet-based reporting.

Regards,

Robert Kugel – SVP Research

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