Vendor Rating: Infor

Promising

We expect Infor to focus its efforts on a single leading core product for each target industry vertical, and then to minimize the number of supporting products needed to achieve a competitive solution. Over time, this will require the transfer of some functionality between current supporting products and core products, leaving the remaining products in maintenance-only mode.

Although Infor has refinanced though a mix of acquisitions (primarily Lawson) and a debt restructure, it does not have the same financial reserves as its main competitors, SAP and Oracle. Focusing investments on the products/industries with the most potential will likely be a guiding principle and we expect some product/vertical road maps to be more developed than others. For this reason, we advise clients to make buying decisions based on the mix of products available today, published industry strategies and road maps for those products.

Analyst Comments

Infor has a diverse product portfolio, with both best-of-breed products and some in need of modernization. As Infor executes on its vertical industry strategy, the challenge will be in integrating those products into seamless vertical solutions.

Source: Gartner (September 2012)

Corporate Viability

Strategy and Organization: Promising

Infor has reset its strategy to one of engineering new products to address 12 defined vertical industries. Understanding that it cannot compete with the scope of the two major business application vendors (SAP and Oracle), Infor has focused on a strategy to build deep industry functionality aimed at a sweet spot of the midmarket, upper midmarket and complementary sales at a divisional level in its targeted verticals. The new management has brought credibility and the experience needed in growing successful application businesses. The recent uptick in growth, due to a combination of cross-selling, license compliance and re-energized sales, has arrested the revenue decline seen in the past few years. The injection of new capital from Golden Gate Capital and Summit Partners and the refinancing performed in 1Q12, together with the 2011 acquisition and integration of Lawson, provides Infor with some operating freedom to grow the business. The debts now have an average maturity date of 2018. Infor will need to deliver on its vision and marketing if it is to prove it is more than a collector of software companies.

Vertical Industry: Promising

Infor has realigned its vertical industry strategy to focus on 12 industries. How it evolves and integrates to the degree needed for its diverse product portfolio to meet the needs of the declared verticals, while maintaining the focus for building industry-specific functionality, will be key. Gartner has seen progress in certain verticals (e.g., healthcare, fashion, food and beverage, and parts of automotive optimization and supply chain). The challenge will be to align functionality throughout the product families to meet specific industry needs. The use of Infor ION to achieve this will be a critical part of Infor's strategy in the short term. Longer term, we expect Infor to refine which primary products are targeted for which industries, and to focus on developing industry functionality within these products, rather than integrating disparate products. Building out the verticals to support more geographic regions will also feature, as some of the product families (for example, Infor Lawson Financials) have been heavily focused on the U.S. market.

Financial: Promising

Infor has taken significant steps during the past two years to improve its fiscal health. Infor refinanced its relatively large debt balance, which resulted in a financial structure that leaves it with adequate cash balances and no large debt payments for roughly six years. Additionally, the company has improved its operating model, which in turn has improved profitability and increased working capital, with both contributing to strong growth in cash flow from operations. Infor has modestly increased R&D spending and says it expects to continue to invest in its products and solutions. It has also stated its intent to continue to drive a more efficient operating model. Gartner believes that Infor is adequately capitalized and sufficiently funded to continue to grow its business, remain competitive and support its customer base at this time. More importantly; however, the company is positioned to improve its finances with each passing quarter, if it maintains its operating discipline and achieves its modest high single-digit revenue growth, roughly in line with the application software market.

Marketing: Caution

Infor rebranded itself under a corporate Infor10 banner, with a focus on "specialized by industry, engineered for speed." A second rebranding is imminent to simplify product names, refine the focus and present a more modern image to the market. Some product branding will be revised and some of the names mentioned in this research will change. New names have been provided where they are known. As of this research's publishing date, the naming is confirmed with Infor, but we are unable to provide further details on changes yet to come. It will take time and money (no matter how creative the marketing is) to build the revised brand and gain a substantial increase in business application mind share, currently dominated by more powerful competitors, such as SAP, Oracle and Microsoft. Infor will need to continue to work the balance between its company brand, the well-known acquired product names (e.g., Lawson, Baan, etc.), and the values that the Infor brand wants to convey around the strap-line "engineered for speed." We believe the new marketing team has the required experience and a cogent plan, but it will take time and creativity to build the brand around the new Infor values.

Market Offerings

Growth ERP Products: Promising

Of the many ERP systems Infor has acquired during the past 10 years, nine are categorized by the company as growth ERP products (see Note 1).

Of its large ERP portfolio, 15 products generate approximately 75% of the total Infor revenue. The company announced that it would hire 400 to 500 new developers, which, even allowing for some workforce churn, shows a more aggressive approach to developing new product features. Infor says these new hires are now in place, which should enable it to fulfill its development plans. Yet, while the total number of new developers sounds impressive, it has to be spread across the company's large product portfolio. The product road maps include enhancements to the individual products (e.g., further localization). Inforce leverages the Infor ION framework to build integration between some of Infor's ERP products and salesforce.com's Salesforce CRM (see Note 2). Infor Local.ly, a localization platform based on Infor ION, allows customers to extract data from their core ERP system and transmit it to local financial institutions and government agencies. This supports some aspects of localization capability for where the ERP system is not natively localized.

Maintenance ERP Products: Caution

All ERP products that do not fall into the growth ERP category are categorized by Gartner as maintenance ERP products (see Note 3). The road map for these products contains sufficient customer enhancements for the individual products to maintain their usefulness. Infor ION-based integrations to Infor's leading add-on products, like product life cycle management (PLM), corporate performance management (CPM) and enterprise asset management (EAM), and to Salesforce CRM through Inforce, can be expected. Infor Workspace, which allows users to combine the classical transactional screens with dashboards, Infor ION-based reporting and analytics, Web applications, collaboration tools, etc., will be made available over time to some maintenance ERP products. These products will continue to be supported, but Gartner believes that, over time, some of these products will be rationalized and functionality will be moved to the growth ERP products.

Customer Relationship Management (CRM): Promising

Infor Epiphany has reduced its emphasis on a CRM suite for sales to serve the Infor installed base, and is instead focusing on marketing departments and multichannel campaign management (MCCM). The company has doubled its development team for Infor Epiphany, and plans an aggressive six-month deployment cycle of releases. Infor Epiphany's campaign management strength is in business-to-consumer (B2C) service industries, and it still has significant mind share in real-time, next-best-offer capabilities through Infor Epiphany Interaction Advisor. Infor is targeting companies seeking campaign management with integrated advanced analytics in vertical industries such as financial services and insurance, telecommunications, hospitality, gaming, retail and high tech.

Infor Epiphany offers B2C campaign management in a company that mostly sells software to B2B manufacturing environments, and the product had been somewhat neglected in MCCM capability. Although there have been renewed investments in and aggressive development of the offering, the MCCM market has become much more competitive. In addition, in 2011, Infor and salesforce.com announced a strategic partnership that established Infor as a reseller of salesforce.com Sales Cloud and Service Cloud as an independent software vendor (ISV) partner committed to developing native Force.com solutions. Those solutions are Inforce and Inforce Marketing. The new partnership combines salesforce.com's CRM applications with Infor's ERP and financial applications, with the goal of delivering Infor back-office integration combined with new salesforce.com functionality designed specifically for Infor customer requirements.

Financial Management System (FMS): Positive

Infor SunSystems remains Infor's primary FMS product for midsize organizations and Infor has continued to invest in it, with a major new release in 2011 that increased scalability and added user interface and analysis improvements. The move to Infor also saw the first wave of Infor SunSystems business integration with the Infor ION platform — work that is ongoing. Infor's FMS portfolio also includes Lawson S3 Financial Management, which will now be called Infor Lawson Financials, a proven and well-established financial solution for midsize and large enterprises that was acquired in 2011. This strengthens the overall FMS portfolio, but Infor has not yet articulated how it will develop and market Infor Lawson Financials for a wider global audience.

Corporate Performance Management (CPM): Positive

Although more commonly used within Infor's ERP base of customers, the company's CPM suite is comprehensive and tightly integrated within a common application platform. Robust strategy management and profit optimization functionality enable it to support a controlled, closed-loop performance management process. IT typically finds the suite easy to maintain and support — the Infor Workspace provides a common end-user experience and the suite provides strong workflow management. A variety of planning, budgeting and forecasting approaches are supported, such as driver-based, zero-based, rolling, top-down and bottom-up; scenario planning and more detailed prebuilt planning functionality exists for employee and asset planning. The consolidation module supports complex requirements and the suite's reporting is flexible, providing a variety of formats as well as interactive reports and dashboards to facilitate analysis.

Human Capital Management (HCM): Promising

Infor has a comprehensive set of HCM capabilities combining its workforce management capabilities (via its Workbrain acquisition) with the recently acquired Lawson core Human Resource Management Suite (HRMS), talent management product and the strong Infor Enwisen HR Service Delivery solution.

Work still needs to be done integrating the solutions, and Infor will need to prove that it can retain key staff and sell net new deals — areas it has struggled with in the past.

Enterprise Asset Management (EAM): Positive

Infor has multiple EAM products as a result of acquisitions, including Datastream (in 2006) and Hansen Information Technologies (in 2007; that vendor had also acquired Spear Technologies). Infor positions these products based on variables such as industry sector, functional requirements and company size. The erstwhile Spear product functionality (transit-focused) has been included in Infor's EAM product (formerly known as Datastream EAM). The Infor Public Sector product (formerly Hansen), targeted at water utilities and local government, is evolving in user interface and segment functionality (e.g., GIS and linear assets). Infor EAM can be applied to any industry as a point solution, but particularly where Infor ION-enabled Infor products are installed, enabling potential integration.

Product Life Cycle Management (PLM): Promising

Infor's performance related to enhancing its PLM offerings and supporting those customers has been inconsistent through 2011. The company acquired PLM offerings for discrete and process manufacturers during the 2005 to 2006 time frame. Until recently, a significant number of those customers expressed dissatisfaction with Infor's level of interest and investment in PLM. However, the company has expressed renewed interest in PLM, and some customers in industries such as food, specialty chemicals and personal care products provide positive feedback on some of the capabilities related to formula development, labeling and regulatory compliance. Gartner is not yet fully confident that the current positive focus on PLM is long term, but the growing evidence of renewed investment, combined with Infor's legacy capabilities, is promising and Infor can deliver value.

Supply Chain Management (SCM): Promising

Infor has a number of best-of-breed applications across the supply chain planning and execution space, as well as various degrees of SCM support within several of its ERP solutions. Many of the best-of-breed SCM applications came to Infor via acquisitions, and some have been developed by Infor. In SCP, Infor has solutions supporting planning from sales and operations planning (S&OP) through to manufacturing scheduling and industry support for both discrete and process manufacturers. The individual solutions are capable, but have tended to be implemented more as point, rather than platform, solutions. Infor has been slower in driving tighter integration across the various planning solutions, but is making progress with the Infor releases. In the supply chain execution (SCE) space, Infor has several warehouse management system (WMS) solutions, as well as transportation solutions.

Technology/Methodology: Promising

Infor has stepped up its investments in technology, and is in the process of creating a platform (Infor ION) that should enable it to present capabilities from across its portfolio, or from third parties, to its customers (see Note 4). The combination of these technologies has given Infor a means to create prebuilt combinations of its products, and to offer relatively straightforward customization and integration capabilities. The different parts of the Infor ION suite are in various stages of maturity, and further work on integrating the subcomponents will be forthcoming. The significant overlap between Infor's and Lawson's future initiatives (e.g., Infor Workspace and Lawson Smart Office (now to be called Infor Smart Office), Infor ION-based analytics versus Infor Lawson BI, ERP-wide search, etc.) creates the need for more-concise road maps, which, to date, have not been delivered for all products. Overall, Infor has the technology it needs to provide its customers with an (Infor-centric) platform for integration, extension and customization.

Pricing Structure: Promising

Infor pricing (including the former Lawson products) has been set in line with the rest of the software market. Infor does not follow a premium pricing policy and it is less complex in structure than some of its competitors. Pricing is on a product basis and we expect further pricing rationalization across the portfolio over time, with maintenance costs remaining similar to other large vendors. Infor has used tactical pricing promotions to encourage fast adoption (e.g., in its recent Infor ION price promotion). Further examples are expected.

Customer Service/Support

Licensing/Auditing: Caution

Over a number of years, Infor has acquired a large number of software companies, each with differing licensing structures. Customers are dealing with Infor's interpretation of the original licensor's software agreements concerning usage rights, licensing models and third-party access to source and object code for daily operations and support services. When these are not well-defined in the original agreements, different interpretations may occur. Gartner's client interactions indicate Infor as a vendor undertaking audits, and, while customers understand that they must remain in compliance, they may challenge Infor's audit results if they believe they have not violated their original agreements.

Sales Strategy: Positive

Infor's direct sales strategy is much unchanged, with a focus on larger accounts. In 2011, the company won a number of large deals and there is renewed focus on continuing to win the bigger deals. That said, the move to the industry vertical solution strategy and the increased focus on territory and market segment planning, will stress some parts of the Infor sales organization. In addition, the acquisition of Lawson and its sales teams and channels will inevitably take time to weld into a seamless organization.

Indirect Partner and Channel Strategy: Promising

Infor Partner Network (IPN) launched in June 2011 and is now thought to include 1,500 partners. Through IPN, Infor has invested in certification and training, sales enablement and tools, demand generation, and market development funds, and is beginning to integrate Lawson partners into the program. While signs are good, Infor's partner and channel strategy will not warrant a positive rating until it has one to two years of consistent delivery and effort.

With the IPN program foundation in place, Infor is actively recruiting new partners (targeting 500 new partners in 2012) and is looking toward 2013, when it will increase its partner selling zones and focus on recruiting in Brazil, Russia, India and China. A challenge will be the transition of existing partners from product to industry and vertical solution as Infor makes additional investments. This new vigor will take time to manifest itself in the field. New partners will take time to become trained and competent enough to drive new demand in the market. Continued investments must be made around partner enablement, which will be key for Infor to support its partner efforts at scale (especially into new geographies and segments). While this is a general industry challenge, Infor will face the particular challenge of finding the right partners to meet demand — today, while it is building its partner numbers, and in the future, when the partner base matures.

Support: Promising

Infor's support requirements fall into three categories: primary (help desk) support, consulting support for current customers and consulting support for new business opportunities. Infor supports a large number of products across many countries and industries. Customers comment that the support staff's depth of experience on the various products across regions is of mixed capability. However, customers also comment that they have experienced improvements with the Infor365 support model in the past year, recently renamed Infor Xtreme Support. Infor has upgraded its end-user support, adding a portal and a new knowledgebase for self-help, plus the introduction of the Infor ION Support Assistant — a support engine aimed at faster issue resolution and preemptive knowledge to prevent issues from occurring. Issues with the availability and qualifications of professional services resources remain, although Infor is putting a lot of effort into expanding its reseller and implementation partner ecosystem and is rolling out product certification for all new hires and partners. As this ecosystem gains experience, customers should experience a marked improvement in availability and quality of resources for new initiatives. Customers should ensure that only resources with proven experience take senior project roles. Proof of certification by all external individuals should be sought. Customers planning initiatives such as ERP upgrades or further ERP deployments should ensure that contracts and statements of work adequately protect against project member redeployment.