Infor Strikes Again (at Long Last): Getting “Soft” While Flexing Its Muscles? - Part 2

Part 1 of this blog series analyzed Infor’s latest acquisition of SoftBrands Inc., a company with a somewhat complicated history and lineage, and formerly called Fourth Shift and AremisSoft.

The post concluded that, from a higher level overview, Infor has a good synergistic opportunity with the SoftBrands Hospitality solutions but some serious tweaking to do with the SoftBrands Manufacturing solutions. Some issues discussed were the long backpedaled development of the original Fourth Shift product due to SoftBrands’ focus on partnering with SAP for the SAP Business One Fourth Shift Edition product.

Infor’s Opportunity

But I will still go out on a limb here and say that SoftBrands’ manufacturing products mentioned in Part 1 might have the best chances of being brought back to life under Infor. To be fair, Infor has breathed more than one breath of fresh air into some long-written-off enterprise resource planning (ERP) products. Think of Infor ERP LN (formerly Baan) or Infor ERP Adage (formerly SCT Adage) and how much these products have been bolstered via Infor’s “Extend, Enrich, and Evolve” or “Three Es” approach and accompanying product delivery.

To that end, I am not sure how neglected and technologically far behind the “classic” Fourth Shift product is at this moment in order to be fully service-oriented architecture (SOA)-enabled within the Infor Open SOA framework. But the least Infor can do is to offer the “evolve” components like Infor MyDay or Infor Business Information Services (BIS) to legacy Fourth Shift customers.

Offering Infor MyDay on top of all of its ERP assets is a great way to entice customers to use Infor’s unified user interface (UI) and then eventually swap out the antiquated underlying systems. Part of the strategy for Infor MyDay is to layer it on top of all underlying enterprise systems and eventually have it become the main UI that Infor customers will use to access enterprise information.

However, from my understanding of Infor’s current sales strategy, the vendor really needs to focus on the plethora of its existing solutions. SoftBrands will certainly add an inevitable distraction in the short term, and at least it will be interesting to see how it plays out.

Enter Infor Flex

This brings me to an even more recent announcement about Infor Flex, a well-thought-out program that was devised to give customers on active maintenance contracts a clear, fast, and cost-effective path to adopt Infor's latest product innovations.

While the entire press release can be found here, and there is also an Infor Blog entry with a video message from Infor’s chief executive officer (CEO) Jim Schaper here and a Flex Overview Presentation here, the gist of the matter can be found in the following excerpt from the PR:
“…Through a package of software, services and financing, Infor Flex gives customers compelling, low-risk options to upgrade to the latest version of their existing Infor products or exchange to another Infor product, on a like-for-like basis. The decision to upgrade or exchange is completely in the hands of customers based on the needs of their business. Infor Flex minimizes license and/or transaction fees and offers significant benefits, such as a fast, reduced-fee implementation methodology and incentive pricing on additional users, modules or complementary solutions…”

A week before announcing Infor Flex, Infor also announced Infor Financing, which, for a limited time, offers qualifying customers a zero-percent financing option so they can immediately improve their competitiveness through software that's available at flexible and favorable payment terms. Infor Financing is also available as part of the Infor Flex program for qualifying customers.

As with the SoftBrands acquisition coverage, there is little I can add to the opinions of Ray Wang, Frank Scavo, and ZDNet’s Dennis Howlett in their respective blog posts. My understanding on the Infor Flex program is that Infor has either removed or dramatically reduced and simplified pricing along with providing special incentives for customers to get access to new product releases in order to encourage customer upgrades.

Some software companies charge for each new release, but Infor does not seem to be one of these (“out of touch”) vendors. The new license revenue stream is always appealing, but that policy does make licensees seriously consider the cost before an upgrade. There simply are cases where upgrades induce major underlying platform changes that have, historically, incurred costs. Infor pledges to leave no stone unturned, however, in finding ways to eliminate or reduce these.

I can only speculate on whether there has been considerable customer resistance recently, which has then pushed Infor to this new program. In other words, it is difficult for the cynic in me to think that any vendor does anything for the customer out of the goodness of its heart. But in any case, what Infor is doing here will be beneficial if it moves more clients to the latest releases at a cost-effective price. My hunch is also that the focus is on leveraging Infor Open SOA and Infor MyDay.

But the "catch 22" here is in how many of Infor customers are on the latest product release to be able to take advantage of these new “evolve” products. Not too many, I guess, and there Infor might be facing a real problem. There is a significant investment in this new technology, but if Infor Flex cannot build a lasting success in its install base, the company will ultimately fail.

I believe this initiative to get customers to upgrade or migrate will be the vendor’s focus (and a litmus test of a sort) for the next year or so. It is a good idea to get customers in a position so they can take advantage of these new innovations. But with a customer base of 70,000, the vendor cannot do this with a sporadic win here and there. Infor needs to show proof points and mass adoption relatively swiftly.

No Customer Left on the (Rimini) Street

During the analyst call on Infor Flex, it was interesting to hear that Infor did not care for a low-touch maintenance option that Vinnie Mirchanadani asked about, and then discussed in his blog entry. In fact, temporarily handing over some laggard customers to third-party service providers might be a wiser option for any vendor than to lose them anyway in the long-term due to a heavy-handed approach and rigidity.

Third-party service and maintenance providers like Rimini Street, netCustomer, Spinnaker, Eclipse Total Solutions (ETS), etc., seem to be having a ball recently, especially in this economy. The main premise of these providers is at least 50 percent cheaper service compared to those of the original vendor. For more information on Rimini Street, as the most established and vocal third-party service provider, see TEC’s previous article, “Latest Developments for a Vendor-neutral Third-party Support and Maintenance Provider.”

Even more recent updates on Rimini Street can be found in respective blog entries by the “usual suspect” bloggers like ZDNet’s Larry Dignan, Vinnie Mirchadani, Frank Scavo, and Ray Wang. In a nutshell, Rimini Street now boasts nearly 300 customers. These are renowned companies that are on stable Oracle PeopleSoft, Oracle JD Edwards, and Oracle Siebel products (with support for SAP Business Suite introduced in 2009), and that do not necessarily care for the “latest and greatest” SOA and Web 2.0 technologies and gadgets.

The key highlights from the company's mid-July press release:

  • Rimini Street again achieved record results, by quadrupling sales in first half of 2009.

  • The company accepted a substantial investment from Adams Street Partners for a minority stake in the Company.

  • The investment will be used to aggressively expand the service provider's global operations to meet growing client demand.

Rimini Street’s clients are typically very happy with their current functionality and want to run the current product releases for next 5 to 10 years. Rimini provides all the tax and regulatory updates, patches, and fixes the customer's need. The third-party service provider will take care of customers’ existing customizations, but will not provide general consulting services such as enhancement development.

One can always wonder about what happens to the companies that need some modern technologies now, say, to use either Facebook for customer relationship management (CRM) forums or LinkedIn for talent management. Or, what if they need some new functionality from their primary vendor, say, on-demand transportation management system (TMS) or sourcing/supplier relationship management (SRM)?

To that end, new functionality that is separate from the ERP deployment—like Taleo or SuccessFactors for recruitment or employee performance management, LeanLogistics for TMS, or Ariba or Emptoris for sourcing—is procured and managed separately from Rimini Street. Customers can still procure additional modules from their primary "mega" vendors if they like.

I asked Rimini Street’s executive whether in 5 or 10 years, when the customer decides that it is time to go for SOA and Web x.0, they will have to leave Rimini and go back to SAP or Oracle. Will that be like an entirely new implementation, or will they even have to pay penalties to these vendors to get reinstated on the service and maintenance contract? In other words, will all the savings they have made with Rimini Street be eaten up by the new installation and penalties?

Dave Rowe, senior vice president (SVP) at Global Marketing and Alliances said:
“Our clients generally plan to run their current releases for the next 5 to 10 years, then make a decision on a next-generation software platform well down the road. Many of our clients plan to compare the next-generation platforms from current ERP providers as well as potential new entrants like Workday or NetSuite, once those platforms are built, tested, and widely deployed—eliminating the risk involved in investing now in an unknown new platform to be delivered on an uncertain time frame at an unknown future cost. As part of a competitive evaluation, clients will still be able to choose their current vendor for the next-generation platform. If in 10 years you line up the vendors, each will fight very hard to win the new business and aggressively price as needed, and likely not resort to charging back maintenance fees.”

Here are a few of the highlights of why Rimini Street was selected as "IT Vendor of the Year" by Hastings Entertainment, a leading multimedia entertainment retailer (full press release can be seen here):

  • ultra-responsive service (note that Rimini’s average response time by a software engineer is fewer than four minutes);

  • extreme dedication to full resolution of each and every issue (in a stark contrast to the typical software vendor’s support model);

  • support for existing customizations just as for the “vanilla” source code; and

  • very high-quality tax and regulatory updates delivered ahead of the primary ERP vendor's updates.

Maybe the "Street" Is Not That Suited For Infor Customers?

While Rimini Street and its peers seem to be doing well with disaffected tier-one ERP customers, I'm not sure the bang for the buck is there for Infor’s tier-two or -three customers, though. For one, Infor's ERP install base is too darn fragmented for any third-party provider to tackle effectively.

One barrier of entry for the likes of Rimini Street to cater to Infor's install base is that it is dispersed over 50 products. Some of these products are quite out of date technologically, and with limited install bases, so that is not viable for any outside company to form a team for (e.g., Manman, PRMS, KB, and other esoteric ancient products, that require rare and nearly extinct skills) that Infor has inherited.

On the other hand, those Infor products, which a third-party service provider might want to target, have been enhanced by Infor to the degree that existing customers have incentives to stay with the vendor. Thus, some of Infor customers from the “outdated product” camp might want to move to a similar function product that has definitely been enhanced by Infor of late (e.g., Infor ERP LN, Infor ERP SyteLine, Infor ERP Adage, Infor ERP LX). This is exactly in line with Infor Flex’s “switch” option.

Alternatively, these companies can opt to remain on their stable ERP products (following the “if ain’t broke, don’t fix it” adage), but with some modernized add-ons from Infor’s “evolve” products, at least to be Web- or business intelligence (BI)-enabled. Thus, when asked about any help from third-party players, Infor’s CEO statement about how no customer (out of 70,000) has ever mentioned that option might not be that off-the-mark (although some cynics will always reserve the right to their own interpretations).

Dear readers, what are your views, comments, opinions, etc. about the concepts of third-party service providers in general, and about Infor Flex per se? How do you think Infor will fare against its formidable competitors in light of its lofty strategy and recent concrete moves? If you are Infor, SoftBrands, or Rimini Street users, I would appreciate it if you shared your experiences with the product and the company discussed here.
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