Lawson Means Business with HCM (But Wait, There's More...)

Lawson Software (NASDAQ: LWSN), headquartered in St. Paul, Minnesota, the United States (US), and with offices around the world, provides software and service solutions to about 4,000 customers in manufacturing, distribution, maintenance and service sector industries across 40 countries. Its solutions include Enterprise Performance Management (EPM), Supply Chain Management (SCM), Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Manufacturing Resource Planning (MRP II), Enterprise Asset Management (EAM) and industry-tailored applications.

Lawson has not lately been accused of being too exciting, glitzy or so, at least not compared to a decade ago, when its erstwhile slick marketing machine was crafting catchphrases like "self-evident applications (SEA)", "drill-around", "web-addressable applications" and so on.  Some recent attempts in touting corporate social responsibility (CSR) and a witty marketing spot on YouTube have been noted (even acknowledged by the competition), albeit with mixed reviews/reception.

Nevertheless, according the "still water runs deep" adage, Lawson's relative quietness certainly does not mean that the vendor has not been active in the field and in its research and development (R&D) labs. I've been made aware of many recent moves to execute on the roadmap that was outlined at the vendor's CUE 2007 conference. In order to provide a viable alternative to SAP, Oracle or Infor, the vendor has been launching (or is about to launch) many new products, and also reorganizing its products portfolio along the five strategic product lines below:

  1. Lawson M3 for Manufacturing and Distribution Enterprises [evaluate this product];

  2. Lawson S3 for Services Companies [evaluate this product];

  3. Lawson Human Capital Management (Lawson HCM) [evaluate this product]; 

  4. Lawson User Productivity Platform -- to be detailed shortly; and

  5. Lawson Systems Foundation (LSF) -- an underlying technology stack, in great part based on the IBM WebSphere stack, that allows separate migration tracks for Lawson applications and its technology platform.

The company is even more focused on selected vertical markets (i.e., healthcare organizations of all sizes, plus mid-market food, fashion/apparel, wholesale distribution, and equipment service and rental enterprises). In fact, Lawson is working to become more than just a viable alternative in those markets – but rather an obvious choice. 

The big headline items for the foreseeable future (likely to be announced at CUE 2008 next week in Las Vegas) should include the release of the new user interface (UI) called Smart Office. Its major part, Smart Client, has been part of Lawson M3 for over a year and has many live customers. This is Lawson's answer to SAP-Microsoft's Duet or other ERP vendors' like Office Business Applications (OBA) offspring products. The new UI will be applied to both the Lawson M3 and Lawson S3 products.

The Smart Office UI will be bolstered with a new version of Lawson Business Intelligence (LBI) -- also built for both Lawson M3 and Lawson S3 (in fact, LBI for Lawson M3 is also a major cross-sales opportunity for the company). Additionally, a new version of Lawson ProcessFlow, a workflow management application, has also been built for Smart Office and both the Lawson M3 and S3 lines.

Lawson is also expanding its User Productivity Platform to entail a lot more than the abovementioned Smart Client, ProcessFlow and LBI initiatives. The platform also features integration with Microsoft Office (including the Groove collaboration product), which helps with being able to, e.g., launch HR functions from Outlook's contact list or having the HR department maintain its own direct reports structure in Microsoft Outlook.

Also, users are able to dump (export) data to a Microsoft Excel spreadsheet, change the spreadsheet, and then interactively have the spreadsheet update underlying Lawson applications (with full editing capabilities). Lawson’s effort here is to let users work in their “own space”, which is the place where they want to spend the majority of their time. For example, managers spend most of their time in Outlook, and they should thus be able to do HR transactions from inside of Outlook.

Some excitement and up- and cross-sell opportunities (even to non Lawson ERP users) can come from new Industry Solutions, such as Contract Management (for the healthcare and public sectors, as part os Lawson S3), e-Sales (for all manufacturers and distributors, as part of Lawson M3) and Trace Engine (for food manufacturing and distribution, also part of Lawson M3).

Bolstering Lawson HCM

One particular strategic area of fervent activity has been in the HCM space. It is not too surprising, given Lawson's HR management roots and the market's recent realization of the strategic importance of both full-time employees and contingent, temporary workforce.

Lawson is investing with the intent of becoming the world-wide leader in providing integrated HCM solutions, and the serious HCM competitor to Oracle PeopleSoft , Kronos and SAP.  The development efforts have lately been focused on building systems like talent acquisition, performance management, compensation management, learning management, and succession management.

I would imagine many resounding enhancements along those lines to be unveiled at CUE 2008. Codenamed "Ordway", the HCM suite is also slated to be the very first product delivered written (at least the above-mentioned new modules) in the Lawson Landmark architecture.

Also, while the suite will be built as a Software as a Service (SaaS) offering, it will most likely still initially be offered in the traditional on-premise model. I am wondering why such a cautious approach, given that the SaaS model in the HCM space has thus far been proven by the companies like Ultimate Software, ADP, Taleo and Authoria, to name but a few?

The one critical missing piece of Lawson's HCM endeavor has been a robust workforce management solution that includes time & attendance (T&A) and resource scheduling. To that end, in late February 2008,  Lawson acquired VasTech, a provider of workforce management software and services, headquartered in Annapolis, Maryland, US, with 45 employees. The transaction, which is expected to close in March 2008, is not anticipated to have a material impact on the company’s fiscal 2008 fourth quarter or fiscal 2009 results (Lawson’s fiscal year ends May 31, 2008).

With this acquisition, Lawson plans to soon offer customers in the healthcare (and possibly in hospitality and gaming, albeit at a later stage) industries an advanced workforce management staffing and scheduling solution to complement the Lawson HCM offerings. VasTech fills that gap for Lawson at just the right time, with the strategic HCM solution to be unleashed at CUE 2008.

Healthcare organizations, in particular, are challenged to manage their operational requirements and chronic staff shortages while providing high-quality patient care. By delivering workforce management capabilities that help address these key challenges, Lawson pledges to continue to strengthen its leadership position in the healthcare industry.

Lawson’s new workforce management solution will also aim to help healthcare organizations manage a variety of compliance and reporting challenges associated with safety initiatives, labor productivity and staffing levels. This is particularly important for hospitals as they face strict compliance with the staffing effectiveness standards of The Joint Commission – a regulatory organization that evaluates and accredits healthcare providers.

The rumor mill tells me that Lawson has been interested in buying a work force scheduling system for some time (e.g., the former partner Workbrain, before Infor bought the company for for a hefty premium over the asking price).

Therefore, Lawson't motivation here is simple and clear, since it has a number of healthcare organizations (about 400 organizations, with over 7,000 hospitals) running on Lawson HR applications.  All these customers have scheduling needs, and VasTech 24/7 is a healthcare specific scheduling product (nurse shift bidding, for example). 

All things being equal, these hospitals will likely buy this application from Lawson and not other providers (e.g., API, Kronos, Infor, etc.) if Lawson has its own offering.  If the company manages to sell it to other types of organizations at some stage - that would be great, but the deal is driven by the healthcare segment's requirements.

While future Lawson workforce management solution will likely be adapted to serve several industries, Lawson took a very deliberate approach in its search for the right strategic acquisition.  The vendor wanted the best solution for the healthcare vertical, whereby nurse scheduling is a major challenge in hospitals, and VasTech has a proven solution for this challenge. 

When combined with the Lawson Performance Management for Healthcare solution (which it acquired 18 months ago as former Competency Assessment Solutions [CAS]) and its strategic ongoing HCM developments, this VasTech acquisition should give Lawson the best overall (possibly hands down) HCM solution for healthcare. Almost all of VasTech’s clients are healthcare companies, with specific nurse scheduling functions (shift bidding, credentials, etc.) , and that market was Lawson’s driver for this deal.

What are your views, comments, opinions, etc. about Lawson's HCM moves in general and in the healthcare sector per se? We would also be interested in your experiences with this software category (if you are an existing user) or in your general interest to evaluate these solutions as prospective customers.
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