Lawson Software-IPO and Several Acquisitions After Part Four: Strengths Continued

Strengths Continued

Until very recently, Lawson Software, Inc. (NASDAQ: LWSN) has cruised as a leader in the mid-to-high end market for financial management, human resources (HR), professional services automation (PSA), e-procurement, and retail distribution applications by continually betting on the following few creeds of success:

  1. Adequately broad footprint

  2. Architectural astuteness

  3. Industry-tailored solutions

  4. Hosting approach

2) Architectural Astuteness

As mentioned earlier, Lawson has long embraced a layered, flexible, open, Web-based, and XML-accessible product architecture, with the idea of support for ever changing technology standards. A good example was its early delivery of visionary, Web-addressable (with server-based application logic and a data structure that could be referenced and executed via a URL) and componentized products (using Active Object Repository) that exhibit an open architecture and a support for a wide range of platforms (using Business Component Integrator (BCI)), well in advance of much larger and more noisy competitors.

Lawson has long been promoting its Self-Evident Applications (SEA) initiative (since 1996), with the idea to simplify the learning curve required by users, featuring Lawson Portal (a default role-based Web user interface) and navigational tools. The underpinning of Lawson's technologies have long been SEA, which is the concept of delivering application functionality to light-client, browser-based desktops. While conventional client/server applications are form- or transaction-driven, the Self-Evident (recently renamed into Self-Service) Applications are information based, which means that users can view them on dynamic and personalized Web pages, with minimal training requirements. Another product component that was released at the end of 1990s, LAWSON INSIGHT II Open Component Solutions, allowed users to access, view, and interact with enterprise information using one of the following technologies: Java, Microsoft ActiveX, Lotus Domino, or Javascript/HTML.

The Lawson product architecture has since further evolved and is currently composed of the following:

The Web Services component includes Lawson Portal and Internet Object Services (IOS), which are key components for deploying Lawson applications via the Internet. The component was devised to provide physical and logical separation as well as multi-level integration. Lawson Portal provides a single point of navigation through which users can access information from disparate sources, including Lawson core business applications, third party applications, Internet sites, and other miscellaneous data sources. Furthermore, businesses can customize the preconfigured user interfaces by using extensions to tailor solutions to meet their specific requirements. Lawson Portal enables a wide distribution of information to users based on their roles in an organization, while controlling access to data and can be configured by other enterprise portal products. Internet Object Services provides the connection between Lawson and the Internet, and manages the communication between Lawson's browser-based interfaces and Lawson applications and databases. Internet Object Services delivers user requests to Lawson applications and responds with results to users.

The Application Server components include the business logic applications, active object repository, database layer and environment (workflow, security, and BCI component integrator). Lawson's proprietary business logic applications contain the server-based logic components of its software solutions, while the active object repository is a proprietary library of objects that contain data attributes that define the interrelationship between the application logic and the data. For example, the active object repository would contain the attributes about an employee record in the human resources application, which are loaded into memory for use as the human resources application runs. In addition, the active object repository enables any authorized user to look through and around transaction data by using the Drill Around feature, based on the user's needs and analysis criteria. Drill Around is not dependent on a predefined path, but rather is driven by the unique transaction and the attributes that the user is investigating, regardless of the application. The drill around feature allows users to extend their knowledge search in a point-and-click manner at every level of the application including reports for every data element within the database.

The database layer exists independently from all other components, while the environment maximizes the database system's performance, reliability, and availability while providing secured access across the solutions. The environment enables the proprietary software in the business logic applications to function in multiple operating system platforms.

This is Part Four of a five-part note.

Parts One and Two detailed the events.

Part Three began the market impact.

Part Five will discuss the challenges and make user recommendations.

3) Industry-Tailored Solutions

As mentioned earlier, Lawson has long espoused a very tight industry focus and an undisputed leadership position within the health care, retail, financial services, professional services, and public sector (government and education) segments of the market. With an analogy to geometry, as the volume of a 3-D object is equal to its base multiplied by its height, Lawson, contrary to many other players, seems to be compensating its narrow foothold with a strong vertical dimension. Lawson will continue to concentrate its internal sales efforts on its traditional vertical markets and to additionally rely on partners to address and develop particular industry needs. Still, Lawson will attempt to provide a vast majority of this functionality as a native part of its solution, either via acquisition or internal development. Look for Lawson's opportunistic expansion into another service industry market (e.g., earlier mentioned "emerging" markets like utilities and the hospitality sector) and for its abstaining from manufacturing in the foreseeable future.

On the surface its portfolio matches many of these competitors' offerings, covering financial management, human resources, professional services automation, procurement, distribution and customer relationship management. But the company's success has been built on tuning these for selected specific industries, namely health care, retail, professional services, financial services, and the public sector. To that end, it provides a series of pre-built interfaces and extensions to the core Lawson applications that are designed specifically for business processes within its chosen targeted industries. For example, Lawson's e-Procurement for Healthcare solution allows health care organizations to coordinate and automate the process of ordering, receiving, and paying for medical and other supplies from multiple suppliers, networks, and web exchanges, using a single Web-based portal.

Additionally, Lawson's direct sales force and services organization is aligned with the strategy to provide industry-tailored solutions, and focuses on the unique business processes for each of its targeted industries. Within each industry, Lawson has a sales team dedicated to prospective customers, and another team dedicated to sales to existing customers. It also has regional sales teams that focus on specific geographic territories, with thirteen domestic sales offices in the US.

4) Hosting Approach

Lawson has also had an early involvement in hosting/application service providers (ASP) deployment (owing to its advanced product technology and its focus on the functional areas that lend themselves well to the ASP business model) and consequent mind share and the success in the ASP market, with dozens of viable ASP partners and close to 500 ASP sites. Through its ASP program, the company insists that its ASP partners customize and pre-pack the Lawson product in order to provide a particular value to a certain vertical industry and to also bring new business from the market segment. ASPs allow Lawson to reach small-to medium-sized businesses that prefer a hosted solution. The software architecture depicted above is easily distributed over the Internet, it can serve many customers and it supports multi-tenancy, which lets ASPs securely host multiple customers on a single set of Lawson applications.

For mid-market users, outsourcing software operations can be a low-cost first step toward utility computing. Vendors like Lawson that are treating outsourced services as a strategic component of their overall product rather than a short-term revenue boost have a chance to grab long-term market share as users move toward utility computing. The most recent addition to Lawson's ASP fold took place in April, when Lawson and Verizon Information Technologies Inc., a subsidiary of Verizon Communication, announced a strategic alliance with Velocity Outsourcing to provide business customers with Lawson software and computing applications hosted at Verizon data centers. The two companies will market their products and services through Velocity Outsourcing, a new company created by Eisner Technology Solutions (Eisner), which is a fourteen-year Lawson Software Alliance Partner and has performed full implementations and provided applications support and consulting services for hundreds of Lawson clients. Velocity Outsourcing partner Verizon IT is well established in IT managed services, and Lawson has professional service expertise in the respective markets. Still, Velocity Outsourcing will need to distinguish itself from other established Lawson ASP partners like Metanext, netASPx, Agilera (now part of Blue-Star), and Siemens Medical Solutions.

Perhaps the most intriguing aspect of Lawson's history came in December 2001, when—during a waning year for stock market flotation and after twenty-six years as a fiercely-independent private company—Lawson chose to launch itself onto NASDAQ. Underlying that latest move was a desire to firmly establish the company in the mainstream of business software. The $190 million cash infusion that it has raised through the initial public offering (IPO) has provided the company with a war chest for international expansion and major acquisitions, while adding further visibility in the applications market. Preceding the IPO, Lawson secured $40 million in venture capital funding, and spent $27.5 million acquiring professional services automation software specialist Account4 (see Lawson Software Means Business With PSA and IPO). This has enabled it to tap into the service-based companies, such as systems integrators and management consultancies, for software for managing their planning, budgeting and billing.

To that end, Lawson services automation application called Lawson Service Process Optimization (SPO) automates the business processes of professional services organizations and corporate internal and external service departments. This application can work independent of any other system or in conjunction with Lawson core business applications to add reporting and analysis, invoicing, and capitalization capabilities. Lawson tailors this application for internal services departments, as well as professional services organizations and the other service industries on which it focuses. Services automation helps internal services departments within organizations to improve their service delivery capabilities, lower and stabilize costs, better align resources and investments with business strategy, and improve work efficiency and effectiveness.

This application offers additional tools to track service requests and define approval processes and allows for the incorporation of best practices and facilitation of project accounting and internal billing. Services Automation for Professional Services helps professional services organizations, such as consulting firms, improve their balance sheets with faster cash flow and increase resource utilization and bid management. It aims at providing greater visibility into service businesses by helping customers determine which projects and clients will bring the greatest profit margins.

This concludes Part Four of a five-part note.

Parts One and Two detailed the events.

Part Three began the market impact.

Part Five will discuss the challenges and make user recommendations.

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