Lawson Software Marches Over $300M Milestone

Lawson Software Marches Over $300M Milestone
P.J. Jakovljevic - August 24, 2000

Event Summary

According to a press release from August 3, Lawson Software, a provider of Internet-enabled business applications, announced it has won a major e-business contract with HCA, owner and operator of more than 200 hospitals and other facilities in 24 US states, England and Switzerland. HCA, the nation's leading healthcare provider, licensed the full lawson.insight financials, human resources and procurement solution suites, as well as analytics, e-commerce and open component solution extensions. HCA also licensed Lawson's Employee and Manager, Financial Information and Vendor Information Web Self Service Centers. The contract represents the largest single sale in Lawson's 25-year history.

Lawson won the contract following a comprehensive evaluation that included several bidders. HCA officials cited Lawson's robust functionality, advanced workflow, Web Deployability, full integration and ease of implementation and customization among the technological reasons for selecting Lawson.

"Lawson's technological strength, including its scalability, was very impressive," said Terrie Tidwell, vice president, Financial Systems, HCA. "But Lawson clearly stood out in its strong healthcare experience, reputation and dedication. Lawson and HCA share a dedication to organizational excellence and customer service, so our corporate cultures are a very good match as well."

HCA will strive to leverage its Lawson e-business solutions to consolidate and streamline financial and payroll processes throughout the enterprise, replacing its legacy system infrastructure. Lawson's Web self-service solutions will empower HCA's employees with real-time access and control of the information they need to achieve their corporate mission.

Earlier, on July 20, Lawson Software announced financial results and its year-over-year growth statistics for the year ended May 31, 2000. The company reported revenues of $306 million for the year, yielding an overall revenue growth rate of 15.7%. Lawson's international revenue increased 41.5%. Lawson experienced 36.6% growth in contracting activity for target vertical markets, including healthcare, retail, professional services, financial services, public sector and telecommunications.

Three of Lawson's new vertical markets - professional services, financial services and telecommunications - experienced triple-digit growth in contracting activity, compared to the same markets without a vertical focus in their prior fiscal year. Lawson continued its expansion in the retail sector with license fee growth of 33.3%. Lawson continues to execute on activities to generate revenue from - e-business solutions and e-services powered by Lawson and delivered via the Internet. Lawson reported growth of more than 300% in new commitments during fiscal year 2000.

"In a fiscal year that bridged Y2K, Lawson moved into a new corporate headquarters building, underwent an internal restructuring, and launched four new vertical market initiatives plus a new corporate strategy of powering e-services for e-business," said Jay Coughlan, president and chief operating officer, Lawson Software. "At the same time, Lawson maintained solid revenue growth while building a significant amount of deferred and subscription backlog revenue, which is helping us operate and forecast much more like a publicly-traded company. Through our strategy, we've established new sales channels and a source of steady, recurring income. That strategy already is paying off, and we are very optimistic about our position in the market and the future of the company."

Market Impact

Lawson continues to reap rewards from continually investing significant R&D dollars in order to deliver innovative products, often in advance of much larger competitors (and much more tacitly, without generating much of a hype). The recent announcement like the incorporation of vertically focused business intelligence (analytical) capabilities speaks for it. Furthermore, Lawson has demonstrated a very tight industry focus and is regarded as one of the Top 3 ERP systems for Healthcare, Retail, and Professional Industries. Being privately held and independent of Wall Street pressures has allowed the company to direct its investments for development of its desired core competencies.

The company believes that they can support companies ranging in size from only a few $ million to $1 billion or more. It will be concentrating its internal sales efforts on its traditional vertical markets for now and relying on partners to bring them other leads. Lawson has made an all-out effort to establish itself as a force in e-business. To that end, it has been building its products and services around three main pillars:, Lawson.insight, and is a work-in-progress of its strategy to possibly satisfy all the needs of the Internet users of its Web-based e-services. It currently comprises: iJob, a real-time candidate registration; Workforce Analytics, a Lawson hosted e-service designed to assist HR professionals measure and manage their human capital; Lawson Digital Depot, an Internet procurement portal; and Lawson Tone that delivers Lawson business applications via the Internet by partnering with applications service providers (ASPs).

Lawson.insight is an e-business management system, which contains Lawson's traditional ERP software functionality. Lawson.insight products are grouped as engines, Self-Evident Applications (SEA), or extensions. The engines comprise core ERP modules such as financials, human resources, procurement and distribution management, and some extended ERP functions such as CRM (through an OEM agreement with Siebel). Lawson has long been promoting its SEA initiative, with the idea to tremendously simplify the learning curve required by users, featuring Web user interfaces and navigational tools. The extensions, on the other hand, are customizable applications for areas that include workflow, e-commerce, and analytics. includes training, implementation, and support services. It offers ImpleMentor, an online project management tool for the installation process. Training is available through Lawson Software University (LSU) via either traditional classroom or through Internet distance learning.

Lawson, by adopting XML as its internal standard and providing appropriate interfaces, claims to be able to integrate with other e-commerce systems either on the front end or on the back end so that its customers' systems can communicate smoothly with other vendors, whether via the Web, e-mail, or even Fax, EDI, and spreadsheets. This, bundled with the fact that its product will run on almost any platform or database, prompts us to believe that its competitors, particularly mid-market ERP vendors, will be enormously pressured to replicate Lawson's value proposition.

Lawson has also built an impressive mind share in the ASP market. Lawson's main customer base is within the healthcare, financial, and professional services space, with many smaller firms that are generally more attracted to the notion of turning over their applications to someone else to run, while they focus solely on their core competencies. Moreover, Lawson's software consists mainly of financial, procurement, and human resource transaction systems, the ERP components that customers are generally more eager to outsource. With close to 400 ASP sites already signed up, Lawson is ahead of a number of much larger and, therefore, noisier ASP proponents, some of them already usurping the title of an ASP market leader.

While we believe that Lawson's product strategy against its major competitors is on track, one should not discount fierce competition from much larger vendors, like SAP, Oracle, PeopleSoft, and J.D. Edwards. These vendors, while possibly inferior regarding healthcare or retail industry focus, will try to influence customers purchase decisions by offering their more comprehensive product portfolios (including CRM modules) or instilling FUD (fear, uncertainty, doubt) in more conservative CFOs who may cast a wary eye on Lawson's immunity from financial statement disclosure due to its (surprising) determination to remain a privately held company.

Touting a CRM module would be an attempt to capitalize on Lawson's recent difficulties with a CRM strategy. Lawson's CRM strategy, which had initially floundered, became solid only recently with a global distribution agreement in which Lawson will integrate and sell its enterprise applications with Siebel Systems' CRM suite.

As for the FUD facts, is the recent appointment of Robert Barbieri (who has 22 years of financial management experience with publicly-traded and multinational companies) as CFO the sign of any strategic shift in that regard?

User Recommendations

Lawson's offerings seem well suited to companies planning to engage in e-business - or already involved in it - who do not yet have the kind of basic ERP back-end that is Lawson's strength (except for manufacturing). Since any company planning to engage in e-commerce will want to have at least a basic financials package and will need other components of an ERP suite if they are successful, the easy integration promised by Lawson is a compelling reason to consider them as part of any e-commerce initiative.

Organizations considering ERP applications (both web based and network dependent) should however consider all available options, although Lawson's activities are promising. The notion of a full Internet based solution could save time and money on the integration. An additional consideration might be the complete outsourcing of the ERP application with an Application Service Provider (ASP).

We generally recommend including Lawson in a long list of an enterprise application selection to mid-market and low end tier 1 companies (with $10M-$2B in revenue), based on a very deep understanding of customers' needs within the following industries: Financial Services; Healthcare; Professional Services; Public Sector; Retail; and Telecommunications.

Organizations seeking a Web-based solution and out-of-box functionality with little or no re-engineering effort may benefit from evaluating Lawson's ASP offering. Support, connectivity, ease of use, security, acceptance, and scalability are only a few regular considerations. Companies with a substantial manufacturing activity (for which Lawson does not offer a native solution) and companies with more intricate business processes may want to inquire how Lawson would deal with the issues of customizations and 3rd-party products bundling in an ASP setup.

As for the new added CRM functionality through the partnership with Siebel, users are advised to ask for firm assurances on the availability and future upgrades timeframes, and more detailed scope of combined product functionality. Also, make sure that Lawson offers a single contract and help desk for all disparate components of its product offerings. Finally, consideration should be given to the endorsement of "web standards." Should a different XML standard be adopted (industry wide) after installation, identify who will be responsible for accommodating the change and what measures have been engineered into the application to support evolving standards.

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