Software provides Web-based, client/server enterprise resource planning (ERP)
software for companies in the mid- to high-end markets (the Fortune 2000 companies).
Its customers are concentrated in the financial services, healthcare, professional
services, public sector, retail, manufacturing, and wholesale distribution industries.
Founded in 1975, and with headquarters in Minneapolis, MN and London, UK, Lawson
Software has experienced outstanding (over 35%) growth over the last four years.
It is a privately held company and the ninth-ranked ERP vendor with revenues
of $270 million in fiscal 1999 and more than 1,800 employees in 20 offices worldwide.
Lawson, founded by Bill and Richard Lawson and John Cerullo, initially provided
custom mainframe software for Burroughs and IBM installations.
company has continually recognized and anticipated new computing trends by broadening
its platform support and adding products for the IBM System/38 in 1981, IBM
AS/400 in 1988, UNIX in 1990, and Microsoft Windows NT in 1998. The company
fully embraced open systems technology in 1985 by moving all development to
a UNIX-based CASE tool.
1993, Lawson was one of the first software application vendors to shift its
market focus by delivering client/server applications. Lawson's cross-platform,
open-database, component technology is incorporated into its flagship product
--the LAWSON (formerly LAWSON INSIGHT II) Business Management System. The company
was one of the first to Web-enable its product in 1996. It commercially deployed
Web Self-Service and role-based "Self-Evident Applications" in 1997, and in
1998 delivered a pre-packaged performance measurement product.
In 1999, the company acquired ijob of Edmond, OK, a maker of Web-based HR software,
which automates employee training and benefits tracking.
LAWSON Business Management System is comprised of six integrated process suites.
These suites support and facilitate the execution of the following business
processes: Human Resources, Financials, Procurement, Supply Chain, Collaborative
Commerce, and Enterprise Budgeting.
addition, Lawson offers Value Management Solutions products including the Analytic
Suite and Financial Performance Management. These value-adding solutions bring
together real-time financial and non-financial metrics into a picture of organizational
performance. The Analytic Suite is integrated into an Enterprise Analytic Warehouse,
which gives key decision-makers visibility of the business and financial processes.
The Performance Indicator Suite anticipates the most commonly asked a business
question for each targeted executive role, then uses OLAP and algorithms to
provide the answers and pre-populate the role-based data marts.
underpinning of Lawson's technologies is its Self-Evident Applications (SEA),
the concept of delivering application functionality to light-client, browser-based
desktops. The main idea behind the SEA concept is to simplify the use of software
so that most people within an organization can use the product, rather than
a select few. While conventional client/server applications are forms- or transaction-driven,
the Self-Evident Applications are information based, which means that users
can view them on dynamic and personalized Web pages, with minimal training requirements.
recently released product component, LAWSON Open Component Solutions, allows
users to access, view and interact with enterprise information using one of
Software serves its worldwide base of more than 2,800 customers through direct
sales, support and affiliate locations in North America, South America, Europe,
and Africa. The company derives approximately 15% of its revenues outside of
the North American market.
expect Lawson Software to continue to expand on its commitment to assist businesses
in cost control and strategic planning. In addition, Lawson will continue to
evolve its vertical strategy in the financial services, healthcare, professional
services, public sector, retail and wholesale distribution industries and to
strengthen its position as a leading provider of Internet/intranet solutions.
has continually invested significant R&D dollars (~18% of total revenue)
in order to deliver innovative products, often in advance of much larger
competitors. The company was one of the first to Web-enable its product
in 1996, commercially deploy Web Self-Service and role-based "Self-Evident
Applications" in 1997, and deliver a pre-packaged performance measurement
product in 1998. Furthermore, LAWSON Business Management System runs on
a broad set of the most popular platforms and databases.
- Lawson has
demonstrated very tight industry focus (LAWSON 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 developing its desired core competencies (e.g.,
over 200 employees, a number unrivaled by much larger ERP players, are dedicated
to developing the product for the healthcare industry).
Lawson has displayed a focus on product quality and customer satisfaction
in its mission statement: 'to get one client (at a time) and keep it forever'.
The company achieved an enviable customer retention rate of 96% (its very
first customer from 25 years ago is still on its customers' list). Lawson
is generally competitive in speed of implementation, total cost of ownership
(TCO), and user interface functionality (the "Drill Around" tool for cross-applications
data access, and role-based "Self-Evident Applications" on the Web).
- While we cannot
disclose more detailed financial data because it is a privately held company,
we can state that Lawson Software has been a viable company and has exhibited
a very strong long-term financial track record.
Lawson currently does not offer a manufacturing product suite, although
approximately 19% of its customers are manufacturing companies. This may
result in a number of lost opportunities in the future, since certain customers
prefer more complete solutions from a single vendor. Moreover, the company
has only recently released its first CRM modules and plans to develop the
remaining CRM functionality in house. We consider this at least 12 months
- Lawson has achieved
very low brand awareness and has an undeveloped channel outside of the North
American market. This is further aggravated by the fact that the healthcare
sector is not well developed in those markets. Moreover, less litigation-aggressive
European stockholders may not fully appreciate and readily accept its Strategic
Ledger and Financial Performance Management suites.
Remaining privately held deprives the company of the significant capitalization
for marketing, R&D, and acquisitions, available to its publicly traded competitors.
Furthermore, more conservative CFOs will cast a wary eye on Lawson's immunity
from financial statement disclosure, given that corporate viability increasingly
gains in importance for software selection procedures.
Despite a highly competitive environment, we predict that Lawson Software
will reach $500 million in revenues within the next 3 years (65% probability),
based on its expertise and stronghold in relatively untapped industries
(See Vendor Strengths).
Due to increasing competition from larger vendors with significant resources,
we believe that the company will have to decide to go public within the
next 12 months (75% probability). Failing to do so will put Lawson behind
at least two other vendors in healthcare and retail markets respectively
by 2003 (70% probability).
Within the next 3 years, 25% of total Lawson revenues will come from outside
of the North American market (60% probability). During the same time, more
than 40% of its total revenue will come from license revenue (60% probability).
- We believe
that, within the next three years, the Company will have to either acquire
(35% probability) or partner with (40% probability) a vendor whose products
would significantly enhance its manufacturing capabilities. The potential
candidates could be Symix Systems, SSA, or QAD. The least likely scenario
(25% probability) is that Lawson will develop the product internally.
Lawson should further penetrate the Small-to-Medium Enterprises (SME) market
segment in the following ways:
Expand business in its existing customer base, by upgrading older versions
of software and by offering new extended ERP modules and enterprise applications.
Further expand its global presence, both by opening new offices and developing
new affiliate partnerships. Lawson should capitalize on its alliance with
IBM and seek licenses from native sources in markets outside of North America.
Deliver more new, focused and pre-configured vertical solutions, and offer
application outsourcing to make Lawson attractive to smaller, resource constrained
Remain committed to new product features and the introduction of additional
enhancements (See Vendor Challenges) and to enhancing offerings for manufacturing,
possibly through strategic product alliances with competitors. While we
respect the company's intent to deliver a fully integrated in-house developed
CRM product suite, we believe that the company should seriously consider
an appropriate partnership or acquisition, in order to preempt significant
product release delays. The example of SAP resorting to that route is a
case in point.
We generally recommend including Lawson in a long list of an enterprise
application selection to mid-market and low end tier 1 companies (with $100M-$2B
in revenue), based on a very deep understanding of customers' needs within
the following industries: Financial Services; Healthcare; Professional Services;
Public Sector; Retail; Wholesale Distribution; and Publishing.