Based on recent industry events, we put together a series of questions pertaining to market trends, platform approaches, and mid-market issues for software application vendors to answer. Following is the continuation of the responses we received from two upper mid-market, stalwart vendors—Infor and IFS.
For more background on the questions we asked below, and for these two vendors' answers to our first four questions, please see Two Stalwart Vendors Discuss Market Trends and Two Stalwart Vendors Discuss Platform Approaches (Wars).
Questions and Answers
Question 5. Microsoft desktop supremacy—"solo," "duet," or many can still play at this game?
IFS: We believe Microsoft dominates the desktop, but there is an analogy between the "stacks" and the desktops. Different technologies have different merits, but to the consumer they start to look about the same. Functional solutions will continue to drive the decision making for [enterprise resource planning] ERP applications, but user experience will continue to increase in importance.
IFS will continue to support creative [user interfaces] UIs that are simple to deploy, appealing to use, and [that] integrate well on the desktop (primarily with Office products). The IFS Smart Client for Excel is a good example of this. Most recently, in June 2007, IFS announced the North American launch of IFS Business Analytics offering, an Office Business Application (OBA) that makes IFS Applications ERP software accessible to users of the Microsoft Office 2007 system. Business Analytics is the first deliverable of the IFS Intelligent Desktop initiative, which will integrate IFS Applications with the Microsoft Office 2007 system to make these applications more broadly available to enterprise customers and greatly improve user productivity. By providing secure and traceable integration between Microsoft Office Excel 2007 and IFS Applications, the Business Analytics OBA harnesses the power of Office Excel 2007 as the preferred tool of financial analysts and a familiar tool to managers.
Infor: Why are Microsoft and SAP offering Duet? Are customers really asking for this? Microsoft sees this as means to sell and lock customers into Office 2007—it's clear that businesses have minimal reason or justification to upgrade to Office 2007, since Microsoft Office XP and Office 2003 already meet most of their needs. But, embedding business application interfaces directly into Office for Microsoft Dynamics is a great ploy to get businesses to buy and get locked into Office 2007 and subsequent releases. On the other hand, SAP's most significant revenue growth opportunity is to sell user licenses to existing customers. Duet is a great ploy [for] accomplishing that—users in other parts of a company will explore the Duet interfaces in Office and thereby cause the company to buy more SAP user licenses.
But is this what business really want—even "fatter" clients, with more installation and maintenance overhead, paying for a copy of Office 2007 in addition to the SAP user license? What about support and all the possible finger-pointing between SAP and Microsoft to resolve any problems in the future? Customers tell us that they want low cost, low installation and maintenance overhead for user access licenses. They want to deploy thin clients and browser-based user access with the flexibility to use many interface technologies, including mobile ones. Infor is pursuing a flexible, zero-footprint UI solution using state-of-the-art technologies such as AJAX, Flex, and other open standards (we already deliver Flex-based UIs). Another key point Duet misses is role-based interfaces and business processes. Infor UI strategy is centered [on] providing role-based persona interfaces that enable end-to-end business processes across traditional functional silos in the business. Again, Infor's approach is all about doing what customers want—providing them with low cost, industry standard user interfaces based on industry standards with low installation, maintenance, and hardware costs.
Question 6. Incidentally, what about partners? That is, independent software vendors (ISVs) and value-added resellers (VARs)?
IFS: IFS supports a reseller channel as well as partners that provide complimentary solutions. At the same time, IFS sees a growing interest in partnerships and collaboration opportunities.
From an IFS perspective, the US Air Force (USAF) project is a good example of where partnerships (that is, Oracle, IFS, and Click Commerce) offer a more compelling solution than any single solution (see Nimble Enterprise Applications Vendor Faces Stiff Challenges in a Competitive Environment). The reality is that many opportunities are too complex, or seen as too risky, for a single vendor to undertake. IFS will continue to develop partnerships on a case by case basis where it adds overall value, and that includes occasionally partnering with competitors if we can mutually benefit.
Infor: Infor is committed to hybrid sales models with direct sales teams and channel partners (VARs). We do not recruit thousands of VARs and let the market sort out the survival of the fittest. We rather work closely with our channel partners to provide a genuine, long-term business opportunity, working cooperatively with Infor. Infor channel partners have access to the same resources as our direct sales team. Our Infor channel regional sales managers coordinate and promote sales and services opportunities with our channel partners, and manage potential conflicts.
With regard to Infor solution partners (ISVs), we have an impressive list of complementary solution and technology partners that we work with closely to provide comprehensive solutions to our customers. These complementary and technology solutions are on our price list and sold as part of the Infor contract with our solutions on our paper. We have been doing this since day one, whereas it seems that others are only now starting to do this, but only for selective partners.
Question 7. What about going mid-market vs. defending it? What, to your mind, will be the key success factors (KSFs) in this market, and what have you been doing to better position yourself there?
IFS: Contrary to popular thought, mid-market customers require the same functionality as large enterprises. They just don't have the level of resources to acquire, implement, and support the solution. Being successful in the mid-market means delivering the solutions [customers] need at prices they can afford. As an example, IFS offers tier-one functionality that is packaged with an implementation model suited to the mid-market, and will continue its practice of one product with vertical industry focus.
The middle market has become a target for traditionally tier-one vendors, but IFS feels confident that the fact that we have always targeted this sector will serve us well.
Infor: If there is such a thing as the mid-market, then Infor is the number one vendor in this space, with a large proportion of our 70,000 customers in what is traditionally viewed as the mid-market. It is a core part of Infor's heritage inherent with the experience built into our solutions and domain expertise over the past thirty years. So, while companies like SAP and Oracle view the so-called mid-market as just a business growth opportunity, Infor has the cumulative experience and focus with customers in this market. Microsoft, on the other hand, is struggling to scale small-company solutions into the core mid-market.
To be successful in the so-called mid-market is to first understand that there isn't a mid-market per se. Companies' requirements don't differ that much by size, as you can still have smaller companies with [the] same complexity of requirements as very large companies. The difference in requirements have more to do with vertical industry, operations span (for example, production, supply chain, etc.), and business scope (single site, multisite, multiple entities, multinational). What is different is the budget and resources available for implementing business systems—so-called mid-market companies are much more cost-conscious, risk-averse, and efficient in their business systems needs and implementations. Many very large companies are actually [collections] of many smaller divisions and entities, and when those divisions and entities need [solutions] to cost-effectively run their operations, the large scale corporate solutions don't fit their needs. Infor and acquired predecessor companies have always been focused on providing the most relevant and cost-effective solutions for companies of all sizes.
Question 8. Microsoft SureStep, Lawson QuickStep, Oracle Accelerate, and others—breakthrough implementation methodologies, or merely "baby steps"? Are we missing something earth-shattering in your offering in this regard?
IFS: Everyone is trying to reduce the services content required to implement a solution, and some of these approaches are just a repackaging of existing implementation methodologies, pushing more of the work to the customer (more self-paced training, for example). The longstanding IFS application implementation methodology (IFS AIM) has a proven track record of guiding customers to a successful, cost-effective implementation.
Our implementation efforts moreover are always improving, and we have noticed a gradual decline in recent years in the percentage of services dollars when compared to license fees. This is due to our own internal process improvements rather than a specific initiative
Infor: Infor offers these capabilities as part of our worldwide professional services team of over 2,200 people along with solutions with industry experience built in. We are not trying to make one product fit all—we have industry-specific solutions designed for different industries. The bottom line is that customers want predictable, cost-effective solutions with rapid implementations. If a vendor's solution doesn't meet those criteria, [the customers] will need special methodologies and gimmicks to achieve [them]. Conversely, within Infor industry-oriented solutions, that capability is already built into our solutions.
Question 9. At the end of the day, who do you think is in a better position to ultimately win in the market? Or do you think there will be no single winner, and that everyone will remain at the current, equidistant positions?
IFS: IFS, of course! Ultimately, the vendors that manage change, delivery value, and provide cost-effective solutions to customers will survive.
IFS is in a unique position of offering the most mature and stable SOA-based application on the market. We continue to make significant research and development investments in our product—something many of our competitors are not doing. Our product and customer-centric approach continues to attract new customers, and we feel this success is sustainable.
Infor: We don't believe that any one vendor will ultimately win. Major vendors such as SAP, Oracle, and Infor aren't going to go away given the sheer volume of customers and presence in the market. Different vendors offer different value propositions that appeal to different types of companies and market segments. New or expanded solution categories and delivery models will continue to make the business applications market attractive to new vendors and [lead to] innovation by all vendors. Consolidation will continue, but new, innovative start-ups will keep filling in the gaps. Customers want choice, which will continue to drive diversity and innovation amongst many vendors in this market.
Our Parting Comments
As in presidential debates, the essence of these two vendors' responses was not changed by us, except for some minor editing with regard to style and grammar. Contrary to presidential debates, however, the two vendors have had virtually unlimited time to respond to these questions, and no real limit was imposed regarding the length of their responses. Neither was any repartee possible regarding some of their allegations and statements about competitors (at least not at this stage, given that this is the very first article of its kind).
As is the case for voters, it is up to each reader to form his or her own opinions about each vendor's responses, their genuine intentions and concerns for the individual customer ("political" posturing?), and so on. Such questions-and-answers articles will likely continue, given the number of other vendors whose responses are currently being prepared. Readers are more than welcome to quip in with their comments and opinions, which we hope and believe this series will provoke.
This concludes our questions-and-answers series Two Stalwart Vendors Discuss Market Trends.