Lawson Asserts Itself, Draws A Bead On Bigger Players

Event Summary

On May 7, at CUE 2001, the company's annual user conference, Lawson Software, a privately-held provider of Internet-enabled business applications for service industries, announced the release of lawson.insight 8.0.2, the newest version of its flagship enterprise e-business solution line. Included are additional new products and enhancements that complete the automation of e-business processes for service sector industries so it will be a full 360-degrees of coverage. The lawson.insight 8.0.2 release is scheduled for general availability in August 2001.

The lawson.insight line offers the healthcare, retail, professional services, public sector and financial services markets new features for e-business process adoption and improvement. Lawson also announced delivery of new solutions and tools engineered to help service providers (SPs) quickly develop and deliver e-services powered by lawson.insight engines and extensions. With the new applications in the suite, Lawson has thrown a gauntlet to direct competitors, particularly PeopleSoft. New products and enhancements in the 8.0.2 release of lawson.insight include:

• Encumbrance Accounting - public sector. Provides early warning of spending commitments to reduce risk of overspending appropriations.
  
  
• Purchasing Analytics - all markets. Offers purchasing analytics including key performance indicators to drive new efficiencies and lower supply chain costs.
  
  
• Average Daily Balance - financial services. Determines average daily balance in all funds and cost of funds to determine available funds.
  
  
• XML e-Scorecard - all markets. Provides zero-client access to enterprise reporting and analytics.
  
  
• Connector for Siebel eBusiness Applications - professional services. Integrates enterprise relationship management processes through direct connection of lawson.insight with Siebel Systems applications.
  
  
• Project and Activity Accounting - professional services. Manages project accounting including tracking of daily project activity, valuing and recognizing revenue for ongoing projects and customer billing.
  
  
• Open Application Environment - all markets. An open, component-based application environment using industry-standard Java technology.
  
  
• Connector for PKI - all markets. An expanded security engine providing integration to Entrust public key infrastructure and digital certificate solutions.
  
  
• Knowledge Module for PATROL - all markets. Integrates Lawson engines with BMC Software's PATROL solution to provide enhanced enterprise management support.
  
  
• Connector for Tuxedo - all markets. Integrates BEA Tuxedo into the Lawson environment to support application load balancing and distributed transactions.
  
  
• Connector for Microsoft Application Center - all markets. Integrates Microsoft Application Center into the Lawson environment to support application load balancing and distributed transactions.
  
  
• e-Procurement Service - healthcare, professional services. An integrated connection to trading exchanges, marketplaces, purchasing organizations, suppliers and networks.
  
  
• e-Recruiting - all markets. Automates candidate application and selection processes with Internet-based system for online recruiting.
  
  
• e-Workforce Analytics - healthcare. Offers real-time analysis and reporting on workforce performance with comparative metrics from Saratoga Institute.

The lawson.insight 8 Series is devised to help service companies achieve competitive advantage through e-business operational improvement of financials, human resources, distribution, procurement and analytic processes. A core component of Lawson's software environment, XML, allows the enterprise to connect with a wide array of stakeholders, including suppliers, partners, customers, prospects, employees, consultants, influencers, decision-makers and anyone else with an impact on business, thereby going beyond the limitations of basic B2B and B2C transactions.

"Lawson's focus on vertical markets remains as sharp as ever, and this lawson.insight release again demonstrates its commitment to adding new functionality and solutions that address the needs of the industries it serves," said Dean Hager, executive vice president, Global Products Division, Lawson Software. "The potential savings from leveraging e-business efficiencies are very attractive. Lawson's proven e-business engines automate end-to-end processes to drive those efficiencies throughout the enterprise."

Market Impact

While Lawson has for some time tacitly been a thorn in the flesh of the bigger players, it has now decided to create a noticeably greater noise in the market. Having reached $313 million in revenues in 2000 and having achieved significant mind share in the service industries sector, the company believes the time has come for it to become a recognized competitive force. Lawson continues to be a leader in the mid-to-high end market for financial accounting, procurement and HR applications by continually betting on the following three tenets of success:

1. Early delivery of visionary, Web-addressable (with server-based application logic and a data structure that can be referenced and executed via a URL) and componentized products that exhibit an open architecture and a support for a wide range of platforms - even in advance of much larger and more visible publicly traded competitors. Lawson has long been promoting its Self-Evident Applications (SEA) initiative (since 1996), with the idea of simplifying the users' learning curve by featuring Web user interfaces and navigational tools.
   
   Lawson's advantage also lies in its integrated, omnipresent Drill Around functionality and its tight integration with Microsoft Office applications. The drill around feature allows users to extend their knowledge search at every level of the application including reports for every data element within the database. This is a powerful tool that will enhance the user's ability to isolate data and rapidly extract specific information for reporting or analysis.
   
   
2. Very tight industry focus and an undisputed leadership position within the healthcare, retail, financial services, professional services, public sector and telecommunications segments of the market. Lawson will continue to concentrate its internal sales efforts on its traditional vertical markets and to rely on partners to address and develop a particular industry's needs. Look for Lawson's expansion into another service industry market (e.g., utilities) and for its abstaining from manufacturing in the foreseeable future.
   
   
3. Early involvement in ASP deployment (owing to its advanced product technology) and consequent securing of mind share and success in the ASP market - with more than 40 viable ASP partners and close to 500 ASP sites. Through its ASP program called Lawson Tone, the company insists on its ASP partners customizing and pre-packaging the Lawson product in order to provide particular value to the particular vertical industry and to also bring new business from the market segment. On its side, Lawson pledges to share revenue with ASPs and not to become an ASP itself, as opposed to its competitors that have their own ASP business on the side.
   

The recent announcements of vertically focused partnerships should bode well for the company's continued market success. These partnerships might be the sign that Lawson has begun to address its partnerships more strategically rather than opportunistically, which has often been the case in the past. Also, the partnerships with renowned EAI and applications management vendors will provide Lawson with readily available toolkits for making deeper functional adjustments and customizations as well as the better scalability, security and load balancing, where the company has traditionally trailed the bigger competitors.

Lawson, by adopting XML as its internal standard and providing appropriate connectors, 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 their business partners, 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 and with the forthcoming product enhancements, prompts us to believe that its competitors, particularly mid-market ERP vendors, will face a tall order to match Lawson's value proposition.

While we believe that Lawson's product strategy is hitting the bull's eye, one should not discount fierce competition from much larger vendors, like SAP, Oracle, PeopleSoft, and ever more from J.D. Edwards and Microsoft Great Plains. These vendors, while possibly inferior regarding service industries focus, will try to influence customers purchase decisions by offering their more comprehensive horizontal product portfolios, by touting superior global presence and multi-national product capabilities, or by instilling FUD (fear, uncertainty, doubt) in more conservative CFOs who may cast a wary eye on Lawson's prolonged existence as a private company. The company has indicated a possibility of going public, but without any firm timeframe indication, probably the result of the current stock market slump.

While being privately held and independent of Wall Street volatility has allowed the company to direct its investments for development of its desired core competencies, going public might be necessary in order to keep up with the need for huge R&D investments. Lawson's competitors can garner these funds without the need to turn to venture capitalists (as Lawson recently did to obtain a $40 million VC investment). Further to retain its workforce, Lawson may need to offer them stock options.

Look for a particularly fierce duel between Lawson and PeopleSoft owing to the closeness of the companies' focus and product offering. The technological advantage that Lawson has had due to PeopleSoft's belated involvement in Web-enabling its products is now all but gone (see PeopleSoft - Catching Its Second Wind From The Internet). On the other hand, PeopleSoft's advantage due to a broader product foothold and better product scalability and monitoring/load balancing may be annulled by Lawson's new product release. Every selection war will be won by mere nuances.

While PeopleSoft's advantage is still its market recognition, positive turnaround momentum and bigger resources, these might not suffice for a discerning, savvy IT decision-maker. The use of a statistically valid decision-making tool along with careful determination of importance (weight) factors for all selection criteria will be of paramount importance (see Knowledge Based Selections). When more than one vendor ranks well within a given set of areas (as is very likely in the case of Lawson and PeopleSoft in terms of e.g., HR/payroll and financials functionality), the decision hierarchy provides the supporting material required to justify further investigations before the final decision. These include, inter alia, scripted scenario demonstrations and prodding client reference visits/conference calls.

User Recommendations

Evaluate Lawson if you are a mid-market and low-end Tier 1 company (with $10M-$2B in revenue) within the following service industries: Financial Services; Healthcare; Professional Services; Public Sector; Retail; and Telecommunications. Organizations considering business applications (both Web-based and network dependent) should however consider competitive offerings too. Nonetheless, using a full Internet based solution could save time and money on the integration.

Enterprises 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. Since any company planning to engage in e-business will want to have at least a basic financials package and will need other components of an ERP suite afterwards, the easy deployability and integration promised by Lawson is a compelling reason to consider it as part of any e-commerce initiative.

More comprehensive recommendations for both current and potential Lawson users can be found in Lawson Software Expands Vertically As Well and Lawson Software: Self-Evidently Thriving on Innovations.