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How Infor sees the Cloud

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26th Apr 2011
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How does an international combine with a portfolio of mainly on-premise ERP products make the transition to Cloud computing? Infor's head of strategy Bruce Richardson gave some pointers in London this month.

Before joining Infor last year, Bruce Richardson was research director of analyst firm AMR. But within days of announcing that sale, Infor chairman Jim Shaper invited him to jump the fence and direct the company’s software strategy rather than commentating on it.

“Having watched the company from the outside perspective, what excited me was to transform Infor from a portfolio company into a software company,” Richardson told the audience at the company’s recent SunSystems FMS launch event in London.

“[Infor] had a reputation as being an aggregator trying to consolidate the industry. Now we want to make innovations. In addition to becoming a software company, I wanted this to be more about partnership - what can we put in to make your life successful,” he told the assembled Sun users.

Through its consolidation activities in 2002-6, Infor picked up a number of accounting and ERP applications including SunSystems, Datastream and Pegasus. These are what is known as “legacy” products and, as Richardson acknowledged, they cater for sectors where most customers have already made their software decisions.

“The ERP market is very mature,” said Richardson. “The number of first time customers gets smaller, so there’s not a lot of opportunity in that market.”

The new kid on the block is Cloud computing, which has transformed HR and sales automation processes. Accounting and ERP have been slower to respond, but is moving in that direction. Because of the inbuilt dependencies - HR or sales people can probably tolerate minor disruptions within their systems, but manufacturing and finance cannot - ERP will be the last thing to go into the Cloud, suggested Richardson.

Infor CEO Charles Phillips has said he wants the company to lead the large enterprise into the Cloud and Richardson confirmed that the next release of SunSystems will be offered in the Cloud by next year.

However the technology barriers are only one part of the equation. The supplier’s internal company culture needs to change too. “If you're now expected to do Cloud deals where its smaller sums spread over five years, then that's a cultural issue unless you've started as a pure Cloud firm or you can create a second sales force just to deal with Cloud,” Richardson said.

“Cloud shows up on every Request for Proposal, although most deals end up on premise. Everyone asks about Cloud though so we have got to change the economics of the channel and the direct sales force so that they can see they can make as much money in the Cloud.”

But the economics are very persuasive with early migrants in the Infor camp. Richardson said the company’s first Cloud customer was biotech firm that worked out it could afford a couple of extra scientists on staff if it ran its applications in the Cloud.

UK psychometric testing company SHL jumped at the chance to be an early test user for the web-enabled version of SunSystems FMS Enterprise and realised an immediate return on its investment by retiring eight Citrix servers that were both slow and expensive to run and maintain.

While Infor negotiates the transition to the Cloud, Richardson cast doubts on how well other traditional enterprise on premise vendors will manage the move. “I don’t see SAP’s Business ByDesign as a volume product,” he suggested.

“In the Cloud, you have to be fanatical about cutting the costs of acquiring new customers. You do still need a sales rep to go to the client for you. You think that you don't and that you'll do it all over the internet or by the phone, but as soon as the client gets into the second or third call, you've lost. If they have to call 0800 numbers, then you have lost money, even in the Cloud. In the Cloud, the physics of software still apply. Cloud ERP companies just haven't made ERP as easy to use. The way the ERP market works hasn't changed in 20 years – every deal is hard fought, there's still a 6-9 months sales cycle and there are still the same consulting companies involved.”

With Richardson formulating its strategy, Infor is aware of these challenges and learning to cope in the evolving business software environment. Harking back to where the company was last year, he commented, “We needed to become a software firm and an ERP firm. We were a portfolio company that loved every product just the same. We had acquired a lot of companies and products and we were tapping into maintenance and service revenues, but there is nothing as important as new licences. When I joined I said, we have to drive licences and pull through seats. We've really made that transition now.”

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