Unite and conquer: that was the battle plan for Infor, the private equity-backed business applications maker, when it was founded back in 2002. The idea was to buy companies with popular and profitable products and to create an applications giant with the scale to rival SAP and Oracle.
Five years on, and an acquisition spree that has hoovered up 31 companies – including one-time luminaries of the enterprise resource planning market such as Baan, SSA Global and Systems Union – Infor has become the third largest enterprise applications vendor, with annual revenues of $2.1 billion, and over 70,000 customers.
But critics of the company often dismiss it as merely a collector, saying it only acquires companies to farm the maintenance revenues, and that it has no interest in developing the technology. With its service-oriented architecture (SOA) strategy, Infor is hoping to shake that reputation.
SOA giveaway
From May 2008, Infor will provide its customers with the infrastructure for a rudimentary SOA for free – or rather, paid for by maintenance, not license, fees. A Sonic enterprise service bus (ESB) from Progress Software will be baked into the applications, creating what Infor’s CTO Bruce Gordon describes as an ‘invisible’ SOA.
“At the end of the day, companies in the mid-market do not want to buy SOA technology, they want to buy business solutions,” he explains. “So we have to be able to hide the complexity inside the application.”
Mark Hader, CIO at Odom’s Tennessee Pride Sausage, a user of Adage, the ERP application that Agilisys – as the company was then known – bought in 2004 along with the Infor brand, says the SOA direction will relieve the ‘tedious shepherding’ currently involved in integration. “We have to do 17 different types of integration,” he says, and Infor’s plans will ease that.
“Companies in the mid-market do not want to buy SOA technology, so we have to hide the complexity inside the application.”
Bruce Gordon, CTO, Infor
Moreover, there is an upside in this strategy for Infor itself. As a serial acquirer, Infor has a product set based on many different platforms. Giving its customers an integrated platform should provide additional opportunity to cross sell. It intends to cherry-pick the best core functions from the applications set it has acquired, and combine this with the vertical, best-of-breed application functionality of its various product lines.
The transformation will help the company to solve the acquirer’s problem of integrating acquired products into the native product set while still serving the old product’s customers. Infor’s customers will be able to upgrade their legacy applications piece-by-piece, if and when they need to.
That said, the hyper-acquisitive activity that has so far been Infor’s defining feature is on hold for the time being, according to CEO Jim Schaper. The company’s latest two acquisitions, of human capital management vendor WorkBrain and of public sector ERP provider Hansen, will be the last of any significant size “for a while”.
This is in part imposed by the market, explains Schaper. The credit crunch in financial markets makes funding purchases more expensive. What is more, Schaper is focused on readying the company for a public offering. So while private ownership has funded the ‘unite’ part of its plan, and allowed it to undergo radical changes such as its SOA conversion without the burden of publishing quarterly results, the investors behind its private funding will want to see how successful the company has been in the conquering stakes.
Further reading
Agile ERP – Can enterprise resource planning ever become as flexible as modern business requires?
