It's always a pleasure to get an update from a CEO who gives straight answers to straight questions, is not overly PR'd into assembling all the right buzzwords in the correct order and who chooses to focus on the company's story rather than resorting to competitor bashing. Charles Phillips, CEO Inforis among that elite group.
For those that don't know, Phillips was once the go-to financial analyst on Wall Street as a managing director with Morgan Stanley before joining Oracle as the person who masterminded the rollup of the enterprise software business by that company. Phillips is not one of those bean counter type CEOs. He understands software. Most people I know admire his candor and attention to the interests of user groups.
Here are highlights from the conversation.
Given the Informatica warning but better than expected results at SAP, are you seeing any particular problems in EMEA?
Overall I'd say that EMEA is pretty good. The channel is going well and hiring around 600 developers shows confidence to the market as a whole. Europe generally is softer than it was say six months ago, but you can close deals if you have enough pipeline. It's unquestionably tougher if you were counting on closing all your large deals. That's not happening but no, we don't see a meltdown as some have been describing.
Infor has wrapped up the maintenance market to itself. Is this sustainable given the UseSoft decision in Europe?
Maintenance at the application layer is more complicated and typically, customers want to deal with the software author. It's much easier at the commodity database layer. Given the database does play for third party maintenance, people could save money if they get smart around it. To your point, there could be a way to stop third parties via contract terms on sign up but I don't think that's really necessary.
What's happening around the exit strategy?
We're pretty comfortable right now. There's no real pressure to exit. Of course that can change so if we see that Workday (for example) gets a strong IPO then we'd consider how that kind of exit might work for Infor. But right now? We're OK as we are.
What's happening with Upgrade-S and using the cloud?
It needs experienced eyes to do this right. We recently hired someone to run Upgrade-S who has a lot of experience in this area. He brought some people with him and so now we are fine tuning the offering. We're looking to lower the cost of infrastructure and retire customisations by bringing them into product. Newer versions cover 90% of what customers need so it's a win-win. Sure, we charge a little extra but it's still less than what you could do it for. We can then expand the footprint for them and that is something customers welcome.
How's the relationship with Salesforce.com going?
We're surprised how many customers are coming forward. People are excited about being able to use Salesforce.com style solutions from us. That applies whether they are existing customers or prospects. For us its a nice differentiator. It certainly helps us sell deals that are sales business driven but is a lot slower in the manufacturing space. That's to be expected.
Plex recently got snapped up. Why didn't you go after them as a cloud play for your manufacturing customers?
We did take a look at them but there were several factors involved. Something like 50% of their business is in automotive and a pretty niche area of that. There was a lot of overlap and when we looked further, they were a little bit too much down the market for us to be really interested. Taken together, the price they wanted wasn't right for us. More generally the people we speak with are still worried about putting core financials and manufacturing in the cloud so it's a lot slower than what we are looking for in growth. Edge apps are much less critical and we're concentrating on those.
What's it going to take to see a robust PaaS and PaaS ecosystem emerge around the Infor galaxy of products?
We're rolling out Mongoose. It's one of a very few ecosystems where non Infor third party ISVs are coming in. We bought two companies the last year that have been using Mongoose for a number years. Mongoose is declarative and meta data driven. It's not procedural so there's lots of developer advantages. The fact it's .NET based helps but that's not the real reason developers come to us.
So OK, applications are more constrained but that's OK. Two hundred resellers know it, another 5,000 SyteLyne customers are working with it so we've got a good base. It's hard to predict growth but people are promising me a lot. We'll just have to see.
When I think about Salesforce, it's not really giving developers an IDE they would choose for big applications. Our tools are already proven with two million subscribers in the cloud so we can use Salesforce to extend but the focus is on Mongoose. That's a message our customer like and I think we've proven it for developers so far.
What about accommodating 21st century needs?
There is a debate happening right now. What was developed 20 years ago doesn't accommodate change. Any time there's change in that affects those monolithic apps, everything breaks. We asked ousleves what happens if we use XML and adopt a loosley coupled architecture. You probably wouldn't embed analytics, localisations, infrastrure and mobility. You'll still keep integrations at the application layer but not these other things. We set out to build for durability and resilience. I'm never going to have everything in one application and we need to recognize that. We can be loosely coupled and it is kept simple. This is a message that is getting resonance and we can show references on iON. Flextronics is a great example where their entire manufacturing runs on LN while they have other stuff like Workday in place.
I look at what we're doing and think, great, it's exposing XML which is the language of the Internet. People worry and say but is that robust enough? I answer and say but if you think about the Internet, it is pretty robust, right? Large companies get it straight away although it is a nuanced conversation. So now the core iON platform is there and we're building those XML documents now. The most recent step is to start going back to older versions of our software so that in time, every customer can get the same benefits when change occurs.
What's the social story?
OK, so Social Space is technology we built rather than layering what you can get from a Twitter. Why? Here's the problem. In addition to tapping into existing services, how do you tap into processes? Embedding social deeply into processes that we understand is what matters to customers. You can think of it as something like social ERP inside say production scheduling, the warehouse or wherever you need it to be. Subscribers and followers have a dynamic link to a process even if you don't know them. We know who is doing what even when you don't know. So really what you're doing is subscribing to a business object with a pool of helpers one or some of whom can solve your problem.
When an issue or exception crops up, you can send a message to people you know and don't know. We think that is a real differentiator because while you are subscribing to events, you really don't need to build the people following for the task at hand.