Charles Phillips at Infor: what next?

Earlier today, I fielded a call with Jim Schaper, CEO and chairman Infor to discuss the hire of Charles Phillips ex-president at Oracle to Infor's CEO position. Mr Schaper was more than upbeat, he was ebullient about snagging one of the industry's heavy hitters: "Charles isn't just a good fit, he's a great fit."

Infor had been on a search for a COO but that all changed when Mr Phillips became available. "We aggressively chased him for three reasons. He knows the applications space and from his time on Wall Street clearly knew some of the companies we've acquired. Second he values innovation and understands the customer relationship. That's important what with the ION release coming in January/February. Finally, whether we make more acquisitions and/or go public, we will need to deploy more capital to fuel our next stage of growth. Charles is absolutely the right guy matching all those requirements."

Infor, while comparatively large with revenues estimated at $2.2 billion is something of a black box. As a private company we don't get to see behind the numbers the company chooses to publish. Which are precious few. As a company that has done its fair share of rolling up the enterprise apps industry I am concerned that Infor is little more than a financially engineered company that happens to sell software.

During our conversation, I suggested to Mr. Schaper that any business relying heavily on maintenance revenues from legacy applications is not sustainable in the long term. This is typical of the roll up player that wants to leverage existing code at minimal cost. He countered by pointing to Oracle's track record in licensing and organic growth. There are different ways to interpret the data. While Oracle can readily point to what appears to be stellar growth, applications don't figure as an area where the company has done well organically. At least in my analysis.

Since we cannot know any more than the company is prepared to reveal, the first job I'd like to see Mr Phillips undertake is a review of how transparent the company should be going forward. According to Mr Schaper, Infor reveals information to customers when needed. That's not enough. If Mr Phillips is to convince then opening the financial kimono would be an excellent step forward. If he decides - as some think - that an IPO is in the wind then he will have no choice. I'd rather see Infor move early on this point.

Bringing Charles Phillips into Infor alongside the earlier hire of Bruce Richardson as CMO sets up two legs of a potentially formidable stool. It still needs a third leg which Mr Schaper says comes in the shape of Soma Somasundaram, recently promoted to global head of R&D. "Soma was the architect of the Microsoft partnership which is proving key to our product roadmap," said Mr Schaper. In reality, we will know more once we see what the ION release, slated for February 2011 truly holds for customers.

Towards the end of our conversation, Mr Schaper said he'd like to see an early analyst day with Mr Phillips leading the charge. That would be welcome. During his time at Oracle, he became increasingly uncommunicative with the outside world except on the financial analyst calls. This is not the Charles Phillips many of us had come to know even if the reasons were connected to a specific PR strategy coming from the top. In his new role, I hope we will see more visibility as Mr Phillips plugs in his customer advocacy experience to his new role and remembers the value of robust, public discussions with the analyst community.

Overall I like this hire. Whether Infor continues to consolidate as Mr Schaper implies for the short term and/or files for an IPO, Charles Phillips will play a key role. He's the kind of C-suite executive I can envisage blossoming in this type of company. Whatever happens, his actions alongside those of the other executive bench will likely be followed more closely than in the past.