Infor is increasingly seen as a threat to Oracle and SAP for its ability to go deep into industry features with its enterprise software. The company has remained in the background in recent years as it revamped its software, created a universal user interface, and made plans to migrate customers to a cloud model.
Now some analysts are seeing Infor as a real alternative to SAP and Oracle. Infor, which held an analyst powwow this week, laid out its plans. Cowen & Co. analyst Peter Goldmacher noted that Infor's approach could take share from SAP and Oracle. He said:
Unlike traditional ERP vendors that focus broadly on large verticals, Infor goes a layer deeper and offers specialization at a business process level that incorporates sub-category specific workflows. This gives customers the opportunity to enjoy dramatic savings over Oracle and SAP on the services to customize the software.
Migrating customers to modern apps. Phillips says that Infor is a roll-up of more than 60 acquisitions and the company has done a lot in the last two years creating a migration path that has a standard user interface and an architecture that can scale. "We have 500 customers in the pipeline to move from legacy applications to our destination product," said Phillips. The key for Infor is to offer customers deep industry features so they won't have to customize. Ultimately, these customers will move to the cloud and a subscription model. About 150 customers a quarter are migrating. "Migration itself is easy," said Phillips. "The challenge is getting agreement to do it and lining up the different constituencies. Generally we set them up with a sandbox in the cloud to see what's possible."
The importance of UI. Infor has been heavily focused on the user interface and its next version, code-named Gramercy Park, aims to anticipate what users need and want to prepopulate forms using contextual data, said Phillips. "We're in a battle against forms and want to add an anticipatory aspect in the UI." Navigation should revolve around an anchor in any one subject or situation. For instance, a nurse in a hospital room should have a UI that pivots on all the assets there and have drilldowns. Gramercy Park will launch at the end of the year and Phillips said Infor will show it in September. Infor is currently prototyping apps.
Verticals. Infor's plan to battle SAP and Oracle is to go deeper with features such as nurse scheduling and industry specific processes. "Everyone talks verticals but go a mile wide and an inch deep. Our healthcare suite has features unique to hospitals," said Phillips. "SAP and Oracle have big brands and talk terminology, but if we go through a demo we win." The challenge for Infor is getting invited to the bakeoff. "It's a question of do they know us and do they have a current impression of us," he said. "Our first meeting is to force a demo early in the sales cycle. The other guys try to avoid demos."
Infor's coming out party. Infor has admittedly been flying under the radar. "We purposely didn't do any marketing for the first 2.5 years," said Phillips. "We had to fix plumbing and applications. We've spent $1 billion on R&D over the last three years so now it makes sense to be more aggressive with marketing and PR. I'd rather do it when we have something to talk about."
Debt. Moody's gave Infor a warning last week, but Phillips said the advisory was standard issue and triggered because the company restructured some debt. Phillips said the company replaced a 12.5 percent loan with a seven percent one. "Our cash position is strong and we have $800 in EBITDA a year," he said. In the third quarter, Infor had $410 million in cash and equivalents and $5.36 billion in long-term debt.
Is there an IPO in the future? Phillips said the biggest benefit to Infor with an IPO would be more visibility. "We're the third largest private technology company in the world and IPOs are big marketing events," said Phillips. The company has developed its products and is now getting the benefits, but Phillips would prefer more reference customers and critical mass before an IPO.
Competition. Aside from Oracle and SAP, Infor is starting to see more competition with Workday. Salesforce is more of a partner. "We've rewritten our HCM products and they go fully GA in May," said Phillips. "So we'll compete with Workday, but it's a big space and we're all replacing PeopleSoft." In smaller accounts, Infor may run into NetSuite.
Does the suite win in the cloud? Probably, said Phillips. "Software is one of those industries where too many applications are a problem. A broader footprint has appeal and if you use a bunch of point vendors you have to become the integrator," said Phillips. The cloud has had a best of breed approach because that's all there was. Infor aims to offer rich and deep integrated applications via the cloud. "No one can offer a hospital in a box," he said. "We have to go the last mile and add features that used to be customized applications."
Amazon Web Services as a partner. Phillips said Infor's strategy is to build on AWS because it doesn't want to run data centers; AWS has a wide footprint and enables customers to scale down automatically. "AWS has scale and capacity and they are responsive," said Phillips. "We looked at others and it took months to get meetings. We didn't have the time to wait. After we announced the AWS partnership, the other guys are calling us now."