Infor Global Solutions Acquires Lawson Software

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Lawson Software‘s signing, in the past few days, of the definitive agreement to be acquired by Golden Gate Capital and Infor Global Solutions promises to vault the combined entity to the #3 slot of ERP vendors. This is a notable achievement for Infor.

After a long string of acquisitions (probably second only to Oracle in number) Infor’s latest acquisition (which will be its 29th or so, by our count) is as much to solidify its place among the very top echelon of vendors as it is to fill specific functional or vertical gaps, in contrast to most of its earlier purchases.  That said, Infor will obviously be glad to get their hands on Lawson’s Best-of-Breed HCM and Talent Management solutions, among other things.

Infor’s acquisitiveness is distinct from Oracle’s: Whereas Oracle’s strategy has been, in the words of Infor’s Bruce Richardson to “surround the ERP system with best-of-breed software for HR, CRM, PLM, performance management, transportation management, demand planning” in an effort to compete more effectively with SAP, Infor’s strategy has been much more around assembling a strategic series of product lines as core offerings.   (When Infor announced on March 11th its intention to acquire Lawson Software, speculation rose about whether other vendors would jump into the bidding, Oracle being chief among them.)   Infor’s standing as the leading solution assembler (having long ago acquired SSA Global) is well-established and perhaps unchallenged, and it has shown itself to be very competent at rebrandng these disparate pieces into a comprehensive set of offerings.

Infor CEO Charles Phillipsopen letter to Infor and Lawson projects a long list of benefits from the combined entities:

  • Complete ERP suite:  Combination of Lawson’s enterprise financials and human resources products with Infor’s manufacturing, supply chain, workforce, and asset management products
  • Complementary products: Leveraging product line synergies to offer end-to-end business process support
  • Standards-based integration: Integrating the entities’ applications through standard middleware
  • Re-inventing the applications experience:  Reinventing how customers “deploy, use and upgrade”
  • Expertise in key industries:  Significant breadth and depth in key verticals, and extending into more industries and processes
  • Innovation and investment:  increased product investment and innovation
  • Scale:  Significant scale in the applications business with over 75,000 customers
  • Cloud:  Continued deployment of applications into the cloud
  • Best-of-breed products: Creating new integrated suites from current best-of-breed standalone solutions
  • Talent: Combining Infor’s and Lawson’s domain experts will allow Infor to make more talent “more available to customers”.
  • Customer relationships:  Infor is going to “raise the bar” in its relationships with customers.
  • Focus: Combining Infor and Lawson’s “8,000 technical professionals”

This list is a mix of reasonable merger benefits, some other benefits that could be as likely from the separate entities as from the combination, and still benefits of separate initiatives (which is not unusual for such communications).

When you look at these closely, there are perhaps just more than half that seem to really address benefits expected to result from the acquisition itself:

  • The ability to offer a more comprehensive ERP suite by combining Lawson’s enterprise financials and HCM with Infor’s manufacturing, supply chain, and other functionalities
  • The opportunity, with synergistic alignment of Infor’s and Lawson’s solutions, to effectively cross-sell to offer an end-to-end solution.
  • The ability to integrate the best vertical knowledge of each company to become even broader and deeper in its vertical focuses
  • The ability to offer customers “the best of both worlds” – standalone best-of-breed solutions as well as “an integrated suite”.
  • Leveraging Infor’s and Lawson’s strength in numbers (particularly domain expertise) to put more experts in front of more customers.
  • Combining Infor and Lawson’s “8,000 technical professionals”
  • Scale of 75,000 customers: Considering that Lawson is adding some 5,000 customers to Infor’s 70,000 (7+%), it is difficult to not conclude that what Infor really means by “scale” is gaining the coveted 3rd place on the ERP vendor list.

Several of the other reported “benefits” seem less directly resulting from the acquisition itself:

  • Innovation and investment:  Infor announced its intention to add 400 developers to its workforce just days after announcing its bid to acquire Lawson.  This commitment to “accelerated innovation” is a resulting benefit of the combination, although it was certainly timed to coincide.

This is just one of the more visible efforts Infor has made to demonstrate its move  beyond a history of being an assembler of solutions, and is intended to send a strong signal to customers and prospects, as well as to each of the companies, about Infor’s strong intention to build new capabilities.  The more that Infor is able to leverage the combined effect of adding these new resources while refocusing the combined resources of the two companies, the more Infor will be able to further legitimatize and solidify its move up in the ranks of the ERP vendors and perhaps provide a more serious challenge to Oracle and to SAP.

 

  • Standards-based integration:  We are not sure we understand the precise relationship between applications being “service enabled” and their integration by standards-based middleware, or how this is a “benefit” of the combination.  We have yet to see hardly any M&A not promise expeditious integrations, so it wil be interesting to see how Infor follows through on this commitment.
  • Re-inventing the applications experience, “Cloud”, and “Customer relationships”:  It is not immediately evident to us these are benefits resulting from the acquisition.  Infor is certainly trying to send the message about some significant (“radical!”) refocusing around how customers “deploy, use and upgrade enterprise applications”, and how they intend to become more “reliable, proactive and responsive”.   We found it interesting that “Re-inventing the applications experience” and Customer relationships” were so divorced from one another in the letter.  Infor also took advantage of the letter to remind you about their and Lawson’s cloud offerings.

This should all become clearer over the next 90-100 days.  Infor has provided customers and prospects with a report card, and we will, as we suspect you will be, watching for further clarification in each of these areas, and grading the speed and clarity with which progress is made.  Infor obviously has no lack of experience in these acquisition matters, and now has an eminently qualified man at the helm in Charles Phillips.  So it is reasonable to expect that Infor will complete this latest acquisition at least as smoothly as previous acquisitions.  We will be interested to see what this means for  Lawson’s Harry Debes.  We were first introduced when he was with Geac, where his executive capabilities clearly stood out.  You can debate some of his ideas on cloud computing.  We would be surprised to see Infor not retain and take advantage of Mr. Debes’ capabilities unless he has his sights set elsewhere.

The Vendors:

Infor Global Solutions

Infor Global Solutions has a complex history, having made some 30 strategic acquisitions which Infor has assembled and rebranded under the well-known Infor brand.  Infor’s proficiency at making strategic acquisitions and consolidating them into a coherent set of solutions enables Infor to offer a broad range of products including ERP, HR and Financials, customer relationship management (CRM), supply chain management, product lifecycle management, as well as other functionalities.    Infor’s focus on acquiring companies with deep process and discreet vertical expertise means that Infor now can boast customers in a wide range of verticals (partial list): Apparel & Footwear, Automotive, Chemicals, Consumer Packaged Goods, Distribution, Food & Beverage, Healthcare, High-tech & Electronics, Hospitality and Gaming, Industrial Supply, Life Sciences, Public Sector, and Retail.  Their solutions are based on IBM, Microsoft and Progress technologies.  Infor has cloud and managed service offerings, and reaches out to the SMB and midmarket via indirect sales channels.

 

Lawson Software

Lawson Software is a Top 10 ERP vendor, positioning itself as a high-value, lower cost vendor with deep vertical expertise.   Lawson focuses on a few key verticals, including healthcare, the public sector, manufacturing and distribution, as well as few niche areas: food, fashion, and equipment rental.  Lawson is perhaps best known, or at least as well known, for its best-of-breed HCM solution, which Lawson has further recently invested in by adding Talent Management capability.  Lawson has used its relatively smaller size to its advantage, offering an uncomplicated set of product lines, and straight-forward message for the midmarket.  Lawson’s solutions are based on IBM technology and middleware.  For some midmarket customers, Lawson supplements the direct channel with partners and resellers.

 

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Comments

  1. not just Infor (though as you point out a track record of 30 acquisitions), Oracle, IBM, Microsoft – the track record of enterprise M&A has been it has been ok for some investors (though you could argue at least some of the acquired companies could have with some initiative generated more value on their own – maybe not as much as an Apple turnaround, but more than the one time premium in an acquisition) but customers have not seen much from it. Acquirers promise a lot but “fusing” acquired products is hugely difficult – see how little the industry has delivered and the growing availability of third party maintenance shows little innovation enterprise vendors have been delivering around older products. In meantime, as I research my next book, compared to what is happening in consumer tech, enterprise tech looks so slow. M&A slows it down even more.

    http://florence20.typepad.com/renaissance/2011/04/next-book-update-clockspeeds-brick-and-mortar-and-more-1.html

    BTW – not just commenting on Infor, Most of the on-premise market is just not delivering much for the cost

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