Infor Puts Brakes on Acquisition Spree

Having acquired its way into the ERP cabal that includes Oracle and SAP, Infor cites tightening debt markets and internal issues in a decision to slow its acquisitive pace.

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Posted on Sep 11, 2007

LAS VEGAS — The ongoing upheaval in the debt markets has forced Infor Global Solutions to rein in its torrid acquisition binge, the company's chairman and CEO, Jim Schaper, said yesterday in an interview. "We won't be doing any large acquisitions in the near future," Schaper told Managing Automation at Infor's annual Inforum customer conference here. "That's partly due to the current market and partly due to internal issues." Schaper said Infor may well pull the trigger on smaller deals in the near future, but it's unlikely the company will engineer any more large acquisitions, such as its $1.6 billion takeover of SSA Global last year, in the near future. The shift marks at least a pause in one of the largest sustained acquisition runs in enterprise software industry history. Over the past four years, Infor has spent $4.39 billion — mostly from private equity partners such as Golden Gate Capital — to acquire 31 software companies. The run has helped Infor grow from a small, little-known software vendor to one with more than 70,000 customers, $2.3 billion in annual revenue, and the wherewithal to rival industry leaders, such as SAP and Oracle, particularly in the mid-market. Yet, the private equity sources of capital that Infor has used have become harder to access or too expensive as lenders have become more conservative, concerned about the repercussions that sub-prime lending problems have brought to the market. Schaper called lenders' tightening "an overreaction," but said he does not expect to see it ease until at least the end of 2007. Infor's most recent acquisitions came in June, when the company bought human capital management (HCM) software vendor Workbrain and Hansen Information Technologies, a provider of applications for state and local governments. For now, Schaper said, Infor will concentrate on integrating and extending its current collection of enterprise software offerings and on preparing the company for an initial public stock offering, which could take place within the next 12 months. Besides allowing Infor to tap into a public source of equity, going public would raise the company's profile, a benefit in its ongoing competition with SAP and Oracle. "A lot of people still don't know who Infor is," Schaper said. He insisted, however, that the hold placed on larger acquisitions does not signal any fundamental change in Infor's growth-through-acquisition strategy. The company expects to return to a more aggressive acquisition approach when conditions permit, he said. "This will allow us to catch our breath and do one job for a while instead of two." In other news announced at Inforum, Infor provided additional detail on how and when it will implement its Open SOA (services-oriented architecture) strategy, initially announced in March. Infor officials said the company will SOA-enable each of its major enterprise application products — including ERP LN, SyteLine, ERP Visual, HCM Workforce Management, XA, Adage, and other platforms — over the next 14 months. Infor also plans to roll out a series of SOA-enabled application components that duplicate and extend key functionality currently found in Infor applications. These components will interoperate with existing Infor applications, so customers running multiple Infor products can centralize key functionality, allowing for improved flexibility, said Bruce Gordon, Infor's CTO. These components will include a common role-based user interface, new business intelligence reporting services (enabled by new master data management middleware), a cost analysis module, a pricing/contracting/invoicing module, an inventory control module, and a Web-based order-entry module. Infor also plans what it calls a multi-books accounting module that will allow manufacturers to run different financial ledgers in the various countries where they operate and to roll up and report financial results centrally. Most of these components, like the enterprise service bus and other Infor Open SOA infrastructure, will be available to customers under their current maintenance agreements, officials said. Customers can choose to implement the new cross-platform components or continue relying on the same functionality currently available within their individual Infor applications. Over the long term, however, Infor plans to target the new SOA-enabled components for most new functionality, said Mike Frichol, Infor's vice president for global industry and product marketing. Infor officials noted that some of the company's products already have been largely SOA-enabled. For example, the company already has defined many business object documents for its enterprise asset management, SupplyWeb supplier management, and SyteLine ERP products, allowing them to easily interoperate. With the new SOA enablement, a new version of SyteLine, ERP SL 8.0, already makes use of Infor's new role-based user interface. Customers here at the company's conference said they are interested in some aspects of Infor's SOA plans. Margaret Long, director of management information systems at engine testing instrument manufacturer AVL North America Inc., for example, said her company, a user of Infor's Visual ERP product, is "very interested in the new SOA user interface, which will allow our executives to easily visualize and understand trends in our business much more quickly." Infor also announced a significantly expanded partnership with IBM under which the latter's Global Solutions unit will sell, enhance, and provide services in support of Infor's ERP LN product. IBM said it will target mid-size manufacturers in the electronics and transportation equipment manufacturing industries that use LN. According to Jay Ennesser, vice president for cross-industry alliances at IBM Global Solutions, the ERP LN product will be IBM's first and only offering for mid-sized transportation equipment manufacturers. Infor's Schaper called the new deal a significant expansion of his company's partnership with IBM. Until now, he said, Infor and IBM have partnered primarily to support Infor products running on IBM's System i platform. But ERP LN — formerly known as Baan — runs on a number of IBM platforms, Schaper noted. Ennesser noted that IBM previously had a similar partnership with SSA Global, the former owner of ERP LN. That partnership, however, did not succeed because "SSA was already struggling to support their customers," Ennesser said. In addition, Infor announced its commitment to continue to support and extend the functionality of older versions of the Baan ERP product, specifically Baan IV and Baan 5. SSA had previously announced plans to discontinue development of enhancements for those versions, Infor officials noted. "This is a very important [customer] base to us," Schaper told a roomful of Baan users at Inforum. Specifically, Infor said it plans to bring role-based home pages, reporting services, multi-book accounting, and other SOA-enabled components to the older Baan products. The first of those enhancements will be delivered this winter, officials said. While satisfying some Baan users, the Infor promises were met with skepticism by others who noted that a succession of Baan owners — including Baan, Invensys, and SSA — have promised to support the products but failed to deliver. Users, in an open question-and-answer session, noted that Baan IV and 5 customers still lack an easy upgrade path to the latest ERP LN release. Schaper said Infor plans to address that problem, although the company did not provide specifics during the meeting. In yet another product announcement, Infor detailed new versions of its Infor SCM supply chain management product. SCM Demand Planning 6.2 has been upgraded to work with the company's new role-based user interface. And SCM Warehouse Management 9, unveiled four months ago, has been upgraded with a new labor-forecasting feature, based on Infor's Performance Management analytics technology. In the human resources area, Infor rolled out the first enhancement of its HCM Workforce Management product, formerly Workbrain 5.0, which Infor acquired in June. The new Feature Pack 2 enhancement includes a Schedule Compliance module designed to help companies comply with labor laws and policies, Infor said.

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