Soon-to-be-merged Lawson Software Inc. and Intentia International AB, with combined annual revenues of $770 million, will emerge as one of the largest vendors of ERP software focusing on mid-market customers (revenues are between $250 million and $1 billion). But the company and its new CEO, Harry Debes, must quickly address several key challenges if they are to sustain that position and fend off rivals such as SAP AG and Oracle Corp., experts say. Debes' first challenge will be to fashion a vendor with a global reach and brand presence out of two companies that have primarily operated as regional vendors. Intentia, which sells its software to apparel, food and other manufacturing companies mainly in Europe, has struggled to establish a beachhead in North America and Asia. More troubling for the new company -- which will carry the Lawson name -- is that Lawson is little known in Europe. "That's going to be a big hurdle," said Simon Bragg, European research director with ARC Advisory Group in Cambridge, England. "They'll be going up against SAP and Oracle (both targeting the mid-market) ... [and] that will be difficult." Trying to compete as regional players in an increasingly global market has hurt both Intentia and Lawson in recent years. Lawson's software license revenues have declined, and Intentia's last profitable fiscal year was 1998. Bertrand Sciard, who took over as Intentia's CEO last March, has been attempting to cut its operating costs by, among other things, narrowing its vertical industry focus. Sciard will become COO of the new company, which will be run by Debes, a former executive at GEAC and J.D. Edwards. A Lawson spokesman said the plan is to make Lawson-Intentia a global company. Lawson officials, however, declined to elaborate on the deal, which should be completed by the end of the year. Debes and his team must also work quickly to reassure customers -- pegged at 4,000 -- that their software investments will be protected. "They need to calm the user base and establish cross marketing sales teams," said Paula Rosenbloom, director of retail research at Aberdeen Group. "That's where the real opportunity is." Company officials have committed to five years of continued support for existing products, and that has convinced some Intentia customers to give the combined company a chance. "Most customers, like us, will wait and see what they do," said Brian Goodman, vice president of operations at building materials handling equipment manufacturer Columbia Machine (Vancouver, WA), which is one of the few North American-based manufacturers using Intentia's Movex ERP suite. But Debes and his team will need to do more than just mollify current customers. They have to convince customers to upgrade to the latest Web services-based releases that both companies are rolling out, and consider cross-selling efforts of the combined Lawson-Intentia. Even before the acquisition, analysts note, Intentia was having trouble convincing customers to upgrade. ARC's Bragg estimates that only 10% of customers have upgraded to Movex Version 15, Intentia's all-Java-based release. "That's not very impressive. Intentia customers seemed willing to sit tight and see what happens," he said. The new Lawson will not face long odds in every respect, however. Integration of the Lawson and Intentia product lines should be fairly straightforward since both companies are using IBM middleware, such as WebSphere, as the basis of their migration to SOA-based next generation products, analysts note. And the new Lawson should enjoy a good opportunity to cross sell products to the combined customer base. While both companies have financial and procurement software, there is relatively little overlap in their product lines. Intentia's asset management and maintenance software should be attractive to some of Lawson's primarily service-industry customers such as hospitals, said ARC's Bragg. And Lawson's business intelligence, performance management and human resources products should appeal to many Intentia customers. While cost-cutting is not the primary goal of the acquisition, the new Lawson may be able to improve development efficiencies by outsourcing more software engineering to India. ARC's Bragg noted that Romesh Wadwhani, former Intentia chairman and now co-chairman of the combined company, has extensive contacts in India. Still, Debes and his team have their work cut out attempting to prove the acquisition makes sense. "They'll be able to make one and one equal two with this thing, but I'm not sure they can make it equal more than that," said Bragg. This article was repurposed from the August 2005 issue of Managing Automation magazine.