Infor’s CEO, Kevin Samuelson
Infor’s strategy for differentiating their business from competitors like SAP and Oracle rests on a truly differentiated approach to ensuring that their customers get ongoing value from the business applications they purchase. This in turn rests on developing solutions far more industry-focused than their competitors.
Infor held an Innovation Summit at their headquarters in New York City on March 18th and 19th. Several top executives laid out Infor’s strategy for differentiating their solutions based on their technology, product development, and customer service. Infor, with anticipated revenues of $3.4 billion for 2024, is the third largest supplier of enterprise resource planning software applications.
Infor’s Approach to Industry-Specific Solutions
The ERP market is making the transition to the Cloud. ERP firms like Infor, Oracle, and SAP – or supply chain software companies – like Manhattan Associates and Blue Yonder – have produced multitenant cloud solutions. Some of these companies are further along in their journey to convince their customers to move to a multi-tenant solution than others.
Multi-tenancy, also known as ‘public cloud,’ is a software architecture where multiple instances of an application run on the same physical server. For example, Google Maps app is a public cloud application. Consumers are hitting the same software platform and code base to get turn-by-turn directions on how to travel from point A to point B. However, each user has their own instance of the software. When Steve Smith is looking at his cell phone app, the app knows his home address and the destinations he frequently travels to. But Steve Smith does not have access to Dan Jones’s travel history.
A public cloud solution has two key advantages. These solutions can be much quicker to implement. This means customers have a quicker payback period. Customers can also continue to get new functionality without going through a painful upgrade process. With traditional software, the upgrade process was so painful that many companies rarely, if ever, upgraded.
But for customers to fully achieve these benefits, they need to commit to forgoing customization. Increasingly, large enterprises have decided to do just that.
But where Infor is different from the largest ERP suppliers in the market is that instead of building one public cloud solution that serves all their customers, they have built three separate public cloud solutions. Each public cloud solution is designed to support a limited number of industries. “It would be cheaper to build just one multi-tenant solution,” Kevin Samuelson the CEO of Infor explained. “But it would not be as good for our customers.”
Most ERP companies have industry templates whose goal is to make it quicker to implement a solution for customers in that industry. Infor does as well. The implementation team goes in and turns on the switches that apply to that industry and turns off the switches that don’t apply.
However, because these other software companies continue to add features for all industries, most of the code added does not apply to any individual customer. Infor executives describe other solutions as being “bloated.” This means that when a competitor’s implementation team goes to configure a solution, they end up turning off 90% of the switches. This makes for longer implementations.
Even worse, their competitor’s industry templates are not really all that industry-specific. So, for other ERP providers, a food & beverage template supports all food and beverage companies.
In contrast, the Infor food & beverage solution supports micro verticals. Their micro verticals need solutions that support shelf-life logic, seasonality, achieving high quality despite variability in raw materials and ingredients, traceability, and attribute-based stock keeping units. That functionality is necessary for bakeries, dairies, and beverage manufacturers, but perhaps less important for other F&B subverticals.
When the Infor services team goes in to implement a templated solution, the functionality does apply to that industry. Having too broad a template makes it more likely that a customer will find it more difficult to commit to avoiding customization.
Infor Success Teams
Infor has developed customer success teams. A customer has a dedicated team headed up by a person with deep knowledge of the customer’s industry. The team is evaluated, in part, based on their ability to generate value for that customer over time. These teams’ job is to ask, “did the customer achieve the return on investment they were aiming for with their implementation?”
Before an implementation begins, the potential is mapped. Industry best practice processes will be examined. If the customer commits to the standard industry process what is the value? The value derived from the implementation will depend upon the customer achieving certain key performance indicators or key value indicators across all the ‘best practice’ processes. The software architecture allows the value to be measured and those metrics are visible to the customer and the Infor success team.
Further, it is the job of the customer success team to ask, “how can the customer get additional ROI going forward?” Often a customer has limits on how much change they can accommodate. That customer may focus on solving the highest value problems immediately, but postpone process change in other areas. The Success team can prompt the customer to continue their journey to work based on best practices and “walk back customizations” that don’t add value. In short, a roadmap for ongoing value is developed.
But the Success team can help generate ongoing value in another way. This team knows the product innovations and new technologies that Infor is developing. They can help prepare their customers for innovation coming down the pipe.
One tool the company has developed to help ensure that companies get value from the Infor solution is called Process Intelligence. Process Intelligence is used to check whether the users are adhering to the end-to-end process. So, for example, in the purchase-to-pay process, this tool may show that 76% of the time, the process proceeds from beginning to end as it was designed to do.
But that means 24% of the time, the standard operating process is not being followed. The tool allows the success team to drill down and look at where divergences have occurred. Which steps broke down more often? Which users were more likely not to follow the standard operating procedure? Which suppliers or products were more likely to cause problems?
Team members are armed with information that allows them to uncover the root causes of the divergences. In some cases, there can be good reasons for those divergences. New tools, like robotic process automation or artificial intelligence, might be used to overcome a particular hurdle. Or perhaps, certain users need to be coached to follow the SOP. This program has been scaling up over the last few years. The goal is to now apply this methodology to all new ERP SaaS customers.
Laying the Groundwork for Customer Success
The customer success program described above, while more complete, does not sound radically different than what other software vendors have described as how they work with key customers. What is different is that the groundwork for achieving success is laid out during the sales process.
“The implementation really starts in the sales cycle,” Frank Resink, the executive vice president of professional services, said. For food & beverage, Infor has up to 900 processes. They go through these processes with potential customers and define the value drivers. Infor works with the customer to validate which out-of-the-box process will drive value and would need to be adapted.
Each customer is then given an industry solution score that ranges from one to 100. A customer that scores 100 will use all of the industry standard practices, has the right governance in place, and is ready to embrace change. A customer that scores 70 can get value from the solution, but Infor makes it clear how much more value they could get if they could raise their readiness score. A customer that scores 50 to 70 believes that the standard approach needs to be augmented with more customizations or the project will encounter resistance to change. Infor can still serve these customers by having their system integrator partners build the extensions or by helping the customer to harden project governance.
A customer who scores below 50 should not be a customer at all. “Infor only succeeds if the customer succeeds” Mari Cross, the chief customer officer said. “We have said ‘no’ to potential deals more in the last one and a half years than ever before,” Mr. Resink told me.
Is the New Approach Working?
So, is this new approach, which is continuing to be scaled up to include more and more customers, really working? It is working for Infor. Solutions based on the public cloud – software as a service customers – have grown at a compound annual growth rate of 28.3% over the past three years.
According to the company, for many customers, the speed of the implementation is now often limited by a customer’s ability to handle culture change rather than by integration, data cleansing, or configuration hurdles.
There is also evidence it is working for customers. In 2020, Infor SaaS customers had an attrition rate of 8.4%. By 2023, attrition among these customers had fallen to 3.2%.
Infor customers were present and spoke at this summit. Customers who participated in the value creation program sang Infor’s praises. One director of information services said “Infor is a strategic partner. This is a bidirectional relationship.”
An IT director at a different company said that “Infor listens” and “Infor knows our business.” This director added, “We have problems to solve. We don’t care if they are solved with new technologies or old technologies. We just want them solved.” It was clear he felt Infor did solve their problems.
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