Like the American political system, the enterprise application market has long been a two-party system, with Oracle and SAP firmly entrenched as the primary parties. Yet the distant next largest contender, Infor, is campaigning as a strong third party this selection season. In politics, third party candidates rarely win elections and often exist just to play spoiler or influence public policy (I’m looking at you, Ralph Nader environmentalists). However, unlike winner-take-all political elections, Infor can find success by carving out a piece of the enterprise application market.
Third parties are often successful when the two major parties’ approval ratings are down. You won’t find a Gallup poll regarding favorability of Oracle and SAP like you will with politics, but it’s safe to say some customers out there are unhappy with their existing vendor—whether because of compliance audits, high maintenance fees or otherwise. This raises the question: is the market ripe for Infor to rise as a viable third party candidate?
What makes a successful third party?
Effective third parties generally find success by championing issues that strike a chord with specific voters. In particular, they often focus on topics that are ignored by the two primary parties but which are very important to a certain segment of the population (e.g. Green Party and environmentalist). Infor has focused its energy on targeting a few issues that are imperative to specific clients and prospects.
Micro-Verticals and Industries
Infor has hyper-focused on creating cloud business applications that are specialized for verticals and industries on a micro level. This is demonstrated by Infor’s “no two clouds should be alike” marketing campaign, which includes phrases such as, “because manufacturing aircraft is different than managing local governments.” This is not a new concept as SAP and Oracle have also rolled out industry specific products; however, Infor has taken it to a more extreme level and incorporated significantly more granular business processes.
Infor has accomplished this by co-innovating with customers and partners to create micro-verticals as specifically tailored as dairy, fluid power and automation, pet food, and medical devices. In an interview with Fortune, CEO, Charles Phillips, said, “We have figured out how to do that efficiently, where we’ll build things that not all customers can use, only customers in that industry. … We can take things that look like they are nuanced by industry, package those application, and turn it into a cloud service.” Aside from benefits of improved functionality and efficiency provided by the built-in industry specific processes, the vertical solutions also cut down the upfront costs by drastically reducing the need for customizations and by accelerating the time to value.
Healthcare is an example of an industry in which Infor has experienced tremendous success. Infor’s Healthcare division closed over 153% more new cloud deals in 2015 than in 2014. Infor is hoping to replicate this success in other industries such as retail, manufacturing, and the public sector.
Successful Movement to the Cloud
In moving to the cloud, Infor had some inherent advantages over its two major competitors. By operating its cloud applications on Amazon Web Service Infor avoided having to build regional data centers, which expedited the transition and has made them more scalable. Additionally, Infor is not in the infrastructure business like its competitors and thereby did not have to deal with the internal debacle of cannibalizing its own businesses by pushing its cloud based products.
By the end of 2016 it is expected that over half of Infor’s revenue will come from SaaS, with over 45 million users already on its cloud applications. This is a stark contrast to SAP and Oracle whose cloud revenue only accounts for a single digit percentage of their revenue. For Fiscal Year 2015, Infor increased its cloud revenue by 60%, and bookings were up by more than 300%.
Dedication to User Experience
Infor has displayed serious dedication to developing a beautiful and efficient user experience by creating an internal New York City based design agency, Hook & Loop, consisting of over 100 employees whose sole job is to improve user experience and design. Infor’s intention is to create an attractive and productive user experience that doesn’t require super users.
Effect and Fate of Third Party Campaign
Third parties have historically had a tremendous impact on the political landscape, but their successes have generally been short lived. The primary two political parties eventually adopt or incorporate the popular concepts and ideas that differentiated the third party. SAP has already expressed its intent to create industry-specific cloud services for all 25 verticals, and Oracle is moving in the same direction. Likewise, both parties are aggressively pushing customers to their cloud products.
Infor has certainly kept the customer as its top priority in creating an attractive and intuitive user experience that is custom tailored for the customers’ micro-verticals. Infor is campaigning aggressively and organizations that have been willing to consider Infor as a viable candidate worthy of their vote have had the opportunity to put in place a highly competitive commercial arrangement. We will continue to keep a close eye on Infor to see whether or not they gain momentum and differentiate themselves from the two largest candidates, SAP and Oracle.
If your company is electing an enterprise application provider or assessing how best to restructure your relationship with the incumbent, do not hesitate to contact UpperEdge or email [email protected] for an understanding of best-in-class sourcing strategies.