Biggest HCM Deal for Infor!
Koch Industries (Yes, those famous brothers from politics) has paid $2.5 billion (yes, a "b") to buy 49 percent of Infor, the hard-charging ERP vendor. Koch got four of nine board seats and plans to roll out Infor CloudSuite HCM to its 130,000 employees in 10 companies in 60 countries. Lawson (remember them?) is officially reborn in Infor!
By Bill Kutik
Sometimes Infor seems just like CEO Charles Phillips' head-to-toe custom-made clothes.
It exhibits the perfect touch in so many things, such as naming its new AI suite "AI Coleman" after Katherine Coleman Johnson, the African-American NASA computing pioneer lionized in the movie Hidden Figures, which chronicles a time when Jim Crow still ruled Florida and Texas.
John Glenn reportedly wouldn't take off on his historic first orbital mission until she had personally checked the trajectory figures. At its recent user conference and analyst day, Inforum, Infor showed a clip from the movie and the picture of her getting a medal from President Barack Obama -- all with her descendants in the front row.
Perfect. Charles Phillips for president!
Or consider Infor’s jaw-dropping plan for an IoT (Internet of Things) and complete digitalization for residential tenants, store-owners, restaurateurs and office-owners in what the company says will be the largest mixed-use planned community in the U.S. Amazing functionality.
Then there is Koch Industries, the second largest privately held company in the United States, according to Forbes, with annual revenue of $115 billion, owned by the Koch brothers of political fame.
Koch CFO Steve Feilmeier said the company's $2.5 billion investment in Infor came all from equity and not debt, which is the more usual (and burdensome way) to buy such a large part of a software company. Terrific for Infor going forward. And the deal boosts the company's valuation from $2 billion six years ago, when Phillips brought in the new executive team (and turned the company upside down), to more than $10 billion today with 90,000 customers, both reported by Forbes.
The global deal includes Infor CloudSuites for HCM, Financials and Enterprise Asset Management (procurement and maintenance) for 130,000 employees in 10 companies in about 60 countries, with 70,000 employees based in the U.S.
A notable side effect of this deal is the big system integrators -- companies like Accenture, Deloitte, Cap Gemini -- are understandably suddenly interested in having Infor implementation practices, which they never had before. So, this expands Infor's ecosystem to support future big deals.
Before taking over Infor more than six years ago, Phillips spent 17 years on Wall Street becoming its first and leading analyst of enterprise software. His knowledge of all the vendors and their executives led Larry Ellison to hire him as Oracle's president, sending him on a nearly eight-year buying spree acquiring more than 80 companies. That included PeopleSoft in 2004, and later founder Dave Duffield told me Phillips was a "true gentleman" in how he treated the acquired employees.
So, acquiring software companies is a core competency for Phillips.
And his first at Infor was buying Lawson, which came with its own acquisition of Enwisen. Then later PeopleAnswers, a predictive analytics company, which Infor now brands as Talent Science and uses wherever it can within HCM.
Before he arrived, Infor was in its first larval stage as a bottom-feeding aggregator acquiring out-of-date software and living off its maintenance payments with little new investment in its products. But even then, it made one startling purchase in our world: Workbrain, then a white-hot workforce management vendor, purchased for $196 million in June 2007.
Ceridian CEO David Ossip should have totally mixed feelings to hear that his baby, Workbrain, which he sold 10 years ago, is now Infor's fastest selling HCM product. Mixed because it competes with his latest version of workforce management software, Dayforce, whose acquisition resulted in his becoming CEO of Ceridian.
David's first client for Workbrain, then on-premise and now rewritten for the cloud, was British Airways. And like competitor Workforce Software being the first to meet the regulatory needs of the nuclear power industry, Workbrain seems to own the airline vertical for workforce management. Much as an earlier Infor acquisition, Infinium (formerly Software 2000), with HCM and Financials, seems to own the casinos on the Las Vegas strip.
First-mover advantage for vertical applications. Infor named Bank of America "Customer of the Year," and the only product it uses is the former Workbrain.
So, what's happened to Lawson, which you may remember had about 1,000 HCM clients, a talent management suite in the cloud and Core HR on premise when it was acquired?
Lawson veteran and Infor Senior Director of Products Amy Ihlen reports that all products except payroll are now in the cloud, and I point out that Lawson has done better selling new customers and migrating old ones to the cloud than Infor generally. Ihlen estimated the installed base is 60 percent on-prem and 40 percent in the cloud - - though her count includes all the industry vertical solutions, which is basically how Infor goes to market, and each one includes substantial HCM functionality.
Infor launched an UpgradeX initiative years ago and it increased cloud customers from 7,000+ in 2016 to 8,488 in 2017. Out of 90,000 customers.
But let's put that in perspective. Oracle, PeopleSoft and SAP had about 25,000 on-prem HCM customers around the world. After Oracle has been selling them Fusion (Oracle HCM Cloud) for 10 years and SAP selling SuccessFactors (Employee Central) for five and adding in Workday's takeaways and new sales for Workday HCM for the last 10 years, together they've moved only about 5,000 companies worldwide to the HCM cloud.
With three companies working the vineyard, that's a bigger percentage than Infor but smaller than Lawson, which is seeing 75 percent of new apps sold in the cloud.
Lawson has been promising a new payroll since 2014. Frankly, I don't know why people bother. Is there a better way to do payroll than Cobol software on a mainframe? I never understood why payroll was ported to client/server, except maybe to give users the ability to preview before running it.
Like SAP SuccessFactors and Workday previously described, Infor is working on a conversational human/computer interface. Integrated with AI, the plan is to have it augment human action, automate repetitive tasks and advise people on making better decisions.
In fact, Amy’s roadmap is payroll and ATS redesign, then AI and voice. Koch Industries will get all of them first on a schedule that would make any software executive shudder.
But the Koch deal marks a major milestone for Infor and a coming-out party of sorts for Phillips' first acquisition, our old friend Lawson.
HR Technology Columnist Bill Kutik, as chairman emeritus, will help celebrate the 20th anniversary of the HR Technology® Conference & Expo, returning to Las Vegas, Oct. 10-13, 2017. What are the new security risks of corporate BYOD policies? Find out on the 31st episode of his broadcast-quality video series, Firing Line with Bill Kutik®.