Infor’s future in the enterprise looks cloudy and bright

Charles Phillips, CEO of Infor, discusses the state of company’s cloud migration, the competitive landscape and why it prefers talking to line-of-business executives before selling to the CIO. He also discusses Infor’s big data/analytics strategy and the future of cloud pricing.

cp inforceo headshot

Like other enterprise application companies, Infor built itself up through a slew of acquisitions that it has worked hard to unify. And, like other traditional software providers, Infor these days is working hard to move its customers to the cloud.

But the similarities end there, according to Infor CEO Charles Phillips. Phillips, who formerly served as Oracle’s co-president, says Infor has architected a cleaner, more modern integration framework for its apps that will pay big dividends for customers. He claims Infor has also crafted a future-proof cloud strategy that sets it apart not only from the Oracles and SAPs of the world but “cloud 1.0” SaaS companies as well. Add to that mix the company’s focus on serving a wide array of industry microsegments without the

cp inforceo headshot

Infor CEO Charles Phillips

need for expensive integration work, and its deep commitment to improving the usability of its applications via its own in-house design agency, and you’ve got a winner, per Phillips.

Tech Titans Talk: The IDG Enterprise Interview Series

In this installment of the IDG CEO Interview Series, Phillips spoke with Chief Content Officer John Gallant about the state of Infor’s cloud migration, the competitive landscape and why the company prefers talking to line-of-business (LOB) executives before selling to the CIO. (Hint: LOB isn’t trying to protect the past.) He also discusses Infor’s big data/analytics strategy and shares his views on where cloud pricing will go.

CIO.com: I’ll begin with the most basic question any software company faces: If I’m not an Infor customer today, why should I become one?

Charles Phillips: Good question. We are building business applications in a way that’s highly tailored by industry. That’s important because the reason we have a $350 billion systems integrations industry is that applications are fairly generic and they need to be customized by industry.

The applications companies are organized by geography but the systems integrators are organized by industry. We do that out of the box so that has lots of benefits in terms of time and value. If you’re going to run an application in the cloud you can’t have it highly customized, you need those industry features as part of the core product.

We understand our customer’s businesses better because we are industry people and we hire people out of industry -- manufacturing, public sector, healthcare -- and they drive those businesses.

The last-mile features that people value, that perhaps the vendors view as nuances, they are actually mission-critical for customers. We say the last mile is the first mile and that’s what’s important. That last mile stuff, we start there. What do you need to run this manufacturing plant? How does this hospital operate? How do you get patients in the hospital? How do you discharge them? The administrative systems, the financials and all the other things, we have that too but they’re not as critical as the core processes that generate revenue for a company. We tend to do better if it’s a line of business decision maker who has to make stuff happen.

That’s point number 1.

Point 2: I think we have a huge advantage for companies that want to consider running their business in the cloud. Since we came later and had a chance to rethink the current state of the industry, we decided not to build any data centers. We went exclusively Amazon. We decided we didn’t need proprietary infrastructure, so we use open-source databases or Linux Postgres.

Our cost structure for running in the cloud is much different, much more scalable. We can be in 45 points of presence where Amazon is all over the world and that helps us. I think we have a fundamental advantage going into the cloud because a lot of the companies we compete with sell infrastructure for a living and you don’t get to sell that in the cloud for the most part. You can only sell that on-premise so they’re conflicted. We aren’t.

We have the ability to help customers experiment with next-generation infrastructure, whether it’s Hadoop, Redshift, MongoDB, all these new things that are coming. They are all advantages for us, not threats. We’re not in those businesses so we use all that.

The third thing we do differently is we have an enormous focus on user experience. We think the next generation of users will demand something different than how business applications have historically been designed. We made a huge investment to acquire that expertise. We formed a separate company, a company within a company, to focus on that -- it’s beyond just making the screen look better or prettier or changing icons. [The company is Hook & Loop, Infor’s internal creative design agency.] It’s rethinking the user experience and the process itself and having fresh eyes.

People will first go out and watch how a customer works and ask them what they’re trying to achieve. That whole process [involves] having people who are used to attracting people to their content. People who come out of media industries are used to having to compete for your eyeballs and that’s the mindset we approach. We want it to be fun to use and exciting, so you’ll want to use it. It’s complicated to get working, to find the right people, but New York is a good place to find them. It’s complicated to get them working with the industry people. You want some people to do the back-end process and understand that while other people will do user experience. But, we’ve figured that process out.

Lastly, we have established a science lab to build what we call science apps. We hired some professors out of MIT. They’re about a mile from Cambridge and they brought an entire team with deep experience in optimization, all sorts of algorithms they’ve figured out over time. It’s a highly selective group. They are looking at different use cases among the customers’ big data problems and figuring out cloud-based services we can build around them, whether it’s inventory optimization or care-path optimization in a hospital or spare parts, you name it. These are complex problems that you can solve better and differently because so much more data is available, especially on our architecture. We’ve hired a team that does nothing but understand that class of problems.

All those are things we are doing that are somewhat different. One intangible is that we are big enough to do all those things and have scale, but small enough to still be entrepreneurs and co-design products with customers and be responsive. I think we’re at that right size where we can do both.

CIO.com: What is it that traditional competitors, the Oracles and SAPs of the world, don’t get about enterprise software today that you do?

Phillips: I would say the importance of the micro-verticals; that they’re not nuanced features, those are things that really make companies. They are competitive differentiators that are mission-critical for those customers. We spent a lot of time listening to figure out what those are. They do these big, broad industry sectors, the 20 or 30 they focus on. [But] we can address what are very small markets to them. There are thousands of micro-verticals – there are 2,000 of them tracked by the Commerce Department.

Because of our size, we have scale, but a micro-vertical with 800 customers is big enough for us to focus on. They just need bigger numbers. They can’t do that. They’re not interested.

Secondly, we all say cloud. But they have a vertically integrated strategy -- they want to build everything from the application to the infrastructure to the data center. Not many industries withstand vertical integration over time once it gets disaggregated. We’ve already recognized that and we’ll have a permanent advantage until they do something about it. But it’s hard for them to do it because the economic model doesn’t work as well for them.

Thirdly, we believe the monolithic suite is dying. It’s been dismembered as more alternatives pop up from best-of-breed vendors. But, too, they’ve all made lots of acquisitions so there is no single suite anymore. They all have different products and 80 or 90 acquisitions, different data models, different languages -- there’s no one suite. They still sell it like that. But everything they do requires a lot of integration now.

The ability to integrate dissimilar applications to make it behave like a suite is a special expertise we have because we had to learn how to do that. Later, we rethought integration. We don’t do point-to-point. We don’t do service-based integrations the way they do. That’s difficult. That breaks a lot. We do everything ‘publish and subscribe’ with XML.

Any application can change and it doesn’t affect any other applications because we’re just publishing XML that anyone can subscribe to. That loosely coupled architecture allows you to upgrade any component without breaking other ones, which is the way the Internet works. That’s unique to us. We don’t have the point-to-point integration the way they do.

CIO.com: Let’s talk about the point you raised regarding competitors’ vertically integrated stack approach in the cloud. You’ve made the commitment to Amazon Web Services to host your cloud apps. Are there risks to that approach? Are any of your customers, particularly your bigger enterprise customers, concerned about that and moving workloads like ERP into the Amazon Cloud?

Phillips: Our customers are thrilled with the idea. We get a lot of criticism or comments from either competitors or sometimes industry pundits. But our customers are already using Amazon. They’re quite comfortable with it and they think it’s actually a better solution than us building our own data center. They know what the Amazon Data Center is.

They have other applications running there. They are comfortable with the security. Amazon has proven themselves to those customers. They tell me all the time: That’s what I would do if I were running a software company. I wouldn’t try to compete with Amazon.

The industry is pretty competitive, the fact that Google and Microsoft and all those guys are out there is great for us. We like competition. Let them compete, prices come down.

Amazon has called us over a dozen times to advise us how to lower our charges from Amazon. They tell us changes to make in our applications. No other supplier I’ve ever had in 30 years has done that. Part of their culture and business model is to continuously be the low-cost provider and look for ways to do that. We are confident. We have a great relationship with them that turns in place so that’s not really a risk. It’s a perceived risk but it’s not a real one.

CIO.com: Let’s talk about the other set of cloud competitors, the pure-plays. If I’m a customer, why not go with someone who was born in the cloud rather than someone who is bringing their company into the cloud? You may be approaching that differently than the traditional SAPs and Oracles of the world, but why would a company go with you rather than a cloud pure-play?

Phillips: Technology comes in generations no matter what category you’re talking about. I would call those cloud 1.0 companies who are essentially vertically integrated and if you were starting a company today, you wouldn’t go out and build a data center.

All the cloud 2.0 companies are doing exactly what we’re doing. I think the 2.0 companies have an enormous advantage in terms of geography. We can deploy anywhere. You can’t do that if you have one data center in the U.S. The cost structure, the amount of services that Amazon has built -- it’s not just ping, power and pipe, they have software-related services that you can take advantage of if you change your application, which we’ve done.

All these APIs for things like autoscaling and load balancing make the application much more resilient, cheaper to run, because I can give capacity back automatically when I’m not using it. Those things don’t exist on 1.0 platforms. There are a lot more services that have been hardened and matured that they will never build. They don’t have the resources or time to do that.

CIO.com: And by 1.0 companies, you mean companies like, say, a Salesforce.com?

Phillips: Well, I won’t start naming people in categories but certainly people who started building data centers in the 90s. Probably some things have changed since then.         

We are taking advantage of what exists today and it’s much different than what was available then.

Back then, you built the data center, put all your applications on top of probably an Oracle database, and used a lot of stored procedures. There were some proprietary scripting language and that’s how companies built cloud back then. You can use standard languages today. You can integrate to on-premise easily using XML. You can use PostgreSQL on Linux. You can use Amazon’s enormous infrastructure. There are new things, new services available, not tied to any of that old infrastructure.

CIO.com: One more question on the competitive landscape. Who do you consider to be your primary competitor?

Phillips: Because we are so vertically focused, we have different sets of competitors by verticals.

There’s no one that is in all of them. A big company like SAP, they’re nothing in healthcare where we’re very strong. It depends on the vertical but it’s the typical ones you’d think. All of them we see in some places but there’s no one across all of them.

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