Meet Infor The Assembler
(Of Midmarket ERP Solutions)

As Oracle's 18-month battle to take over rival PeopleSoft transfixed the world of ERP watchers, an industry consolidation of a different sort was taking place in the ERP midmarket arena. In January, privately held Infor Global Solutions acquired its 11th company in 26 months by announcing a definitive agreement to buy Mapics for about $375 million. Last fall, Infor added Lilly Software Associates to its stable. The Mapics acquisition is Infor's largest to date and increases Infor's global install base to 17,500 customers in more than 70 countries.

Infor's buying spree is more than a simple growth through acquisition strategy. It is not buying software vendors with disparate (or should I say desperate) customer bases simply for the sake of increased size or scale. Rather, Infor appears to be assembling a portfolio of software solutions and domain expertise by buying companies that address specific vertical industry requirements within its chosen markets. As Rick Parker, VP of global marketing for Infor's discrete manufacturing business unit puts it, "Our strategy is to acquire companies in markets where we think we can dominate." The Lilly and Mapics deals hit that mark by expanding Infor's global portfolio for discrete manufacturers.

Within discrete manufacturing, Infor's sweet spot was automotive suppliers around the globe and midmarket manufacturers in Europe. According to Parker, "Our products are installed in 73% of the world's tier-one and tier-two automotive suppliers, and we have twice as many installs as SAP in German-speaking countries." Lilly adds North American, non-automotive manufacturers with annual revenues between $10 million and $50 million. Mapics addresses manufacturers with annual revenues between $50 million and $250 million and companies with multiple locations. Mapics also adds strong channel partners in Eastern Europe and Asia.

Small and medium businesses represent the fastest growing market segment for ERP software. Consolidation within this segment is a good thing and comes as no surprise to anybody. Other midmarket ERP companies, such as SSA Global and Epicor, have also made several acquisitions. Consolidation stabilizes the market and removes the confusion caused by too many vendors chasing too few clients. The interesting part will be to see what happens to those companies that invested in solutions from the vendors that are being acquired. Will they be forced to migrate, or will their legacy system continue to be supported and enhanced? Will the technical support they receive from the new vendor improve or decline? Will the new vendor successfully integrate the acquired companies and achieve positive synergies, or will they simply milk the install base for annual maintenance revenue?

Infor's Parker told me, "The first thing we do is assure the customers they won't be put on a forced migration march." Long term, Infor plans to roll out products (dubbed world edition) that will be offered on both .NET- and Java-based platforms. "Current customers can choose to migrate to the world edition products or remain on their legacy software," said Parker.

Infor has organized its portfolio of offerings and domain expertise into three divisions: Process Manufacturing, Discrete Manufacturing, and Distribution & Wholesale. The following table lists the companies that Infor has added to its global portfolio in the past two years.