News Analysis: Infor Snags SoftBrands for $80M

Infor surprised many software industry veterans this morning with its acquisition of SoftBrands. Why?  Well, Infor competitors have been spreading FUD that the company was out of cash, the company was in severe debt, and the company could not execute any more acquisitions.  Well, this acquisition puts a kabash on such talk.  In fact, having had the privilege of reviewing Infor's financial health a few months back and hearing from Infor Chairman Jim Schaper about his go forward strategy, this acquisition falls in line with how Infor has executed previous acquisitions.  The acquisition adds new capabilities to Infor's line up because:

  • Significant opportunities exist in hospitality. Infor will gain the assets of Hotel Information Systems (HIS), a major global property management solution provider.  Today, this concern generates $43M in revenue across 4000 hotel properties.  Key capabilities include reservation systems, rate and channel management, food and beverage, property management, and golf and spa.
    HIS will give Infor significant up-sell and cross-sell opportunities in its existing hospitality and gaming verticals.  For example, most Las Vegas casinos run Infinium for their financials and a hodge podge of legacy IBM legacy applications such as Lodging Management System (LMS) owned by Agilysys. (Note: Agilisys was the old Infor name and this company was also based in Alpharetta, GA. They are not related).  This microvertical capability will expand Infor's reach into this growing industry with a market leading solution.
  • FourthShift gives Infor a strong small enterprise offering across discrete and process. Infor adds a strong manufacturing offering for midmarket enterprises that serves 2000 customers.  FourthShift targeted process industries such as Chemicals, Consumer Products, Food & Beverage, and Pharmaceuticals.  Discrete manufacturing verticals included high tech and medical devices that required make-to-stock and strong lot traceability.
    :  Along with the assets of FourthShift, Infor could gain new capabilities to defend against or sell into the SAP market.  In fact FourthShift edition for SAP Business One serves subsidiaries of large enterprises running SAP and vendors an customers of SAP install base customers.  It remains quite doubtful that SAP would maintain this relationship over time.
  • BPM expertise from Evolution and Infra:NET. Both Evolution and Infra:NET products provided rich sets of process expertise.  Evolution focused on providing process flexibility across production, purchasing, sales, and accounting via its BPM capabilities.  Infra:NET served a primarily German based market with strong make-to-order (MTO) process expertise.
    POV: Infor will gain a strong MTO solution that handles low-volume runs, one-offs, mixed-mode, variant parts, and prototyping scenarios.  Infor customers can potentially expect some of these core capabilities to trickle into OpenSOA components.

The bottom line - expect more and more targeted vendor consolidation around verticals and micro-verticals
As seller expectations on valuation come back in line with reality, expect acquirers to expand their presence in new micro-verticals.  This will open the gates to more acquisitions with an industry bent towards hospitality, healthcare, construction, real estate, public sector,and retail.  Expect other acquirers such as Oracle, IBM, and Epicor to soon jump into the fray as market conditions improve.

Other Points of View (POV)
See Frank Scavo's take on the acquisition

Your POV.
What do you think of the continued consolidation in the ERP market?  Were you surprised Infor still was acquiring companies?  Please post here or send me a private email to rwang0 at gmail dot com.
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