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Cloud first for Infor - but customers still need convincing

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23rd Oct 2013
co-founder diginomica
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In common with all the major enterprise software firms, Infor - home now to the Epiphany CRM portfolio - has decided that the Cloud is where its future lies. But also in common with the other 'establishment' enterprise software firms, Infor now needs to convince its customers to get with the programme.

Unlike the Cloud pureplays of Salesforce.com and NetSuite and the like, the 'establishment' has an installed base of thousand of companies running on-premise versions of their software and many of these firms are perfectly happy to stay where they are for now. If it isn't broken, don't fix it etc etc.

That's been particularly true for providers of ERP applications, most of which took years to get installed and up and running. IDC research analyst Bo Lykkegaard made the point recently: "Many of these ERP customers have made significant and sometimes painful ERP investments years back and have ageing, often significantly modified, but working ERP systems. 

"Any interest in upgrading existing ERP systems is met with skepticism regarding the costs of migrating modifications and particularly risks of business disruption if upgrade issues occur. The logic seems to follow the age old saying, which goes 'let sleeping dogs lie'."

Part of Infor's solution to this dilemma comes with its Upgrade X initiative, designed to get customers up on to the latest Cloud-enabled version of the Infor portfolio  - Infor 10x -  hosted by Infor on Amazon Web Services, with the minimum of fuss and difficulty for customers.

Around 20% of Infor's business is already in the Cloud, but that leaves 80% there for the taking.

“We’ve got thousands of customers that have upgraded,” says Infor CEO Charles Phillips. “I can’t give you the exact numbers but it is thousands. We have a lot of momentum to 10x. I think UpgradeX will accelerate it."

With areas such as CRM, it is a case of 'Cloud first' for end users, but other markets are still more hesitant. "We have been surprised by the types of customers who have responded to this," says Phillips. "Some of them have been telling us that they have no way to move to the Cloud. Certainly Europe has been slower to move the Cloud. But it's changing. Sectors such aerospace and defence are now saying 'let's do this' so the timing does seem right."

Kudos for innovation

Not everyone will make the move of course. "Customers have to make the best decisions for their businesses," concedes Phillips. "If they don't see a good reason to move to the Cloud then that's what they think, but there are usually enough new things and value for them to make it worth doing.

"It's in  our interests for them to move to the Cloud. If we run their systems, then we know a lot more about what they do. That changes our relationship with the customer and we like that as a model. Obviously we can't force anyone to move, so we just need to make it really attractive to do so and reduce the risk to them."

The idea for Upgrade X came from customers, he adds. "We talked to a lot of customers who were giving us kudos for innovation. They said that the amount of changes we were introducing astounding, but in fact almost too much," he recalls. "They said 'we're not used to going at this pace. It's hard for us to budget, we don't know when to upgrade. Why don't you guys just be responsible for all the upgrades and we pay you more to do that?"

"So we were told by a couple of the user groups that this is the model that they wanted, like a hardware maintenance contract where they pay a certain amount each year. In software of course, that would be called Cloud if we're running it, so it became a good way to position Cloud and the value of Cloud. It wasn't so much that they wanted us to run the technology but to manage the upgrades. That was the genesis."

Hosting on Amazon Web Services is common sense, asserts Phillips. "We looked that at the trajectory of infrastructure costs and how much scale Amazon had. We had to ask if we were going to build a better data centre than they had?" he explains.

"We're betting that their prices are going to continue to fall long term. In terms of the focus and the value add, it's not in the infrastructure. Every SaaS company used to think that they have to build their own data centre. That was the case perhaps ten years ago, but we have more choices today when there are so many near-free alternatives."

Many US Cloud Computing providers have been concerned of late about the potential negative impact of the PRISM surveillance scandal on the industry's prospects abroad. Phillips has seen little push back on this front to date.

"PRISM certainly didn't help as it reinforced perceptions and fears. Nonetheless the momentum now seems to be in our favour," he argues. "Europe has always had stronger privacy laws. US people just assume that all their data is out there anyway. You have cameras everywhere, Google analysing everything you do.

"If you're concerned about that sort of thing, then you got worn down in the US years ago, but the rest of the world is not quite that digital yet," he concludes.

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