When you first arrived at Infor and took a look around, what needed fixing?
Phillips: The priority for me was reorienting resources into products and away from other areas. We basically reduced our expense in the back office and shifted all of that into product development. I think that the company had a stable customer base, but hadn't delivered enough innovation and change. The second thing we had to do was invest more wisely. Even though the company had invested a huge amount on R&D, and we obviously increased that, the way it was being spent wasn't optimal, in the sense that each distributed development group got to make their own decisions, and they largely did that with input from a very small number of customers. You want to step back and look at ways that can differentiate yourself, things that can make a big difference for a lot of customers and translate into commercial success.
Let's talk about your recent technology launch, Infor10, which includes components such as the ION middleware framework for tying together various Infor software modules.
Phillips: We've come up with a strategy and architecture that takes advantage of our strengths and helps customers as well. There are things that don't have to be in the core [application] engine, whether it's localizations or reporting, or a number of things that are infrastructure-related ... things that you don't need to do 20 times across all of your applications. You build it once. That gives us a lot of efficiencies.
That's what we're doing with Infor10. We build the localizations once, we build the reports once, and that way we can rev the engine, which has the industry functionality in it, a lot faster.
You just alluded to the importance of industry-specific functionality. What verticals are you focused on now and in the future?
Phillips: We have about 13 verticals we're focused on, where we already have strength and an installed base. Just to highlight a few of them, we're really big in fashion, we're big in automotive, high-tech, aerospace.
Our offerings are very micro-vertical focused and that is our strength. At the end of the day, we have those industry features that you'd otherwise have to build yourself or customize. That lowers the time to market, lowers the customization expense and the risk. The rest of the industry is going toward infrastructure as a basis of competition.
What about SaaS? Is this a key area of growth for Infor or more of a niche play?
Phillips: I believe it's a key area for growth across our business. We have a million subscribers in the cloud today, and we're the only company where we have the exact same process, multi-tenant enabled in the cloud, that can also be run on-premises. What that means is we can do hybrid deployments. You may want to be in the cloud in some locations where you don't have much scale, but you also want to keep it on-premise at headquarters. People can mix and match and make that choice.
The second thing we're doing with the installed base is an upgrade center we're about to announce soon. It's a factory, essentially. We say, let us look at what you're doing. If you're on an older release, let's look at the customizations, and our preference is for you to upgrade directly to the cloud. You already know us, you already know the app, this is just another version. Do you still need to see the box? Why not let the next upgrade just go seamlessly to the cloud? That's lower-risk for some customers. We think there's a huge opportunity, because we have a huge installed base, of going in and incrementally upgrading them. That's the easiest way for us to double our cloud business.
Is buying a large SaaS vendor, as SAP and Oracle both did recently, in the offing?
Phillips: We won't do the big splashy $3 billion ones. There are a lot of smaller ones out there that add value, so we will be making SaaS-only acquisitions but it will be targeted ones a little bit under the radar.
So on balance, with all of these things going on, who are you competing with? Who is your biggest rival today?
Phillips: Well, we're a little unique in that we extend to the entire footprint. At the low end of the market we compete with Microsoft Dynamics and Epicor and all the way up to the high end we also compete with SAP and Oracle.
Since we're so big in manufacturing we may have a customer that has SAP and Oracle at headquarters for financials and HR, but we run the plants. That's not an uncommon scenario.
For that reason we have separate salespeople. We have a mass sales force that does the midsized deals and then we've got the strategic high-end sales force. We like being in both businesses.