Lawson Defections: Corporate Coup or Business as Usual?
When business software vendor Infor announced the acquisition of Lawson Software in July, many Lawson customers and analysts were concerned about the future of the company's product lines. Infor executives have dismissed the concerns.
Seven months after Infor shook up the HR software world with its $1.8 billion acquisition of Lawson Software, the deal remains a puzzle.
When business software vendor Infor announced the acquisition last July, many Lawson customers and analysts were concerned about the future of Lawson's product lines. Infor, after all, had a reputation for buying up software companies then letting them languish, milking them for maintenance fees but investing little in improvements. And in late 2011, defections by some key Lawson executives—including former Lawson human resources software strategy leader Larry Dunivan—only stoked worries about Lawson's HR applications.
Infor executives have dismissed the concerns. The company downplays the impact of the executive departures, and CEO Charles Phillips has publically pledged to invest in the Lawson product line with the goal of delivering "deeper functionality and industry-specific applications."
Still, observers are not convinced Lawson customers or products are being well-served. Jim Holincheck, an analyst at research firm Gartner Inc., says Dunivan will be difficult to replace. And he has yet to see evidence that Infor is pouring money into product improvements.
"It remains to be seen whether that investment will happen," Holincheck says.
Unlike the biggest HR software vendors, Infor is a privately held company. Its primary shareholder is private equity firm Golden Gate Capital. Infor has expanded in its eight-year history through a series of acquisitions. All told, it has gobbled up more than 40 companies, including Workbrain, the workforce scheduling software provider, which it purchased in 2007.
Last year, GGC Software Holdings Inc., which is an affiliate of Golden Gate Capital and Infor, acquired Lawson, and then Lawson was combined with Infor.
Based in St. Paul, Minnesota, Lawson had long been an alternative to business software giants SAP and Oracle Corp., and in recent years had made waves with a new set of HR applications designed to be delivered over the Internet as a service. But that initiative came into question with the Infor deal, based on Infor's reputation as a caretaker of business software rather than an innovator. More than one analyst predicted Lawson products would decline.
Infor officials, however, have disputed those fears and have fought to change the company's image. CEO Charles Phillips, who was the former president of Oracle, took the reins in late 2010 and soon after pledged to hire 400 additional software developers. The $1.8 billion Lawson deal was the first major acquisition under Phillips' leadership, and it bolstered the company's position as one of the industry's largest business software vendors, after SAP and Oracle.
Once the deal closed last July, Phillips laid out plans to bolster Lawson's products with a focus on specific sectors, including manufacturing, health care, distribution and hospitality.
But seven months after the deal was completed, there have been few public announcements about Lawson product development progress. And in November, three top Lawson executives—Dunivan, executive vice president Dean Hager and customer support lead Nancy Anderson—left the company, causing customers and analysts to wonder about the future of the brand.
"These are key people who were driving R&D at Lawson," says Ray Wang, principal analyst at Constellation Research. "Customers have to ask, 'Will there be the same commitment now that they are gone?' "
According to Lawson strategic director, Amy Ihlen, the answer is yes. She says Infor has followed through on its investment promises, most notably supporting the addition of 70 new Lawson employees, mostly engineers, which effectively doubled the development team head count for the HCM products line. "It's a testament to Infor's commitment to HCM," Ihlen says.
She also argues that the recent attrition is merely a natural step in the transition process, and she's confident the company can fill the leadership vacancies. "Dean and Larry brought strong leadership to the company, but the Infor executives are stepping up," she says.
Ihlen reports that Anderson's position has already been filled internally, but the company is still considering how to officially replace Dunivan and Hager.
Lawson and Infor leaders may be confident about their future together, but they need to do a better job of communicating that confidence to customers, Wang says. "Right now it looks like a coup, so they need to explain to customers what's going on and who's covering what."
Infor officials say initial progress on Lawson product development is going well. In December, Lawson, which is now considered an Infor affiliate, introduced Infor10 Lawson S3. This product merges Infor and Lawson business software applications, and extends the Lawson Human Capital Management suite through increased funtionality in areas including absence management, benefits administration and payroll.
Bringing Lawson S3 into the Infor10 line gives Lawson customers access to a range of add-on products from Infor, including the Workspace interface, which includes collaboration and social networking tools, and a consumer-grade user interface.
Lawson also has set key target-release dates for iterations of the Infor10 Lawson HCM line. A release focused on talent management features is scheduled for winter 2012, and HR service delivery and workforce management updates will be released in the spring.
"As these new product iterations come to market, people will understand how serious we are" about continuing to be a human capital management software provider, Ihlen says.
Holincheck agrees. "Customers will judge them now on whether they are meeting these key milestones in terms of delivery capability."
In the meantime, the Infor-Lawson tie-up continues to be a question mark. "The biggest concern customers have today is: Will the commitment be there in the long term?" Holincheck says. "The onus is on Infor to show that it's there."
Sarah Fister Gale is a freelance writer based in the Chicago area. To comment, email email@example.com.