Infor Global Solutions: A Review of its Overall (Economic) Position
As a professional services firm supporting clients, we like to remain acutely aware of the financial standing of software publishers. It is important for us as a business and important for our clients. We don’t want to implement a software platform for a client if there’s a risk the platform won’t be supported years later because the software vendor has financial challenges. Clearly, this isn’t a good practice.
In fact, I would urge anyone in search of a new business software solution to take a very close look at the financial and organizational situation of the software provider before making your decision. While the specifics of the software packages themselves are, without doubt, important considerations, knowing whether the company you are buying from will be around in the next ten years is arguably just as important.
To help you, we recently completed the Market Analysis: A Review of the Overall (Economic) Position of the Top 6 ERP Vendors Whitepaper, based on information contained in their annual SEC filings, which outlines the strengths and weaknesses of each of the top software providers, including Infor, Sage, Epicor, Oracle, SAP and Microsoft. The full whitepaper is available for download here, or you can read my individual assessment of these companies in my new Market Analysis Series.
In the first of this six part series, we’ll talk about Infor.
Infor Global Solutions, Inc. develops and delivers enterprise software solutions for medium and large customers globally, focusing on verticals in the manufacturing, distribution, healthcare, automotive and food & beverage sectors. Based on this statement alone, it would appear Infor is a major player in the enterprise software industry, and I suppose the fact it’s even included in this discussion is credence to the fact that, in one sense, it is.
Based on our analysis, however, Infor is not as well positioned in the industry as many tech analysts would have you believe. Although the company is trying to refocus its technology strategy, for instance with its release of Infor 10x, its wide array of technology products still have no real focus. They were largely acquired without any thought to rationalization; and though the company is attempting to standardize localizations and mobile access across its portfolio, it will have difficulty surviving in the transition to the cloud.
Further hindering Infor’s chance at cloud success is the fact that their software license fees are under pressure. Selling cloud leads to a lower demand for professional services with license value received on a subscription basis and therefore total license revenue taking much longer to receive, typically between 24 – 36 months. This hurts cash flow.
For a company like Infor that already has a negative operating cash flow this could put them under even more financial pressure; and this for a company that is experiencing a slew of other financial stresses, including five consecutive years of losses (with net losses of $76 million as of May 31, 2013), current liabilities exceeding current assets, $5 billion of debt and a negative shareholder equity of $500 million.
Given all of these factors – the company’s legacy technology, high debt levels and other financial stressors – I’d conclude that software purchasers should be careful about venturing into business with this company. It is in a weak position and presents considerable risk that would not be overly apparent when a company is considering only its software solutions. As a risk adverse organization ourselves, we see Infor as a company that may not even be around in ten years.
Stay tuned for my next installment.
– Software Delivered as Promised. No Surprises.