Infor's Flex upgrade program termed an early success
- 09 March, 2010 07:07
ERP (enterprise resource planning) vendor Infor says its customers are warming up to Flex, a new upgrade and application-exchange program it started last year.
Flex allows customers to upgrade to the latest version of Infor's ERP software with either no new fees or small license fees, no changes to annual maintenance costs, rapid implementation services and incentive pricing on features they want to add. Infor users can also switch to another application in Infor's portfolio and get the same perks as a Flex upgrade.
Some 200 companies have participated in projects under the Flex banner so far, according to Dennis Michalis, corporate senior vice president of strategy and planning. While this represents a small percentage of Infor's 70,000 customers, it's still a significant amount, Michalis contended.
Infor's installed base is "risk-averse by nature," he said. "Any commercial dialogue [with them] does not move with great speed. These are 'bet-your-business' decisions. They don't happen overnight."
And about 15 of those 200 customers were essentially new business for Infor, as they had let their previous maintenance agreements expire, he added.
Infor is expecting Flex-related deals to skyrocket. "We're literally talking to a ton of customers right now," Michalis said.
Customers who get upgrades through Flex can sometimes incur some license fees, which wouldn't ordinarily be the case if a customer is current on maintenance. Fees apply only to certain situations, according to Michalis.
"There are some legacy solutions where the transfer [to a newer] platform incurs some cost," he said. In addition, the upgraded version might have some third-party functionality requiring payment. "Where that existed, we clobbered it as much as we could."
A Flex deal is essentially "another full-blown sales cycle," he said. Therefore, while Infor agrees to hold customer maintenance fees at the same level prior to the upgrade or application switch, a customer would still have latitude to negotiate the price of additional licenses.
Infor has often highlighted its commitment to continue support for customers on older applications who are willing to pay their support fees. The company grew rapidly in recent years through a long string of acquisitions that brought current annual revenue to about US$2 billion but created a fragmented installed base.
To that end, Flex is also meant to shift customers on legacy systems to newer applications, which are underpinned by Infor's Open SOA integration framework.
But the program is "absolutely" not an attempt to rationalize Infor's product line, and the vendor will continue to support customers who wish to stay on older systems, Michalis said.
Some customers are looking at it as an opportunity to consolidate various ERP instances and simplify operations, he added.
Mitsubishi Electric Power Products is participating in a Flex upgrade scheduled to conclude this year, said Joe Marcoz, director of IT.
The Warrendale, Pennsylvania, division of the global electronics giant has been using Infor's SyteLine product since 1997, he said. The current upgrade from version 6 to version 8 is no simple task, as it affects eight units within Marcoz's company, each with varying needs, he said. Mitsubishi is also implementing other Infor applications under the Flex program.
Infor was able to "get creative" in developing the license model for the project, packaging together add-ons to SyteLine, such as shipping and field services applications, Marcoz said.
The flexibility was valuable because Marcoz's project is "not to just implement a new business system, but re-evaluate all of our processes," he said.
Commercial lighting distributor E. Sam Jones Distributor is also doing a Flex upgrade, on its SX.enterprise system, said CIO Julian Richard [cq]. The update will give the Smyrna, Georgia company new features that ought to boost revenues, including an e-storefront and online ordering capabilities, he said.
E. Sam Jones' project has a shorter timeline than Mitsubishi's. The company signed a deal with Infor in December and its new system was scheduled to go live this month.
Infor provided E. Sam Jones with a fixed-price estimate for the implementation and under their deal, will cover any unexpected overruns, Richard said. The fixed price applies to the core application upgrade, he said. "If you have some other pieces, they still bill you for that."
E. Sam Jones had heavily customized its system, Richard said. Luckily, all of those customizations will be carried forward to the new version, he said. "That makes it a lot easier."
So far, Flex seems to be working out fairly well for both Infor and its users, according to one industry observer.
"The big news is the 200 customers moving on to this. That's good momentum," said Altimeter Group analyst Ray Wang via e-mail.
Meanwhile, "for many customers, this is the first meaningful outreach in a while, and they are benefiting from best practices, new functionality, and a path to modernization," he added.