With cloud-based ERP, customers can focus on outcomes

At the Inforum 2020 virtual conference, ERP vendor Infor stressed the importance of cloud-based ERP and its commitment to customer experience.

One of its strategies has been to provide multi-tenant cloud ERP offerings that are easier and cheaper to implement than their on-premises counterparts. More recently, Infor has added industry-specific functionality to its cloud-based ERP products, which enables customers to avoid time-consuming and complex customizations.

At Inforum, Infor also announced initiatives including its Multi-tenant Cloud Customer Bill of Rights, which is an agreement that defines customer-oriented policies and standards for Infor's multi-tenant cloud infrastructure. The Bill of Rights specifies six rights, such as contract flexibility, that are designed to help customers get more value from their cloud-based ERP investments.

In this Q&A, Rod Johnson, Infor's general manager and president of the Americas, makes a case for ERP vendors to focus less on software and more on customer outcomes and customer experience.

What is Infor's approach to delivering cloud-based ERP systems?

Rod Johnson

Rod Johnson: Infor relies on an agility approach, which included building out our next-generation, industry-specific implementation accelerators. Over the course of the year, we've delivered more than 40 different vertical versions of implementation accelerators. A vertical version goes down to, for example, a dairy company -- not just a food and beverage company, or an academic medical center, not just a hospital. We try to get to these micro-vertical versions of the software. [The cloud strategy] is based on a methodology that we call 60/30/10, where we expect that customers can adopt a minimum of 60% of the business processes right out of the box without any hands-on configuration, 30% would require some thoughtful configuration to tune it to their business, and then 10% is spent on the stuff that's really differentiated to them. There's north of a couple of hundred active implementations using this approach.

What are some of Infor's top priorities in driving this cloud ERP strategy?

Johnson: One theme is a value realization focus and the extension of our methodologies to formally measure, capture and record the value gain from the software. Two is to enhance our policies and focus on the customer with our new Multi-tenant Cloud Customer Bill of Rights, which challenges the industry to raise the level of service and flexibility for customers. This industry is not known for being leaders in customer innovation and satisfaction, and a lot of the complaints you hear about the legacy vendors is the lack of flexibility in the contract terms -- feeling locked in by the vendor and "gotcha" terms like indirect access. This new bill of rights attacks some of these issues, such as contract flexibility. For example, if they're not using any part of their cloud subscription, they can trade it in for something else. We're increasing our service levels on uptime and on response time, and we are driving more pricing transparency. The area where the market needs to innovate is in better customer outcomes and better customer experience, not necessarily more software.

How many Infor customers have moved to the cloud in the last year?

Johnson: We've seen a dramatic increase, even through COVID. If anything, for some segments of our market, COVID has accelerated customers' plans to transition to the cloud to get on a more modern platform and to get out of their own data centers. On aggregate, our customers moving to the cloud has increased by 200%; in prior years, it was 40% to 50%. From a macro standpoint, it's being driven by customers recognizing that ERP applications are viable in a scaled, public cloud environment. We've got lots of references of companies doing it, which is important because most manufacturers are a pragmatic bunch that [want to see that others have done it]. So now they can see that there's lots of other companies like them running their business with complex operations in the cloud. They can also see that pretty much all new innovation in the market, in general and certainly with Infor, is coming into the cloud version. So the longer you stay on-premises, the more you're isolated from new innovations.

Has COVID-19 accelerated momentum for manufacturers who previously may have been reluctant to go to the cloud?

Johnson: Yes, manufacturers, as we have seen, are a pragmatic bunch. They're not really swayed by digital imperatives and terminology like that. Ultimately, they want to see evidence that, one, we can bring in capabilities that make their business better; and two, we can run these mission-critical applications in a consistent predictable way. We have a pretty high bar to clear to get them comfortable with putting their business at risk, because if your ERP system's not running, you're not shipping product and you're not making money. Initial adoption was slow when we launched Infor CloudSuite about five years ago. But in the last 12 months, we've seen a real acceleration because the proof points are there. The reality is that many manufacturers are still running at least a portion of their infrastructures on stuff that was designed in the late 1990s or early 2000s. So there's aging technology and an aging workforce to manage that technology. But most importantly, everything that we think of in terms of modern applications -- the idea of self-service, search, graphical navigation, built-in business intelligence, mobility -- things that are commonplace everywhere else are missing from most of those systems today. [Businesses that stay on-premises] increasingly feel like they're falling behind, and what we've seen in areas like HR is finally arriving to manufacturing.

How is Infor trying to help customers reap more value from their ERP systems after they've moved to the cloud?

Johnson: We're trying to build value services teams that work hand-in-hand with our customers to both identify value opportunities as well as measure that. So there's a broad-based set of investments. This is where the industry should be going -- it shouldn't be focused on selling software, it should be focused on selling an outcome. … It's rare when a vendor follows through and helps the customer measure and achieve that. But now that software is in a multi-tenant cloud, you have the ability to help customers monitor the software. It's the next big step for the industry, and we want to lead.

What's the value of an outcomes-based focus for customers?

Johnson: There was an old analogy for WordPerfect back in the day -- that no one used more than 20% of the functionality. The same is true of enterprise software; we're constantly trying to build new stuff, but why don't we focus on helping our customers get to 50, 60, 70% utilization with the software [they already have]? It's going to create a ton more value than just a laundry list of new features. The real reason why people buy software is to create a values-based outcome for their business, which helps them run their business more efficiently, close their books faster, deliver to the customer more successfully or lower inventory costs. There's a myriad of outcomes that customers are driving to. The Holy Grail of the business applications market is to get to value realization. Now that it's in the cloud, now that KPIs are built into the software, and now that there is a process intelligence tool that monitors how the processes are executing to drive compliance and benchmark the value, we're now in a position to report -- in real terms to the customer -- the value that's been created.