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Infor says GT Nexus acquisition positions it for next-generation ERP

Analysts give Infor the thumbs-up on its acquisition of the cloud commerce vendor GT Nexus, saying it helps it compete with SAP and Oracle.

Infor's acquisition of cloud-based, global commerce provider GT Nexus should help it fulfill its ambition of becoming...

a next-generation ERP company, according to several industry watchers. In a deal announced on Aug. 11, Infor bought GT Nexus for $675 million, pending regulatory approval.

GT Nexus' cloud-based order management system is a great compliment to Infor's supply chain applications, according to Andrew Kinder, director of industry marketing at Infor, based in New York.

"In our opinion, it's the best commerce platform and certainly a great cloud platform," Kinder said. "In the world of trying to connect multiple companies in a heterogeneous way, having a single, cloud-based platform is a great way to do it."

The acquisition has generally received the thumbs-up.

Transacting business in the cloud "makes it a lot easier than the traditional buy-sell transactions, and it really smoothes out the interaction," said Cindy Jutras, president of Mint Jutras, a research firm that specializes in ERP. "It's also somewhat unique in that GT Nexus focuses on the direct materials, as most of the other exchanges that you see that have been successful are more on the indirect," she said. With the direct side, "there's more to be done there because it has to connect back to the internal manufacturing processes."

GT Nexus is important because it brings financing into the supply chain, Jutras explained. "Companies all the time struggle with the fact that they have to go out and procure materials in order to make things before they capture the revenue from the actual production, which makes supply chain financing somewhat important. But still, so many manufacturers don't necessarily recognize the potential of what's available out there for supply chain financing."

The move should also help Infor compete against SAP and Oracle as one of the largest ERP vendors, said Heather Ashton, a research manager at IDC, based in Framingham, Mass., who covers manufacturing and supply chain technology. Infor under CEO Charles Phillips is positioning itself as a new breed of ERP vendor, moving beyond the traditional ERP boundaries and ready to take on the giants, according to Ashton.

It was a necessary move to continually play against the larger vendors, and it helps them to move out of the midmarket.
Heather Ashtona research manager at IDC

"It was a necessary move to continually play against the larger vendors, and it helps them to move out of the midmarket," she said. "The challenge now is how they can integrate the GT Nexus cloud-based systems with their more traditional on-premises applications. There's this ongoing transition to move its customers into the cloud, but they also need to continue to support the existing on-premises customer base."

Paul Hamerman, vice president and principle analyst at Forrester Research Inc., based in Cambridge, Mass., agrees that Infor needed to get into the software as a service (SaaS) market to remain competitive. "The GT Nexus product is a good complement to Infor's manufacturing and retail ERP products," he said. "But, more importantly, GT Nexus is a multi-tenant SaaS system, and helps drive growth in Infor's subscriptions revenue stream -- similar to what SAP has done with several SaaS acquisitions [Ariba, Concur, SuccessFactors]. To date, Infor's cloud business has been based mostly on single-tenant, cloud-hosted services rather than multi-tenant SaaS. The application software industry is increasingly SaaS-driven, and this is an important deal for Infor to get in the game."

Infor sees industry cloud extensions as the future of ERP

Kinder agreed that supply chain visibility and financing are two of the most attractive characteristics that GT Nexus brings to the Infor portfolio. "It answers two simple, but very important questions for us: Where is my stuff and when do I get paid? And I think it's the combination of those two things that make it particularly strong," he said. "We've all been chasing the goal of inventory or supply chain visibility across an extended network for many years, but you can't really do it within the bounds of the ERP because you can only go as far as your own four walls."

GT Nexus will also help Infor move forward, as manufacturing evolves to connect many partners globally to source supplies, manufacture products and deliver them to customers. The kind of collaboration needed to pull this off is best served from the cloud, Kinder said.

"Companies are requiring more and more specialization -- and that's why we've got cloud suites by industry -- and the expectation is specialization brings complex supply chains," he said. "What we're looking for is the combination of the cloud suites and GT Nexus to provide that unifying cloud service that handles industry-specialized networks. That's what we see as the future of how ERPs evolve."

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