Historically, Infor operated a highly restrictive sales channel, limiting its value-added resellers (a.k.a. VARs and channel partners) to sell into companies that generate revenues of no more than $100 million per year. With its August 8th announcement (covered here: Infor Eases Sales Restrictions for Channel Partners), Infor now allows its channel to sell to companies that generate revenues of up to $500 million per year.

The old restrictions made it difficult – in some cases near impossible – for channel partners to generate revenues from the sale of software licenses. Many of Infor’s systems are geared to companies that generate revenues far in excess of $100 million annually. For example, Infor10 ERP Enterprise (formerly ERP LN and Baan) is a feature rich, complex system designed for larger mid-sized and large enterprise-sized manufacturers of complex, engineer-to-order (ETO) products. The $100 million cap effectively made the “reseller” title more theoretical than practical for those firms that only resold Infor10 ERP Enterprise (ERP LN).

Many of the world’s leading aerospace and defense, hi-tech and electronics, and automotive companies operate Infor10 ERP Enterprise (ERP LN), including: Rolls-Royce, Ferrari, BAE, Tokyo Electron, Boeing, Husky, and Zodiac Aerospace, among many others (discolure: some of these companies are clients of ours).

The resale restrictions also made life difficult for resellers of its mid-market systems, including Infor10 Business (Syteline) and Infor’s recently acquired Lawson systems. In many cases, target mid-market customers generate more than $100 million in sales per year. Those who didn’t suffer from the restrictions were those who resold systems intended for smaller businesses, including Infor10 ERP Express (Visual) and Infor ERP Visual Jobshop. (Infor offers several additional ERP software solutions that are not discussed here).

Why the Competition with its own VARs?
At first blush, it appears as though Infor’s redefined relationship with its VARs is unlike those between many vendors and their respective VARs. In other vendor-VAR relationships, the vendors allocate either their direct sales team or a channel partners to an opportunity. But not both. In contrast, Infor expressly states that it’s prepared to go head-to-head with its channel partners for sales to companies that generate between $100 million and $500 million per year. The channel retains exclusivity over the sub-$100 million per year companies, and Infor retains exclusivity over the $500 million per year-plus companies.

Although I’m speculating, it seems that Infor may be fostering competition for the following reasons:

• To drive pre-sales process quality improvement, both with respect to its direct sales and VAR channels
• To create a perception that prospects have “choice”
• To put itself in the mix on a greater number of these mid-market opportunities

There must be other reasons, and I’d be grateful to anybody who could shed light via the comments section, below.

Will Infor vs. its VARs be a Competition that Benefits End-User Companies?
However, the question of whether this competition will be good for an end-user company remains to be determined. From our perspective as a vendor-agnostic, independent consulting firm that has an ERP selection practice area, we think that there are pluses and minuses.

Assuming that Infor and its resellers will engage in pure competition for a given opportunity (this is a big if) – and are not collaborating in their RFP responses and other deliverables – our view is that more information and a greater number of alternatives can be a good thing on a gross basis. For example, we would have opportunities to assess different pricing proposals, different services providers, and possibly different solution sets. We would also be able to play one against the other in negotiations.

The question, of course, is whether these incremental benefits outweigh the incremental costs and complexities on a net basis. In many cases, businesses are looking to assess multiple vendors, as well as their respective ERP software solutions, implementation teams, and support teams.

We have a strong belief that procedural fairness and equity are critical to delivering a successful ERP selection project. One of the ways we do this is to treat each participating vendor equally and to ensure that no vendor has a unique advantage in a pre-sales process. By putting each vendor on an equal footing, we position our client to make a well-informed decision.

If we were to allow Infor and its resellers to submit multiple proposals, we would likely have to do the same for each participating vendor. This would effectively double the scope and scale of a selection project, and create additional costs that might simply not be worthwhile. When we go to tender on behalf of our clients, we expect the vendor to put its best foot forward with respect to proposed software, pre-sales teams, proposed implementation teams, and proposed maintenance and support packages (if applicable).

In some cases, there are net benefits to allowing a vendor to be represented by multiple parties. This typically happens in cases where each proposer attaches significant and different value-add to the core offering (e.g. IBM’s cloud solutions, and business analytics (BI) for SAP).

Knowing what I know about Infor’s offerings and channel, I haven’t yet seen a value-add differentiator that would generally make competing proposals a net benefit to a selection project. Yes, we might see different proposed implementation teams, but is this sufficient to justify multiple proposals for the same software? Why not simply reserve the right to acquire software from one source and obtain implementation services from another. Our firm, for example, does not resell software, but we’re oftentimes retained to project manage the implementation of already acquired ERP licenses.

My concluding question is as follows: if a company between $100 million and $500 million decides it only wants one proposer, how is this opportunity allocated? Does Infor dictate policy? Can a company approach a reseller directly? If you have an answer, please feel free to post anonymously below.