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Why Koch Chose Infor for Investment

Jimmy LeFever   Jul 13, 2017      

On Monday, I had the opportunity to sit down with Charles Phillips, Infor CEO, and Steve Feilmeier, Koch CFO at Infor’s annual user summit, Inforum. In February of this year, Koch invested more than $2 Billion in Infor—a move that left many of us wondering, why Infor…and why Koch? Yesterday we got some answers, as the conversation provided compelling insight into Koch’s strategy behind investing in a company outside of their core competency. Interview transcription follows:

Phillips: Why invest in technology?

Feilmeier: We are paranoid about technology because it’s getting so cheap. Sensors have gone from thousands of dollars to hundreds to tens. We are worried that the Uber and AirBnB scenario is going to happen to us. We decided to embrace it and refine technology. Here are a couple examples, in agriculture, they’re creating new technology to replace pesticides and fertilizer at a genetic level, starting with the seed. In in manufacturing, possible as soon as 10-15 years from now, mass production won’t need to exist because of the on-demand capabilities with 3-D printing.

Phillips: So why Infor?

Feilmeier: Like GE, who is trying to add more technology into their products, we’re trying to add more technology to our manufacturing. We saw a company that has the best management in the industry, has been together and works extremely well together, wants to stay private so they can take a long-term view and so they can make investments that will perhaps take 5-10 years to play out and not be handcuffed or bound by quarterly earnings. Infor just rewrote nearly 100 percent of its code to stay in a modern language and be cloud enabled. We believe that information has taken a big lead there, others are not going to stand still, they’re following, but it’s always good to be a first mover and have that kind of leadership. And we like the way they’re going to market. We don’t know about ERPs like most of the analysts do but we know how much implementation sucks with other big-box ERPs. We found a company that goes to market differently. Infor has different verticals by industry where much of that customization is already done. Then, you layer in some of those best-in-class capabilities across the board, whether it be payroll, purchasing, finance, cloud suite financials, procurement, shipping, etc. Then you can customize how much of that you want through middleware. We thought that was a unique and disruptive approach.

Phillips: Where do you see the big opportunity for Infor?

Feilmeier: One big opportunity for Infor is people don’t know who Infor is. It isn’t yet a household name. That’s largely because they haven’t been marketing effectively.

Well the product wasn’t ready to the standards of the management team when they took over 6 years ago, so that’s why they weren’t marketing themselves like they could have been. That’s going to change though.

Also, if you’re not ready to go after bigger projects because you’re rewriting code, it doesn’t make sense to partner with a Deloitte or PWC or Accenture. They need the scale, they need the volume, and they play for keeps. We had to make sure they were ready for that. We spent the last 6 or 7 months working with these integrators to gauge their interest. We will have 1or 2 big partners in every major category/industry vertical. We see Infor’s key differentiators as their abilities to do it cheaper/faster/better/with the right integrators than the bigger ERPs.

Phillips: Could you talk a bit about the history between Koch and Infor?

Feilmeier: Koch’s manufacturing business runs Infor software. One of our engineering departments came off of Excel and put in a real system to help them do their business better. They were already using GT Nexus well before Infor acquired them and were considering acquiring them, but then Infor did it. We also signed major licenses for Global HCM (HR) for 130,000 employees. We see our employee base increasing to 200,000+, and just like tech is changing, our employee base is changing. They expect us to know the—who they are, where they are in the org, what their skills are, what their roles are, etc. One of the biggest motivators is to ensure we promote from within and not rely on human supervisors to recommend people when opportunities arise. And that’s one of the things Infor will help us accomplish.

/end of interview

After this insightful interview between Infor and Koch, it’s clear that Infor is headed in the right direction with this investment and partnership with Koch. We look forward to see how this will improve the Infor CloudSuite product and to a more in-depth case study of the partnership next year. (fingers crossed!)

 

 

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