Infor Global Solutions Buys MAPICS

Analysis of News Events
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On the morning of January 27, MAPICS became the next iSeries software vendor to ride the wave of consolidation that is sweeping the enterprise applications market. In an announcement that was rumored for weeks, the company revealed it had agreed to be acquired by Infor Global Solutions, a privately held firm based in Georgia. The acquisition creates an enterprise resource planning (ERP) software powerhouse that boasts more than 17,500 customers and annual revenues that approach $600 million.

Under the agreement between the two firms, Infor will pay $12.75 per share in cash to MAPICS' shareholders to gain the company's software, employees, and 4,500 customers. In the process, it will expand its operations to over 70 countries and add dozens of firms to its network of partners and distributors. It will also add several thousand iSeries users to its customer database, a fact that should raise its visibility within the midrange community. This will certainly be the case among discrete manufacturers, a market segment in which MAPICS has wide recognition.

These numbers underline the reason that the two vendors tied the knot: to achieve adequate size to compete in a rapidly consolidating ERP market. As MAPICS CEO Dick Cook put it in an analyst briefing, "With the industry consolidation currently taking place, it was imperative that MAPICS combine to create a larger company to ensure the continued success of our customers." In 2004, MAPICS' board of directors decided that the vendor needed to become a $500 million firm to remain viable. The company, which took in $172 million in revenues during its last ficsal year, initially set out to reach its goal through multiple acquisitions. When Infor made its offer, though, MAPICS realized that it could achieve its objective with a single transaction.

While that transaction may worry MAPICS' customers, it is doubtful that the acquisition will affect them in any significant way. Though Infor has not said what it will do with MAPICS after the merger, the company has generally maintained the support policies of the companies that it acquires. I expect that the vendor will run true to its history with its latest purchase.

While the acquisition may hold little threat for MAPICS' customers, it still leaves them asking, "Who is Infor?" Infor Global Solutions came into existence in 2002 as Agilisys, a company that was a spin-off of Pennsylvania-based Systems & Computer Technology. From its inception, Agilisys' mission was to acquire ERP vendors that serve mid-size manufacturers and distributors in specific industry sectors. One such sector is automotive suppliers, a market where the firm gained a foothold through the 2002 acquisition of iSeries vendor Brain AG. It increased its stake in the automotive sector last year when it purchased Infor Business Solutions, a German ERP vendor, and renamed itself after its acquisition. Infor has also purchased two other vendors with iSeries customers--Daly.commerce and Lilly Software Associates--as well as a handful of smaller firms. These include Apernum, Future 3, Incodev, Mercia Software, NxTrend, and Varial.

Infor has no intention of making its customers migrate to a single product suite or technology platform. Instead, the vendor wants to build synergistic linkages between its product lines that make it attractive for customers to buy from multiple lines. It is also building a consultant team that can provide deep domain expertise to customers in its core industries. These are two of the ways that Infor hopes to become a $1.3 billion company by 2007. The other way it intends to reach that goal is through further acquisitions. Infor will fund those acquisitions just like previous ones: through the financial backing of venture capitalist firms such as Golden Gate Capital, its lead shareholder.

In short, while Infor may never become a household word, it will undoubtedly become well-known among iSeries customers in the manufacturing and distribution industries. In the process, the company will become a more visible competitor to SAP and SSA Global, not to mention the J.D. Edwards solutions that Oracle inherited when it acquired PeopleSoft. As such, Infor is a software vendor that iSeries customers should watch closely. After all, given its strategy of growth through acquisition, chances are good that your company might become an Infor customer someday.

Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at This email address is being protected from spambots. You need JavaScript enabled to view it..