Lawson Retrenches as it Reconnects with Customers

April 28, 2009 Alex Woodie

Things seemed a bit slower for Lawson Software last week at its annual conference and user exchange, CUE 2009, which was held near IT Jungle‘s West Coast headquarters in sunny San Diego, California. Chalk it up to the record-breaking heat wave and the recession, which caused attendance to drop by about half. But instead of lying down in a shady spot and waiting for better times, Lawson executives outlined a multi-pronged plan for driving the company forward and reconnecting with customers.

Compared to past years, when Lawson would take over entire blocks in the nearby Gaslamp District to hold a giant street party for thousands of customers while huge cuts of prime rib were handed out, the beer flowed freely, and bands like Huey Lewis and the News played on the stage, the CUE 09 event was very subdued. Sure, there was a headline rocker–Don Felder, one of the five founding members of The Eagles, played for Lawson customers. And there was food and drink. But the vibe was entirely different. Vendors and partners in the expo are cranky and jittery. The sense of optimism is gone. The party is over. So now what?

First, let’s look at where Lawson currently stands. The company is suffering the effects of the poor economy, along with the rest of the ERP software industry and its customer base, but thanks to aggressive cost cutting and strong maintenance renewals, it still managed to post a profit last quarter. Good times may come back, but there is no guarantee that things will be the same. With deep-pocketed competitors like Oracle and SAP lurking at the edges of the shadows, a smaller ERP company like Lawson has to be very careful not to tread too far from the campfire, lest it get eaten, like Sun did last week.

To avoid that fate, Lawson appears to be favoring a conservative and pragmatic approach to returning the company to growth. It won’t stray very far from what its customers are currently asking for. Big shifts in development tools, such as the move to Landmark, a move to develop in J2EE rather than RPG, are being scaled back. Instead, customers get incremental improvements in existing products, and some new functionality, such as the new enterprise search function for S3 that was announced last week at the show.

The biggest changes at Lawson will take place internally and in its customer interactions. The company is currently in the midst of realigning and streamlining its operations around the world, away from regional organizations and toward industry-focused organizations. For example, instead of having one person in charge of all Lawson activities in France–whether it’s for a food company that uses M3 or a hospital that uses S3–there will be one group dedicated to food and beverage, one for healthcare, one for fashion, and so forth. Each industry group will have coverage all over the world. This will eliminate the parochialism that currently allows that French boss to participate in Lawson programs or sell new Lawson products, or say no. It will also streamline chains of reporting.

The shift to industry-based groups, which began in February, also marks the last phase of the integration of Intentia, and seeks to eliminate a company-wide divide that has roots in product origins, industry strengths, and platforms. M3, which stands for “Make, Move, and Maintain” and was formerly Intentia’s Movex ERP suite, is stronger in EMEA than the U.S., stronger among food and beverage and fashion manufacturers and distributors than other industries, and stronger on the System i, which accounts for about 80 percent of M3 installations.

By comparison, Lawson’s original ERP platform, S3, which stands for “Staff, Source, and Serve,” is stronger in the U.S. than EMEA, stronger among service-based industries like healthcare, government, and law than manufacturers and distributors, and stronger on Unix and Windows servers; the System i accounts for only about 20 percent of S3 installs, according to company executives. Lawson needs to overcome this internal divide if it’s to keep its house strong and united.

Lawson is relying on a “tripod” of tools to keep it relevant in the face of tightfisted customers who no longer commit to big projects, according to Martin Hall, a Lawson executive who works out of the U.K. This tripod consists of a collection of “opportunity analysis” tools and services that tell customers exactly where in their businesses they can save or make money; a series of pre-configured “QuickStep” ERP packages for various industries; and the generation of key performance indicators (KPIs) to show the customers how much money they’re saving or making. The KPIs are delivered via Lawson Business Intelligence, which is seeing a surge in popularity these days and is included in almost every new deal, Lawson executives say.

Beginning in June, Lawson will embark upon an ambitious program to gauge what its customers think about the company. This “Net Promoter Project” is based on similar surveys that companies have used to see whether their customers are satisfied with their vendor (a score of 9 or 10 on a scale of 10) or unhappy (a score between 0 and 6), and will have an impact on Lawson in several ways, according to Peter Quinn, who holds the title of chief customer officer, and reports to CEO Harry Debes.

The most obvious benefit of the Net Promoter Project is showing customers that Lawson cares what they think, which is a huge factor when a customer has to choose between SAP and Oracle, which have developed reputations for being aloof of all but their biggest customers, or a smaller ERP company like Lawson known for giving more face time to customers. And, if the customer gives negative feedback, the project will tell Lawson where it needs to improve.

The project will also show which Lawson salespeople are excelling at the service aspect of their jobs, and which ones are dragging the company down. This is a critical factor, especially considering that Lawson traditionally hands out pink slips following the close of the year’s books on June 30. The company cut 5 percent of its 4,000 global workforce, or about 200 employees, as the economy was freefalling last December, and another round of layoffs would not be surprising.

In terms of product announcements, there wasn’t much at CUE. Lawson announced an enterprise search product that allows users to search against structured and unstructured data residing in their Lawson system. The software will be available for S3 customers in May. A beta test for M3 Enterprise Search is in the works, but availability hasn’t been nailed down yet.

Lawson also announced the second version of its Smart Office, a Windows-based GUI that allows S3 and M3 customers to access parts of their ERP systems from the comfort of Microsoft Office applications like Outlook, Excel, Word, PowerPoint, and functions as an alternative to the Web-based Workplace interfaces that they had been using. The first version of Smart Office was very well-received by M3 and S3 customers, and the second version (actually version 9.03) features more intuitive views of data, closer integration with Office, and integration with Google Maps. Smart Office 9.03 users also gain a new “InfoBrowser” widget that displays exceptions and problems on their screen, and also gives them the capability to work with Excel data in off-line mode.

Lawson also unveiled a new Virtual User Event (VUE) that will allow customers access to 25 video and 75 audio demonstrations on how to use Lawson products. Customers that sign up for VUE, which becomes available next month, will also get a discount on registration fees for CUE 2010, which is scheduled for next April in San Antonio, Texas. A new series of Online Learning Suites announced at the conference will allow Lawson customers to get training over the Internet.

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