Robert Kugel's Analyst Perspectives

I recently attended Infor’s Velocity Summit, designed to showcase the latest versions of its CloudSuite ERP software. Also center stage were Infor’s advances in artificial intelligence and process mining as well as its environmental, social and governance application and supply chain optimization enhancements. The company provides industry-specific enterprise software that enhances business performance and operational efficiency. Verticals and related subverticals include manufacturing, food and beverage, hospitality, healthcare, distribution and retail. Infor offers applications for enterprise resource planning, supply chain management, customer relationship management and human capital management, among others. Infor’s strategy is to tailor software with a high percentage of specific capabilities and functionality for customers in its target industries, delivering a faster time to value. Infor introduced its original AI and machine learning capabilities in 2017 in the form of Coleman, which uses its Infor AI/ML platform built on Amazon’s SageMaker to create predictive and prescriptive analytics. It also offered a chatbot that utilized Amazon Lex. The latest additions offer aspects of GenAI capabilities built on Amazon’s Bedrock. Infor’s Embedded Experiences allows users to create first drafts of text for specific business purposes and summarize insights as well as quickly analyze and interact with data. The Infor GenAI Assistant automates tasks and gets immediate answers to questions in context. And its GenAI knowledge hub uses retrieval-augmented generation to provide immediate access to knowledge, potentially from multiple data sources. RAG enhances the accuracy of generated responses by retrieving relevant information from external sources before generating an answer. This ensures responses are contextually appropriate and factually accurate. Importantly, RAG provides users with source attribution, enabling them to verify that the system isn’t hallucinating. Artificial intelligence-enabled business applications have advanced considerably over the past year as software providers have added a steady stream of capabilities. This includes customer facing, financial, supply chain and workforce software. ISG Research asserts that by 2027, almost all providers of business applications will use some form of generative AI to enhance capabilities and functionality to remain competitive. The productivity gains from AI are more likely to be achieved initially through a steady stream of small hacks and initiatives that eliminate less productive and unproductive work rather than big bangs. One reason is that the infusion of AI into cloud business applications will be incremental, with the level of sophistication constrained by a gradual leveling up of data availability and proven trustworthiness. Use cases are proliferating, including tasks or managing details that outwardly seem trivial but result in a substantial gain in productivity and improved performance. One new and interesting topic covered at the event was process mining, which Infor is introducing in its various cloud suites. Process mining analyzes event data from the logs of software applications to understand how processes are designed to perform and how they actually perform. Typically, the technology will show there are many variations in how a process unfolds and the context in which those permutations occur. The results can be used to uncover the source of bottlenecks, delays, unseen risks and unnecessary workloads that, in turn, allows organizations to institute improvements. For more relevant research on this topic, please read this Perspective by my colleague David Menninger. Process mining offers significant potential for performance improvement by enabling organizations to: Have a clear picture of how processes are performed, especially in identifying variations in workflows and their prevalence. Identify opportunities to standardize processes and eliminate inefficiencies and bottlenecks in workflows, especially where there are variations. Optimize workflows by redesigning processes based on data-driven insights. Establish and support continuous improvement initiatives. Infor’s goal is to overcome the practical barriers that keep enterprises from adopting process mining by eliminating obstacles caused by siloed process data, inconsistent data formats and incomplete records. It can do so because its cloud suites are built to offer high-quality, consistent and comprehensive event logs. Having a vertical industry focus in its cloud suites adds context for process analytics. In contrast, process mining using third-party tools typically requires complex and resource-intensive integrations. The trade-off is capability and flexibility versus cost and time to value since third-party tools deal with end-to-end processes that span multiple applications in ways the Infor’s currently cannot. Process mining offers significant potential for performance improvement by enabling enterprises to gain a clear picture of how processes are performed, especially in identifying variations in workflows and their prevalence. It enables managers to identify inefficiencies and bottlenecks in workflows, especially where there are variations in how processes are performed. Process mining also allows organizations to improve how work is done, redesigning processes based on data-driven insights. Reflecting its customers’ needs to comply with environmental regulations and support corporate sustainability goals, Infor has introduced new software to manage compliance with ESG factors. The software streamlines collecting data for planning and reporting and facilitates assigning responsibility within an enterprise to achieve ESG-related objectives. Enterprises gain the ability to monitor and assess targeted resource consumption, waste and byproducts. It helps organizations manage supply chains in ways that support ESG objectives. To reduce compliance burdens, it facilitates auditable reporting and provides executives and managers with the means to monitor performance to ESG commitments. The main shortcoming I found in the software is that it does not take costs into account in its optimizing routines, but I expect that will be added shortly. Vertical-specific ERP systems are designed with capabilities and features that address the specific needs and regulatory requirements of particular sectors. Having software that aligns closely with an industry's business processes and standards out of the box reduces implementation costs compared to a general-purpose application. It promotes productivity by having industry-specific configurations, workflows and tools already built in. This is especially true for the supply chain management elements of ERP. Infor announced a Distribution Management functionality for inventory and distribution control, designed to eliminate the need for services businesses to have a separate warehouse management system, especially midsize healthcare providers. For distribution, food and beverage, fashion, process and discrete manufacturing business, Infor now offers comprehensive demand forecasting and supply planning as well as AI-enabled warehouse management. Infor’s AI-related product enhancements are especially important because enterprises are already making significant investments in AI. ISG Research finds that, on average, organizations spent 2% of IT budgets on AI in 2023. The average expected spend for 2024 is 3.7% and 5.9% in 2025. Typically, finance and accounting departments have proven to be technology laggards in adopting new methods. An innate conservatism, aversion to risk and the need to ensure complete accuracy are the human factors at work in this delay. However, the productivity and staff morale benefits of AI-enabled applications are compelling. I strongly recommend that finance executives adopt a fast-follower approach to evolving technology. A fast-follower approach is now a necessity because software designed for finance and accounting departments is advancing rapidly, and incremental adoption as AI capabilities become available is a more productive, less disruptive and less risky approach than playing catch-up. AI-enabled applications will reduce a significant part of the department’s workload currently spent on repetitive tasks and mechanical processes, allowing staff to focus on the more valuable work that requires expertise, experience and judgment. I also recommend that enterprises considering a replacement ERP system or moving to the cloud include Infor on the list of providers to consider, especially those in the company’s focused verticals. Regards, Robert Kugel

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