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>> Announcer: Live, from the Javits Center in New York City,
it's theCube,
covering Inforum 2017.
Brought to you by Infor.
>> Welcome to day two of theCube's live coverage
of Inforum 2017 here in New York City
at the Javits Center.
I'm your host, Rebecca Knight, along with my co-hosts,
Dave Vellante, and Jim Kobielus,
who is the lead analyst at Wikibon for AI.
So we're here in day two, fellas.
We just heard the keynote.
Any thoughts on what your expectations are for today,
Jim, and what you're hoping to uncover,
or at least get more insight on
what we learned already in day one?
>> I'd like to have Infor unpack a bit more
of the Coleman announcement.
I wrote a blog last night that I urge our listeners
to check out on wikibon.com.
There's a number of unanswered issues in terms
of their strategy going forward
to incorporate Coleman AI and their technology.
You know, I suspect that Infor, like most companies,
is working out that strategy as they go along,
piece by piece, they've got a good framework then.
We have Duncan Angove on right after this segment.
Dave and I and you, we'll grill Duncan on that
and much more, but that in particular.
You know, I mean, AI is great.
AI is everybody's secret sauce, now.
There's a lot of substance behind what they're doing
at Infor that sets them apart from their competitors
in the ERP space.
I want to go deeper there.
>> So, yeah, so I'm looking at the blog right now.
But what are the particular questions that you have
regarding Coleman, in terms of how it's going to work?
>> Yeah, well, first of all, I want to know,
do they intend to incorporate Coleman AI
in their premises-based software offerings?
You know, for, I'm sure the vast majority
of their customers want to know when, if ever,
they're going to get access to Coleman, number one.
Number two is, when are they going to complete the process
of incorporating Coleman in their CloudSuite portfolio,
which is vast and detailed?
And then, really number three,
are they going to do all the R&D themselves?
I mean, they've got AWS as a major partner.
AWS has significant intellectual property in AI.
Will they call on others to work with them
on co-developing these capabilities?
You know, those are, like, the high-level things
that I want to get out of today.
>> Rebecca: Okay, okay.
>> Well, so a couple things.
So, I mean, the keynote today was okay.
It wasn't, like, mind-blowing.
We had customer appreciation, which was great.
Alexis, who is from Foot Locker, cube alum was up there,
and B of A got customer of the year.
I met those guys last night
at one of the customer appreciation dinners,
so that was kind of cool.
They all got plaques, or you know, that's nice,
little trophies.
I heard a lot about design thinking,
and they shared some screen shots, essentially,
of this new UI,
started talking about AI is the new UI.
It was very reminiscent of the conversation
that we had in May at the ServiceNow Knowledge conference,
where they're bringing consumer-like experience
to the enterprise.
It's always been something that ServiceNow has focused on,
and certainly, Charles Phillips and Hook and Loop
have been focused on that.
The difference is, quite frankly, that ServiceNow showed
an actual demo, got a lot of claps as a result.
Infor said this is ready to be tested and downloaded,
but they didn't show any demo.
So that was sort of like, hmm.
>> Jim: They haven't shown any demos.
>> Rebecca: Yeah.
>> Is it really baked out?
Steve Lucas was up there.
He killed it, very high energy guy.
You know, again, another cube alum.
He's been in our studio, and he's an awesome dude.
>> Jim: He's awesome.
>> And I thought he did a really good job.
>> From Marketo.
>> Talking about, you know, the whole engagement economy,
you know, we think it's going a little bit beyond engagement
to more action, and systems of an action,
I think, is a term you guys use.
>> Systems of agency or enablement, yeah.
Bringing more of the IoT into it
and robotics and so forth, yeah.
>> And then DSW was up there.
I said yesterday, "I love DSW."
I tweeted out that, you know,
the CIO had a picture, Ashlee had a picture of DSW,
and I said, "Okay, when the girls and I go to DSW,
"I break left, they go middle-right,
"we meet at the checkout to negotiate
"what actually goes home,"
so that was good.
It was kind of fun.
And then a lot of talk about digital transformation.
Marc Scibelli was talking about that,
and IoT and AI and data.
So that's sort of, you know, kind of a summary there.
As you know, Rebecca, I've been kind of trying
to make the math work
on the $2-plus billion investment from Koch.
>> Rebecca: Yes, this is your--
>> And the messaging that Infor is putting forth is
this is a source of new capital for us,
but I'm--
>> Rebecca: You're skeptical.
>> You know, as a private company, they have the right
not to divulge everything,
and they're not on a 90-day shot clock.
Charles Phillips, I think, said yesterday,
"We're on a 10-year shot clock."
I said, "Okay."
I think what happened is, so I found,
I scanned 10-Qs, and I've been doing so
for the last couple of days.
There is virtually no information about how much, exactly,
of the cash went in and what they're doing with it.
And so, I suspect, but there are references
to Golden Gate Capital and some of the management team
taking some money off the table.
Cool, that's good.
I'm just, it's unclear to me
that there's any debt being retired.
I think there is none.
And it's unclear to me how much cash there is
for the business, so the only reference I was able to find,
believe it or not, was on Wikipedia,
and it says, "Citation still needed," okay?
And the number here, and the math works, is $2.68 billion
for 66.6% of the company,
and a valuation of $10 billion,
which Charles Phillips told us off-camera yesterday,
it was $10.5 billion.
So you can actually make the math work if you take
that $10 billion and subtract off the $6 billion in debt.
Then the numbers work, and they get five
out of 11 board seats, so they've got about 45% or 49%,
I think, is the actual number,
you know, voting control of the company.
So here's the question.
What's next?
And now, a couple billion for Koch is nothing.
It's like the money in my pocket, I mean, it's really--
>> Rebecca: Right, right, right, the empty,
yeah, exactly.
>> And I suspect what happened is,
'cause it always says "$2 billion plus."
So in squinting through this, my guess is,
this is a pure guess, we'll try to confirm this,
is that what happened is,
Koch provided the additional funding to buy Birst recently.
That upped their share to 66%, and maybe that's how Koch
is going to operate going forward.
When they see opportunities to help invest,
they're going to do that.
Now, one might say, "Well, that's going to further dilute
"the existing Infor shareholders," but who cares,
as long as the valuation goes up?
And that's the new model of private equity.
The old model of private equity is suck as much cash
out of the company as possible and leave the carcass
for somebody else to deal with.
The new model of private equity is to invest selectively,
use, essentially, what is a zero-interest loan,
that $6 billion debt is like free money for Infor,
pay down that debt over time
with the cashflow of the company,
and then raise the valuation of the company,
and then at some point,
have some kind of public market exit,
and everybody's happy and makes a ton of dough.
So, I think that's the new private equity play,
and I think it's quite brilliant, actually,
but there's not a lot of information.
So a lot of this, have to be careful,
is speculation on my part.
>> Right, right.
>> Well, the thing is, will the Coleman plan, initiative
raise the valuation of the company in the long term
if it's, you know, an attrition war in ERP,
and they've got SAP, Oracle, Microsoft,
all of whom have deep pockets, deeper than Infor,
investing heavily in this stuff?
Will Coleman be a net-net, just table stays?
>> Well, so I think again, there's a couple ways
in the tech business, as you guys know, to make money,
and one is to invest in R&D and translate that R&D
into commercial products.
Some companies are really good at that,
some companies aren't so good at that.
The other way to make money is to do acquisitions
and tuck-ins, and many, many companies
have built value doing that,
certainly Oracle, certainly IBM has,
EMC back in the day, with its VMware acquisition,
hit probably the biggest home run ever,
and Infor has done a very good job of M&A,
and I think, clearly, has raised the value of the company.
And the other way is to resell technologies
and generate cash and keep your costs low.
I think a software company like Infor has the opportunity
to innovate, to do tuck-in acquisitions,
and to drive software marginal economics,
so I think, on paper, that's all good,
if, to answer your question, they can differentiate.
And their differentiation is
the way in which they're embedding AI
into their deep, vertical, last-mile approach,
and that is unique in the software business.
Now, the other big question you have is beautiful UIs,
and it sounds really great and looks really great,
well, when you talk to the customers, they say,
"Yeah, it's a little tough to implement sometimes,"
so it's still ERP, and ERP is complicated, alright?
So, you know, it's not like Infor is shielded
from some of the complexities of Oracle and SAP.
It might look prettier, they might be moving a little faster
in certain areas, they might,
they clearly have some differentiation.
At the end of the day,
it's still complicated enterprise software.
>> Right, exactly, and we heard that over and over again
from the people, from Infor themselves,
and also from customers, is that it isn't seamless.
It's complicated, it involves a lot
of change management initiatives,
people have to be on board, and that's not always easy.
>> Well, and that's why I'm encouraged,
that to see some of the larger SIs, you know,
you see Grant Thornton, Capgemini,
I think Accenture's here, Deloitte--
>> Rebecca: We're having Capgemini later on the program.
>> Deloitte's coming on as well.
And so, those guys, even though I always joke
they love to eat at the trough and do big, complex things,
but,
this is
maybe not as lucrative
as some of the other businesses,
but it's clearly a company with momentum,
and some tailwind that, in the context
of digital transformations and AI,
the big SIs and some of the smaller SIs, you know,
like Avaap, that we had on yesterday, can do pretty well
and actually help companies and customers add value.
>> And with a fellow like Charles Phillips at the helm,
I mean, he is just an impressive person
who, as you have pointed out multiple times,
is a real visionary when it comes to this stuff.
>> Yeah, except when he's shooting hoops.
He's not impressive on the hoop court, no.
>> No? Oh!
(laughing)
>> I tweeted out last night, "He's got Obama's physique,
"but not his hoop game."
>> Oh! (laughing)
>> So don't hate me for saying that, Charles.
But yes, I think he's, first of all,
he's a software industry guru.
I think he, you know, single-handedly changed,
I shouldn't say that, single-handedly,
but he catalyzed the major change in the software business
when Oracle went on its acquisition spree,
and he architected that whole thing.
It was interesting to hear his comments yesterday
about what he sees.
He said, "You'll see a lot more tech industry
"CEOs running non-tech-industry companies
"because they're all becoming SAS companies."
>> If they have been so invested
in understanding the vertical, they really get it.
You can see someone who worked on a retail vertical here
going in and being the CEO of Target
or Walmart or something.
>> Yes, I thought that was a pretty interesting comment
from somebody who's got some chops in that business,
and again, very impressive,
I mean, the acquisitions that this company has done
and continues to do.
You and I both like the Birst acquisition.
It's modern-day BI,
it's not sort of just viz,
and I don't mean to deposition Clik
and Tableau,
they've done a great job, you know,
but it's not,
it doesn't solve all your enterprise-grade, BI
sort of problems.
And, you know, you talk to the Cognos customer base,
as great of an acquisition as that was for IBM,
that is a big, chewy, heavy lift that IBM is trying
to inject Watson and Watson Analytics.
I mean, you know, you used to work at IBM, Jim.
And they're doing a pretty good job of that,
improving the UI, but it's still big, chunky, Cognos BI.
Build cubes, wait for results.
>> Yeah.
So in many ways, the Birst acquisition for Infor
and their portfolio is a bit like the thematics
that IBM's been putting out on HTAP, you know,
injecting analytics into transactional processing
to make them more agile, and so forth.
What I like about the Birst acquisition, vis-a-vis Coleman
and where Infor is going, is that the Birst acquisition
gives them a really good team,
the people who really know analytics and how to drive it
into transactional environments such as this.
They've got, I mean, ostensibly, a deep fund of capital
to fund the Coleman development going forward.
Plus, they've got a really strong plan.
I think there's potential strong differentiators for Infor,
far more comprehensive in their plan to incorporate AI
across their portfolio than SAP or Oracle or Microsoft
have put out there in public,
so I think they're in a good position
for growth and innovation.
>> Well, we have a lot of great guests coming up today.
As you said, Duncan Angove is going to be on, up next.
So, I'm Rebecca Knight,
for Dave Vellante and Jim Kobielus,
we will have more from Inforum just after this.
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