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The vendor consolidation trend in the enterprise software market continues with another Lawson Software announcing its agreement with Intentia to combine the two firms.
On the surface, the combination of these two players is interesting for at least three reasons:
The announcement confirms rumors that have been circulating for about a month that such a deal was in the works.
Along with the acquisition, there are major personnel changes. Jay Coughlan is out as Lawson's CEO, to be replaced by Harry Debes, a software industry veteran who ran Geac's Asia-Pacific region and the U.S. sales and services organization of J.D. Edwards.
Bertrand Sciard, Intentia's CEO, will become COO of the combined company. Sciard is another Geac veteran prior to taking over at Intentia. Sciard has been looking for an acquisition for Intentia as part of his turnaround strategy. In this case, the deal was to be acquired.
Richard Lawson, Lawson's founder, and Romesh Wadhwani, Intentia's chairman, will serve as co-chairmen of the combined entity.
The new management team will have their work cut out for them. Neither Lawson nor Intentia have been stars lately in terms of financial performance. Lawson has been struggling and has been cutting costs for months. Intentia has been on a losing streak for years. For Lawson, that means the assets of Intentia could be acquired at a good price--about 1.2 times Intentia's revenue.
The new management team will need to score some early wins to demonstrate the synergy of the deal. The primary opportunity will be to quickly develop the necessary integration to push Lawson financial applications into Intentia's installed base and Intentia's manufacturing modules into Lawson's.
But, if Lawson is successful in selling Intentia's apps in the U.S., I would be concerned about Lawson's ability to support them. There are few trained Intentia implementers in the U.S. Intentia has been trying for about 10 years to build a U.S. sales and services organization, but it doesn't have much to show for the effort.
Both Lawson and Intentia have adopted a strategy that is highly focused on specific industries, which they will need to continue in order to compete effectively against SAP and Oracle, who dominate the top tier.