Lawson Software Business Information, Profile, and History

Company Perspectives:

For more than a quarter of a century, Lawson has delivered leading-edge business management solutions that offer unsurpassed performance, reliability and cost-effectiveness. Lawson focuses on Fortune 2000 organizations, delivering 360 degree e-business solutions to service industries such as healthcare, retail, professional services, public sector, financial services and telecommunications.

History of Lawson Software

Throughout its 25-year history, Lawson Software has remained focused on providing businesses with software applications for core functions such as finance, human resources, supply chain management, and procurement. With the advent of e-commerce and the World Wide Web in the 1990s, Lawson moved quickly to add relevant components to its suite of business applications and make its software accessible with a web browser. As the year 2000 drew to a close, Lawson remained ahead of the curve by partnering with application service providers (ASPs) to host its software for use by client companies.

Providing Software for Core Business Functions: 1975-89

Lawson Software was founded in 1975 in Minneapolis, Minnesota, by William Lawson, chairman of the board; Richard Lawson, CEO; and John Cerullo, chief technology officer. The two Lawsons were brothers with an interest in software programming, and Cerullo was a former senior programmer for Control Data and the U.S. Department of Defense. The company initially provided custom mainframe software for Burroughs and IBM installations. Its mission was to provide packaged business applications for its customers, based on the latest technology. Over the years the company broadened its platform support, adding products for the IBM System/38 in 1981, IBM AS/400 in 1988, Unix in 1990, and Microsoft Windows NT in 1998.

Over the years Lawson gained experience in mainframe, mid-range, and open systems computing. The company fully embraced open systems technology in 1985 and effectively made transitions in computer platforms as new technologies emerged: from mainframe and mid-range systems to client/server environments and, in the 1990s, to web-enabled applications.

Remaining Focused on Software for Back-End Applications: 1990-95

At the beginning of the 1990s Lawson began producing software applications for the Unix platform and continued to support IBM's AS/400. Demand was strong, and Lawson enjoyed a 55 percent increase in its Unix-based applications business from 1991 to 1992, while its AS/400 business grew by more than 25 percent. Overall revenue for 1992 increased more than 22 percent to $37.6 million, compared to $30.8 million in 1991. Packaged software accounted for $31.8 million of Lawson's 1992 revenue, virtually all of it from sales to U.S. firms. At the time Lawson's principal competitor was Oracle Corporation.

In 1993 Lawson introduced its Open Enterprise Release, which included multilevel client/servers applications for accounting, human resources (HR) management, distribution management, materials management, and its Universe environmental system. The Open Enterprise Release of the Universe environmental system allowed Lawson applications to be configured in different ways to support a flexible client/server model. Customers could chose from Windows, Motif, or Macintosh graphical user interfaces (GUIs), and the system could be used on character-based terminals as well. The Open Enterprise Release included several modules with an average price per module of $24,000, that supported the AS/400 as well as several Unix platforms.

In 1994 Lawson's revenue rose to $70.2 million from $44.8 million in 1993. Software sales accounted for $58.5 million of Lawson's 1994 revenue. During the year the company increased its workforce from 400 to 580 employees.

In 1995 Lawson began tailoring its Open Enterprise applications for specific vertical markets, the first of which was healthcare. Lawson worked with healthcare companies and healthcare professionals to develop customized financial, HR, and materials management application software specifically for the healthcare industry, including integrated delivery networks, hospitals, long-term care facilities, and health maintenance organizations (HMOs). Tailored applications would help customers reduce implementation costs by as much as 15 percent, according to one analyst.

Lawson also introduced Open Enterprise Desktop to better integrate desktop applications with its client/server suite. Open Enterprise Desktop created a single environment for desktop applications and the Lawson Enterprise line. Priced at $200 per desktop and sold in bundles of five, it was available for Unix servers and for Windows 3.1, Windows NT, and OS/2 clients.

Other new products introduced in 1995 included the Lawson Employee Information Center, a kiosk component developed for the HR module of its Open Enterprise system. The kiosks would allow employees to query the system for personal and company information without having to go through the HR department.

Incorporating New Technologies in Upgraded Applications: 1996-2000

In 1996 Lawson introduced workflow capabilities for its Open Enterprise 6.1 that would allow users to move from application to application without leaving the Lawson desktop. Workflow processes could be defined at any of three levels: the desktop, the workgroup, or the enterprise. The new capabilities gave enterprises the scalability and flexibility they needed to cope with business process changes.

Lawson planned to release Version 7.0 of Open Enterprise in June 1996, which would include Internet capabilities made possible by licensing Java from Sun Microsystems Inc. Prior to that, Lawson came out with its Open Enterprise Webpage Generator, an application that let users of Lawson's Open Enterprise application complete an order using standard web browsers. It allowed companies to develop and access web forms that were created using HTML (hypertext markup language). The company's customers could then use a web browser to view a form and fill out a purchase order. The Open Enterprise Webpage Generator was made available for free to companies using Lawson's Open Enterprise 6.1.

Instead of releasing its new suite as Version 7.0 in mid-1996, Lawson re-branded its Open Enterprise applications suite as the Lawson Insight Business Management System. It was initially released for Unix and AS/400 platforms, with beta testing being conducted for Windows NT in 1996 and 1997. Insight featured four distinct application sets: financials, human resources, procurement, and supply chain management. New enhancements included three-tier workflow capabilities for the desktop, the workgroup, and the enterprise, and Internet/intranet ordering capabilities. In addition, Lawson added an activity-based management component that could be accessed by any of the four applications. Pricing for Insight began at $150,000 and depended on the number of users; general release was set for September 1996.

After announcing a partnership with Netscape Communications in September 1996, Lawson bundled Netscape's Navigator web browser and FastTrack Server with its Insight Business Management System. As a result, Insight users would be able to integrate hypertext and hyperlinks into their business applications. Bundling the browser and server gave Lawson's customers a solution for accessing and managing their business processes over the Internet or a corporate intranet.

Toward the end of 1996 Lawson took the lead over its competitors in Java-enabled applications by releasing six World Wide Web 'Service Centers:' Employee Service Center, Supervisor Service Center, Procurement Service Center, Customer Information Center, Vendor Information Center, and Financial Information Center. The centers worked with Lawson's Insight suite and tied various application functions together with a simplified browser interface. The service centers were built around Java-enabled applications, a technology that IT (information technology) managers needed to justify building out nationwide corporate intranets. Lawson was ahead of competitors SAP AG, PeopleSoft, and Oracle, who expected to introduce their Java-enabled applications in mid-1997. For 1996 Lawson's revenue surpassed $100 million, and the company had 960 employees.

In 1997 Lawson continued developing browser client enhancements to its Insight Business Management System. CEO William Lawson told InfoWorld, 'We will integrate with the browser in a much more profound way. And by making our software web-deployable, we've made something unusual.' The company felt that the new architecture, which provided Insight users with direct access to applications through a front-end web browser, required a new name and called it Self-Evident Applications (SEA). Key elements of the new architecture included personalized web pages and an HTML-based interface that enabled system administrators to deploy Java applets. All of Lawson's future software would be based on this new model. For 1997 Lawson reported revenue of $166 million.

For 1998 Lawson continued to focus on two vertical markets, healthcare and retail. It targeted mid-size companies and did not plan to follow competitors such as PeopleSoft into the larger arena of enterprise resource planning (ERP) software. By mid-year, though, Lawson began bundling its suite of business applications for finance, human resources, and distribution with an Oracle database and Hewlett-Packard Co. NetServers, thus making it a mid-size competitor in the ERP marketplace.

Lawson also sought to make its software more accessible to non-technical business executives. It introduced Lawson Insight PI (Performance Indicator), an add-on to its Insight system that let users retrieve information from the system without having to build a data warehouse. Insight PI extracted relevant data, based on pre-selected performance indicators, from an intelligent data warehouse containing information from Lawson's software. Each version of Insight PI was designed for a specific corporate user, such as a CEO, CFO, or COO.

Lawson rolled out Windows NT versions of its Insight business applications in April 1998 at its annual user conference. In this respect Lawson lagged behind some of its competitors, showing a reluctance to move to NT. Lawson also unveiled its Strategic Ledger, which let companies capture and analyze data at more levels, and announced consulting partnerships with Ernst & Young and Arthur Andersen.

In mid-1998 Lawson began marketing SuiteExpress to companies with less than 2,000 employees and revenue between $25 million and $400 million. SuiteExpress for Human Resources bundled a new version of the company's Insight Human Resources Process software suite with Oracle's Oracle8 database running under Windows NT on Hewlett-Packard NetServers. With this bundled product Lawson was competing with larger vendors such as SAP AG and PeopleSoft Inc. for middle market companies. Lawson planned to introduce similar bundled systems for its other applications in finance, procurement, and supply chain management.

ERP support for remote or handheld devices was a new trend in 1998. Lawson added support for PalmPilot and Windows CE devices to its Insight Performance Indicator modules, thus allowing remote users to capture company data or receive alerts under certain conditions.

Lawson began targeting new vertical markets in 1998, introducing software targeted to the public sector market. The insurance and professional services industries were two additional markets for which the company began tuning its software. Lawson also expanded internationally, opening sales offices in Amsterdam and Munich in 1998. The company had a presence in 14 countries and planned to open an office in Australia in 1999. Its Insight business suite added support for the euro currency in 1998, and Lawson introduced Insight Human Resources software for companies in the United Kingdom, France, Germany, and the Netherlands for delivery by January 1999. Approximately 90 percent of Lawson's business came from U.S. firms, mainly in retail and healthcare.

In October 1998 Lawson introduced its SEA Designer Suite for use with its Insight business system. The Designer Suite included three modules--Form Designer, Report Designer, and Chart Designer--that let non-technical users easily customize forms, charts, and reports. Later in the year Lawson delivered several new components for its Insight PI data warehouse and analysis suite. The company had gained more than 80 customers for PI since it was introduced earlier in the year. Lawson claimed that the role-based PI system could anticipate 80 percent or more of the questions for a particular job description.

In 1999 Lawson released several new products, including Lawson Insight Franchise Management, a web-deployable software package that managed retail franchisee contracting and billing. The package could be integrated with Lawson's financials and supply chain management software applications. Another new product called Open Components Solution was a set of object-oriented development tools that would make it easier to customize Lawson's applications. The tools would allow 'all things Lawson to be accessed by all things Windows,' according to a company spokesperson. Lawson also made its complete line of applications accessible via Lotus Notes through an integration of its Insight suite with Lotus Domino.

Lawson's most significant new product, though, was Insight II, the next generation of its business management applications suite. Lawson's Insight 2 Business Management System included a new feature, Strategic Ledger, which further simplified data analysis for non-technical users. Strategic Ledger allowed for real-time financial analysis, reporting, and strategic planning and let users pull and analyze data from outside systems in real time. All of the Insight II modules were based on a new object-oriented component architecture dubbed 'Bobjects,' or Business Objects, and all were accessible through a standard web browser.

Toward the end of 1999 Lawson introduced Insight II Workforce Analytics and Insight II Customer Relationship Management (CRM) modules. Workforce Analytics could store and extract data from Lawson's accounting and HR applications to provide an analysis of a company's compensation, turnover, and staffing. Lawson's CRM component marked the company's entry into the CRM market and was scheduled for release in 2000. The CRM applications would be available for general business use and for Lawson's target vertical markets: healthcare, retail, and professional services. Other Insight II components added in 1999 included Candidate Self-Service and Recruiter Self-Service, which Lawson acquired and integrated into its Insight II HR software suite.

In the second half of 1999 Lawson offered a bundled payroll solution called Fast HR/Payroll Solution. It included IBM's Project Office project-management tool to track the software implementation and report on its progress and was available for Windows NT and Unix systems running an Oracle or Informix Corp. relational database. The package was offered as a stand-alone application for internal use or as a hosted service through application service providers (ASPs) USinternetworking Inc. and Shared Medical Systems Corp. The Fast HR/Payroll Solution was priced from $450,000 to $600,000, depending on the number of users and the level of service required. Around the same time Lawson also offered a bundled solution that included financials and HR software for small to mid-size retail chains in cooperation with IBM and Microsoft Corporation.

Other developments in 1999 included the launch of a web portal called Insight II SEAport, which extended Lawson's web-based self-service applications. The SEAport suite was based on Lawson's Self-Evident Applications (SEAs). It let users create a customized 'Webtop' that integrated various sources of information, including Lawson applications, messaging, and Internet content. In launching its own web portal, Lawson was following the lead of its competitors. Web portals enabled companies to feed information to their employees based on their role or function.

In 1999 Lawson announced plans to go public the following year, but it remained a private company throughout 2000. Jay Coughlan, named president and COO of Lawson in early 2000, confirmed for Minneapolis-St. Paul City Business that the company wanted to go public for a variety of reasons, including the fact that it mostly competed with public companies and that it wanted to use stock options to attract and retain employees. For fiscal 1999 Lawson had revenue of $270 million and 1,700 employees worldwide. During the year the company moved from Minneapolis to new headquarters in St. Paul.

Lawson was attracted to the CRM market and had software in beta testing early in 2000. However, the company finally decided to package CRM software developed by Siebel Systems Inc., one of the top CRM vendors, rather than develop its own software. The market for CRM software, which tracked customer contacts and included sales force automation, was projected to grow from $2 billion in 2000 to more than $10 billion by 2003, a much faster growth rate than was projected for the overall ERP market.

A major initiative for 2000 was the LawsonTone program. Instead of purchasing Lawson software for internal use, companies could join the LawsonTone program and access the software through a participating ASP. By the end of July Lawson had signed up 22 ASP partners to host its software, and in October another 20 joined for a total of 42 partners. Each ASP partner was expected to add value through its industry-specific expertise.

Lawson also began shipping components of its Collaborative Commerce Suite, which included e-commerce applications, in the first half of 2000. The suite included six e-commerce solutions: Trade Communication Services, which managed customer payments and contacts; Payment Server Integrator, which accepted payments and routed them directly to back-office applications; Site Builder, a set of development and integration tools for building web sites; Auction System, which allowed customers to host online auctions; E-Resource Management, which consolidated directory-type information for sharing throughout the enterprise; and Mail Server, a system-to-user communication system that included automatic e-mail notifications based on workflow processes.

For fiscal 2000 ending May 31, Lawson reported revenue of $306 million, an increase of 15.7 percent over 1999. International revenue increased 41.5 percent, and three of the company's new vertical markets&mdash′ofessional services, financial services, and telecommunications--experienced triple-digit growth. Revenue from the retail market grew by 33.3 percent.

In November 2000 Lawson announced an upgrade to its Insight system, called the Lawson.insight 8 Series. It was scheduled for delivery in January 2001 and included software suites for financial, human resources, supply chain management, analytic, enterprise relationship management, and e-commerce applications.

For the future Lawson appeared committed to making its software applications available to companies through the hosted services of ASPs and BSPs (business service providers). While it planned to continue to support its traditional client/server customers, the company said it would phase out Windows applications that required it to go in and install software at a customer's site. A new initiative announced in December 2000, called Lawson@Business Server Provider, was indicative of the direction Lawson was heading. The initiative was aimed at ASPs and BSPs and would enable them to get to market faster, secure more market share, and create competitive barriers to entry. The first delivered component of Lawson@Business Server Provider was Multi-tenancy, a unique technology solution that allowed ASPs and BSPs to securely host multiple customers on a single set of Lawson applications. Meanwhile, the company continued to sign more ASPs and BSPs to its LawsonTone program.

Principal Competitors: SAP AG; Oracle Corporation; PeopleSoft Inc.; System Software Associates Inc.; Siebel Systems, Inc.; J.D. Edwards & Co.; Great Plains Software Inc.; Baan Co.

Chronology

• Key Dates:

• 1975: Lawson Software is founded in Minneapolis, Minnesota, by William Lawson, Richard Lawson, and John Cerullo.
• 1990: Lawson adds software products for the Unix platform.
• 1993: Lawson introduces its Open Enterprise Release for client/server systems.
• 1995: Lawson begins targeting vertical markets, the first of which is healthcare.
• 1996: Lawson re-brands and significantly upgrades Open Enterprise as the Lawson Insight Business Management System.
• 1997: Lawson develops new software architecture called Self-Evident Applications.
• 1998: Lawson adds software products for Windows NT.
• 1999: Lawson releases Insight 2 Business Management System.