Collaborative Commerce": ERP, CRM, e-Proc, and SCM Unite!
A Series Study: IFS - Part 2 of 2
R. Garland - October 24, 2001
In the early 90's, ERP came of age. Everyone had to have the functionality ERP packages promised. Since then, as Web and Internet technologies have matured, CRM on the front end, and e-Procurement and Supply Chain Management on the back end, these packages have come into their own.
Now in 2001, the catchphrase is "Collaborative Commerce," where we unite all of the above elements into one coherent system within and between organizations. This is the Big Kahuna, the zero latency, fully transparent, 360 degree exposure that is the stuff systems integrators dream of. Is it here? Are the technologies mature enough? Simple enough?
This, part of a series of articles on Collaborative Commerce (C-Commerce) takes a look at the effort IFS is making in the push.. This is a two part article: Part One focused on details of IFS, the company and its product; this, Part Two, discusses TEC's analysis of IFS' solutions and TEC's recommendations for their use.
IFS Applications 2001: Positives
There are many observations to make about IFS, its approach to enterprise software design, and its breadth of offerings toward the Collaborative Commerce space. Let's start with the positives:
IFS' Componentized Architecture
IFS, by splitting functionality across 60+ independent modules, and by having a five-tiered object-oriented logical model which separates presentation layer from business process from the underlying required business logic, database access, and the database itself; presents a unique and compelling vision of flexibility, both in terms of product adaptability to defined (and changing) business processes, as well as the ability to "cherry pick" modules. Companies can, as they see fit, select modules to co-exist with other, legacy applications and databases, or simply to avoid the "big bang," monolithic approach to enterprise application implementation that has been going out of style. They can slowly add components, which allows for user adaptation to the new tools, and for the companies to begin receiving return on their investment quickly by staging their implementation scope in order of criticality.
The good news, as well, is that, once a user is familiar with the look and feel of one module, they pretty much are comfortable with other modules, as IFS has made a concerted effort to make the modules' appearance and presentation as uniform as possible. Built-in XML support and the external availability of all internal API's mean integration between IFS components and other companies' software is a reasonable endeavor.
IFS' International Presence
The U.S. market now represents 35% of IFS' licensing revenues, making America IFS' largest market. Notable is the recent announcement (Q2 of this year) that GE Engine Services (GEES) has not only placed a multi-million dollar purchase order for IFS' Aviation MRO (Maintenance, Repair, and Overhaul) pre-packaged solution for its own use, but also that IFS and GEES have announced an alliance that makes GEES the exclusive distributor for IFS' integrated aviation MRO software solution to commercial airlines and MRO facilities. GEES will handle sales, marketing, and implementation of IFS' solution.
IFS Engage bolsters the Mid-Market
IFS has a program called IFS Engage, which is an initiative to take their existing portal-based application components and package them into solutions for various mid-market companies. The first packaged solutions offered through Engage include CRM, Collaborative planning, Vendor-managed inventory, and Collaborative project management, with more promised to be delivered throughout the year. This could significantly bolster time to market for time-bound, cash-limited smaller companies.
IFS Applications 2001: Potential Challenges
IFS' "Dark Horse" Image
In the U.S. market at least, IFS is seen as the Dark Horse against its better-known rivals such as Oracle, SAP, J.D. Edwards, Baan, and PeopleSoft, with considerably low brand awareness. They don't enjoy the mindshare that the other companies do, though IFS is trying to correct that. In a conference call with the company, IFS was quick to point out that, in 30 selection contests between themselves and Oracle, IFS won 25 of them, a great win rate. TEC has also observed, that, once companies get IFS in-house and get to touch and feel it - to really understand its user interface and ease of use advantages over many of its rivals - it often wins. Still, if they're not invited to dance, they'll never get on the dance floor with the homecoming queen.
IFS' Financial Position
IFS is also quick to point out that it has increased its licensing revenues by 74% over 1999, the best in the ERP/C-Commerce industry. But the company experienced negative net incomes during Q2, Q3, and Q4 of 2000, and Q1 of 2001. Total net loss in calendar 2000 amounted to approximately $27 million, on top of a net loss in 1999 of approximately $19 million, largely due to significant international expansion and by plowing over 25% of their revenues back into R&D. Happily, the company just announced a profitable Q2 of 2001 (net earnings of US $1.7M), positioning IFS as the fifth largest ERP vendor in terms of licensing revenues. It is to be seen if the company can maintain that trend. For more information on IFS' Financial state, refer to TEC's article IFS Glows Amidst Mid-Market Gloom.
IFS' Functionality Lacking on the Front End
As of now, IFS has only limited eService support for web site customers. It doesn't include cutting edge tools such as Live chat, Collaborative browsing, Call Me Now buttons, Voice over IP (VoIP), Application Sharing, and Desktop Sharing. Though they're planning on adding missing functionality in their next release, IFS Applications 2002, other companies are currently ahead of them in this space.
IFS Two-pronged Storefront Solution Confusing
It's unclear why IFS is maintaining two storefront solutions, one called Web Store and based on technology from Intershop, and the other called Enterprise Storefront, homegrown. Assuming their homegrown solution is the more robust solution, it is unclear why they need Intershop's software. However, company sources indicated to TEC that the only storefront solution in IFS Applications 2002 is the OEM version of Intershop with very tight integration with IFS' other applications.
IFS Business Intelligence Offering Incomplete
Though IFS builds and maintains the Datawarehouse itself and supplies over 300 pre-built reports, they rely on basic ad hoc reporting by bundling Crystal Reports, dashboard capabilities by bundling ProClarity's Analytic Platform, and they don't support OLAP capabilities directly. The IFS Datawarehouse supports so-called "cube" (multi-dimensional data) generation, which can be extracted using IFS Data Transformation Services to populate pre-packaged Microsoft SQLServer OLAP cubes, for OLAP analysis.
Limited Market Scope
In discussions with the company, TEC learned that IFS garners over 50% of its income from the Manufacturing sector worldwide, and 90% of their U.S. income comes from the Manufacturing sector. To position itself more broadly, and help companies see its solution as both bigger than ERP and more broad than Manufacturing alone, it needs to more aggressively market to the service industry and to customers looking for Collaborative Commerce solutions.
Not "All Web, All the Time"
All of the IFS components have a web interface (built directly in Java), though not all of the functions of each component are web-enabled. The philosophy, according to the company, is that some of their advanced GUI, "thick client" interfaces are more usable in client-server, not HTML, form, and are preferred by users. The company insists that the product is fundamentally web-based since it has been written in native Java, but they are listening to their customers and providing thick client alternatives in appropriate places. This seems quite reasonable, maybe even preferable from a usability standpoint over such web-only leaders as PeopleSoft, but the down side is that some client-side updates are still required in the IFS solution.
The Bottom Line
The IFS story is compelling in the Collaborative Commerce space, with considerably-broad functionality, a portal offering that can link customer through to supplier, and their component-based architecture which is open to plugging into other companies' applications. TEC has seen IFS win selections when they go head-to-head against the industry leaders in on-site "bake-offs" of their software.
Still, they need to better organize their components, bolster their eService offerings, clarify their storefront approach, and, in the Business Intelligence realm, at the very least find an application-based OLAP solution. Maybe IFS should look at partnering with MicroStrategy or Business Objects for more complete functionality than Crystal Reports offers. More aggressively, they might consider buying one of these vendors, or another vendor that has an equally robust reporting solution, to complete the picture. They also need to bolster their brand awareness, and let the world know that they are, in fact, a real contender in the Collaborative Commerce space.
Finally, vendor financials have to be a consideration if you're looking at your choices in enterprise-wide systems. IFS still has a couple of more quarters, at least, to show that they have the staying power to last against more well-funded competitors. If they do, then they should be on your short list.
Be sure to get an in-person look at the software, and run their software, as well as other vendors' software, through some of your ideal business process scenarios, to see which vendor can carry the load. You might be surprised at the outcome.
This concludes a two-part article on Collaborative Commerce and IFS. See Part One for details on IFS and its products.