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IFS Bucking the Trends - Part 2

Written By: Predrag Jakovljevic
Published On: September 9 2010



Part 1 of this blog series analyzed the current upbeat state of affairs of IFS, a public business software company (listed on the Stockholm Stock Exchange) founded in 1983 with its headquarters in Linkoping, Sweden. The company develops, supplies, and implements IFS Applications™, an integrated and component-based extended enterprise resource planning (ERP) suite built on service oriented architecture (SOA) technology [evaluate this product].

The article analyzed the vendor’s recent strategic moves as well as the reasons for its prosperity in an otherwise depressed environment. The revenue ratio has been an impressive 35 percent coming from existing customers vs. a whopping 65 percent coming from new customers.

However, 2009 was unusual because there was more selling to the installed base and there was the attraction of migrating to IFS Applications 7.5 with the new user interface (UI) called IFS Enterprise Explorer (IEE), so these figures moved more towards a 40/60 ratio in that year.



Innovation Never Stops

IFS has carefully picked its battles when it comes to product development and innovation. While committed to Oracle database, a few Java-based application servers, and Microsoft .NET Framework on the UI side, IFS continues to innovate on the user experience side. IFS has lately noticed the paradigm shift that is being experienced in its target markets between the aging baby-boomer workforce and the emerging Gen Y workforce.

One of the biggest concerns companies are facing today is that as their aging employees leave and retire they are taking processes and know-how with them. This is because the information isn’t in their business systems, but is rather in the notebooks, scratchpads, and the minds of the workers that have been doing those jobs for years, if not decades.

However, this same aging workforce is becoming proficient in the ways of Facebook, Twitter, instant messaging (IM), video, chat, Wikipedia, and other social media because it is how their grandchildren communicate these days. After all, how many kids do you know that use a cell phone to actually call (as opposed to texting) someone? IFS has already added capabilities into its user experience such as the abovementioned IEE (with non-real-time “sticky notes”), EAS, and IFS Virtual Maps (based on Microsoft’s Bing Maps), to enable collaboration in context.

Facebook & Twitter at the Factory (of the Future)?

Recently, I was made privy to the upcoming solutions from IFS Labs, such as IFS Unified Communications. In the context of business contact, communications will be made easier by showing an individual’s availability (presence) info everywhere there is a reference to a person, for example in the “reference” field on a customer order.

Phone calls, video calls, and chat will be initiated from a customizable contact card that shows not just the usual contact details such as e-mail and phone number, but also important business information such as invoice and payment status. Transcripts of chat conversations will be automatically saved for future reference and attached to the order, invoice, etc. The unified communications (UC) capabilities used by IFS will be provided by Microsoft Office Communications Server (OCS).

Another application that is still in development, WikiHelp, will address the “collective knowledge” memory loss problem within many firms today. As said earlier, the information is there, in the heads of the users or in scattered e-mails or documents, but when you need it the most it's difficult to access. WikiHelp will let IFS users take part in making changes to, or add new, documentation on how to accomplish various tasks throughout the application.

With in-line documentation, users will never lose the context of where they came across the question at hand. With a mouse click, the help panel will be turned on, and the possibility to edit or add a new passage to the help text will become available.

For its part, The Board will be, simply put, micro-messaging (with up to 200 characters in a message) between users of IFS Applications. The feature will create an arena or the pulse of the company for users to help each other, ask questions, post news, and more. It will no longer be necessary to shoot someone an mail, or slightly more daring and intrusive, pick up the phone and call someone to ask about how to solve the problem at hand.

UC, the upcoming Board discussions, and WikiHelp documentation (that can be edited like wikis to enable customers to tailor it to their business) will not only reduce training time because of their familiarity to both young and old workers. These features will also facilitate communication between workers, suppliers, and customers to provide answers more quickly, which will enable the knowledge that is stored in the minds of the aging workforce to be captured. That is because these chats, message boards, Wikis, and other media can be saved within IFS applications, so that the knowledge is available to be accessed when needed.

I was thus wondering what the buying behavior has lately been, i.e., what prospective customers value more: the traditional IFS Applications functionality, the latest technical gadgets, or both. IFS says that it depends on who the buyer is. Namely, if the decision-maker is the CFO/CEO, then they tend to be more concerned with the company’s viability, good references, total cost of ownership (TCO), etc. If it is the departmental end-user, then business functionality comes first, whereas if it is the CIO then the ‘whiz bangs’ and technology get the attention.

Ready to Enter the Market Leadership Phase?

IFS’s overall plan is to strengthen its position in the industries and sectors in which is already strong by focusing on sales and marketing, investing in product development, and increasing partner collaboration (as discussed in Part 1). Somewhat newer is IFS’ interest in making more targeted acquisitions, in light of its recently bolstered war chest (including its strong balance sheet and low-interest loan facilities).

IFS professes interest in acquiring profitable companies within its targeted industries and geographies, with well managed customer bases and recurring revenue from maintenance and support fees. These targeted companies should preferably be small and challenged in their ability to develop their product and expand their business internationally.

Perhaps IFS has learned from its unsuccessful customer-conversion acquisitions attempts in the 1990s? Namely, hoping to gain a fast US beachhead by converting customers from the legacy Time-Critical Manufacturing (TCM) product to IFS Applications, IFS bought US-based ERP vendor Effective Management Systems (EMS).

However, customer satisfaction with TCM was (unexpectedly to IFS) high and, therefore, customer loyalty made it difficult to move customers away from TCM at the time. With the majority of TCM customers reluctant to make the transition, and with IFS reluctant to maintain two separate ERP product lines, IFS then agreed to spin off the TCM product line in late 2001, which is the current WorkWise Inc. organization.

Perhaps times are much different now and the technology quantum leap is much more compelling during these days of social networks and smartphone-oriented generations of users? During the era of client-server and early Web 1.0-enablement of the 1990’s, the technology differentiation and business case for switching to a new advanced solution were not that apparent or justifiable.

Still, rather than attempting to annex users of obscure legacy ERP products, IFS might be better off acquiring complementary products on modern technologies. Astea and MCA Solutions come to mind in that regard, although I am by no means implying that these vendors are shopping themselves around.

In any case, these aftermarket service vendors focus on asset-intensive industries, have made a big play in the defense sector, and have been able to sell into SAP and Oracle accounts. They could add value to many of IFS’ existing accounts, and open doors for IFS’ other solutions in their list of blue chip accounts.

Dear readers, what are your views, comments, opinions, etc. about the outlined market trends, and about IFS Applications per se? How do you think IFS will fare against its formidable competitors in light of its espoused strategy and recent concrete moves? If you are IFS Applications users, I would appreciate it if you shared your experiences with the product and the company.
 
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