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IFS’ Large Wins Streak Continues
IFS’ Large Wins Streak Continues
December 17 2012
In late November 2012,
announced that a major North American offshore oil & gas drilling company had signed a contract to implement
as its enterprise asset management (EAM) software system.
The unnamed offshore drilling company will implement the
IFS Applications for Offshore Service
edition to support maintenance operations.
The deployed solution will include projects, maintenance, and IFS Instant Replication, a special solution for rapid replication of data between offshore rigs or vessels and onshore facilities.
The unnamed customer operates jack-up rigs located worldwide, including the Middle East, the North Sea, Trinidad, Southeast Asia, and the Gulf of Mexico. The application suite will be delivered through cloud deployment, leveraging a virtual environment of one of IFS North America’s infrastructure partners and including managed services—the so-called application-as-a-service (AaaS) cloud service, but I believe the company purchased the software licenses upfront.
Under Swedish Stock market regulations, IFS must put out a press release (PR) on any material activity within 24 hours, which includes new sales with a value over $1 million (USD). It would be impossible to get a sizeable company like this latest customer to sign off on releasing its name in a PR within 24 hours, so IFS had to leave it out, similar to
the previous PR on the hefty win at an Asian utility company
The offshore contract drilling company was reportedly looking to replace its existing EAM solution from an unnamed prominent vendor. The shortlist included the “who is who in EAM and maritime management software.” IFS won for the usual reasons—industry focus and industry-specific functionality, particularly the instant replication, which is of huge importance in offshore drilling. Mobility and ease of use were important factors to the customer as well.
The upstream oil & gas industry is one of IFS’s core markets. Based on a single product line, IFS Applications delivers flexible, component-based business solutions that manage the entire life cycle of contracts, projects, assets, and services. The suite includes functionality for contract and project management, risk management, budgeting and forecasting, engineering, material management, fabrication, document management, service and asset management—all integrated with financials and human resources (HR). Renowned oil & gas customers include
Agility Group, Babcock Engineering Services, Microseismic, Maersk, Heerema Fabrication Group, Seadrill, Yantai Raffles, Archer, Apply Sørco, APL, Hertel, Bergen Group Rosenberg, Technip, BWO, Semco Maritime, Reinertsen, STX Europe, PGS, Wellstream,
A Whopping Named Contract
But before anyone becomes overly suspicious of IFS’ unnamed customers news, in late October 2012, IFS announced that
Maersk Supply Service
, global leaders in the oil & gas and offshore marine services industries, had chosen IFS Applications as their global enterprise resource planning (ERP) solution—to streamline business processes and optimize efficiency.
The hefty contract included licenses and services worth $11.5 million (USD)
Maersk Drilling and Maersk Supply Service are two brand new customers for IFS. IFS also has a third company as an existing customer that belongs to the Maersk corporation,
, but this a completely independent company. The final three ERP contestants were IFS,
. I also believe that
ERP were bidding initially, but they did not make it to the shortlist of three. Maersk Drilling was using SAP for maintenance, which will now be replaced with the IFS product.
article in Danish discusses why the chief information officer (CIO) of Maersk chose IFS
. The article is basically saying Maersk didn’t drop SAP, per se, but that the company chose IFS rather because it proved to be the best vendor in supporting Maersk’s growth strategy.
The IFS solution purchased by Maersk included components for financials, project management, supply chain management (SCM), and maintenance. Parts of the delivery will be subcontracted to a system integrator (SI) partner of IFS. Currently,
are bidding for the contract. The winner will be announced shortly, after which time the implementation is expected to commence immediately.
Blessing and Curse of Large Deals
While these mega deals (like the one with Maersk) must feel good, the trouble is that they skew the financial results down the track—i.e., if IFS doesn't get as large deals next year as it did this year, then the financial markets might come strongly down on the vendor due to disappointing results (in comparison to the last year). Thus, a recurring cloud subscription revenue is much more stable, once a company commits to the sales and reporting terms.
IFS says that it is still not seeing major adoption of ERP and EAM as a subscription service, particularly in the more complex and regulated industries that it targets. The vendor does however anticipate field service cloud demand to increase, particularly in the industries it targets with the
mobile solution and
IFS—Becoming a Serious Field Service Management Contender
. October 29, 2012.
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