IQMS and IFS Going Strong (without Much Help from the Cloud)

These days when all the excitement seems to be coming from “social anything” and “cloud anything” gadgets, it is refreshing to see some tried-and-true enterprise resource planning (ERP) vendors doing very well in their much less exciting manufacturing realms. The two vendors in this instance are IQMS and IFS, and there are many similarities between them (other than the superficial one that their names start with “I” and end with “S”).

Namely, both vendors are focused solely on manufacturing (mostly in discrete manufacturing, but also in mixed-mode discrete and process manufacturing environments), they both leverage Oracle’s database and Microsoft’s client-side technologies, and are currently happy to remain deployed on-premises (perhaps with some managed hosting options). In addition, both vendors tend to offer complete functionality natively and scalable solutions without requiring costly third-party interfaces. 

To be sure, there are many differences between them, such as that publicly traded IFS (OMX STO: IFS) targets much larger clients than IQMS, and is many times larger. These two companies are also headquartered on different continents, IFS in Europe and IQMS in North America. In addition, IFS has much more expertise in asset-extensive and project-based engineer-to-order (ETO) environments, whereas IQMS tends to excel in more repetitive manufacturing environments.

IQMS: 2010 Was the Record Year

Since 1997, privately-held IQMS has been designing and developing EnterpriseIQ [evaluate this product], manufacturing ERP software for the repetitive, process, and discrete manufacturing industries (the company has been around since 1989 and started with its Microsoft DOS-based offering first). Today, IQMS provides real-time manufacturing, production monitoring, quality control, supply chain management (SCM)customer relationship management (CRM), and e-business solutions to the automotive, medical, packaging, consumer goods and other manufacturing markets. With offices across North America, Europe, Asia, and India, IQMS serves about 500 manufacturers around the world.

In early February 2011, IQMS announced its “2010 year in review” expose. With an impressive 30 percent revenue increase over 2009, 42 new named client companies, expanded software development, a steady 98 percent customer retention rate, and a best-ever attended User Group Conference (over 300 attendees), IQMS achieved its best year in the company’s twenty-one year history. For more details on IQMS, see my in-depth 2009 series on the vendor.

IQMS Executive Speaks Out

What follows now is a brief dialogue with Glenn Nowak, VP of Sales at IQMS. I asked about the following details that were not in the aforementioned press release (PR):
PJ: How has IQMS been thriving in a still tough economy?

GN: I think the pricing model of our system (scalable and modular) has a lot to do with keeping our pricing competitive. We are interested in getting each client what they need when they need it, and they understand the following: while they may want everything, realistically they can buy only what they will use now, with the option to add more modules as they grow and implement them then.

Additionally, we strive to foster continued relationships with our clients. We saw many clients start to pull out of the economic slump and reinvest in their company (through increased headcount or additional software functionality).

PJ: What regions, industries, company sizes, etc. have been performing well (and which are still sluggish)? Is it about gaining brand new customers or up-selling new modules to existing customers?

GN: We continue to be strongest in the mid-market range. Consumer goods and automotive sectors, which were slower before, have picked up for many of our clients, which is a good sign for recovery. The medical devices market has continued to be strong for us. Some new clients helped us expand into areas such as manufactured flooring, metal fasteners, and beverage dispensing.

PJ: How many employees and offices do you have now?

GN: We are still pretty lean with about 100 employees across the globe. We are in a hiring mode right now and are hiring almost 20 people to start first of March. We still have our corporate office here in California, and direct offices in Illinois and England, with partners serving other regions (e.g., Asia).

PJ: What are your recent new enhancements/modules since we last spoke? Are there any capabilities that are selling like hot cakes?

GN: We have added the RealTime Process Monitoring module since we last spoke (see the related PR). This capability has been very well received by our clients. Another newer application is the mobile ERP capability that is currently available on the BlackBerry phone. We are working on it now for the Google Droid device and have plans to also work on an Apple iPhone and iPad mobile shop floor application.

Unlike other mobile ERP applications we took more than just contact management and included shop floor machine monitoring, capable to promise (CTP), inventory, and other areas of importance. This is quickly growing to be the most asked about capability in recent months.

PJ: Who are the competitors that you've been facing? Has there been any changes in customers' views towards software as a service (SaaS)/on-demand, or you are still happy to remain implemented on-premises?

GN: We still see Epicor, SYSPRO, Plex Systems, and the other “usual suspect” companies in the mid-market. We are still happy with our on-premises approach because of the stability in our product. Because we offer variations of the on-premise package, we have found out that we still compete (and win) against the SaaS-only models.

PJ: Given that Plex Online is thriving too (see my recent article), would you say that the economy is doing better or you are still taking business away from other vendors?

GN: I think it is a combination of both. The economy is picking up and those who previously put projects on hold are back to evaluate and purchase for real. We have won accounts where we were up not only against an upgrade of their previous legacy system, but also as a complete ERP system replacement.

PJ: What do you mean by "variations of your on-premise product"?

GN: The variations we offer include a purchased server on premises (our standard offering) and our Managed Service offering, whereby the server is on the client site, but is managed and maintained by us. The benefits we see for the SaaS model is that clients don't want to incur the expense to maintain the system or purchase hardware. With our Managed Service offering we adeptly cover both of those issues, and because data is stored locally, possible Internet connectivity and security issues are eliminated.

IFS: Not a Record Year, but Still a Decent One

For its part, IFS was founded in 1983, and continues to develop, supply, and implement IFS Applications [evaluate this product], a component-based extended-ERP suite built on service oriented architecture (SOA) technology. IFS focuses on agile businesses where any or more of the following four core processes are strategic:

  1. Service & enterprise asset management (EAM)

  2. Manufacturing

  3. Supply chain

  4. Projects

The company has 2,000 customers and is present in more than 50 countries with 2,700 employees in total. For more information on IFS, see my 2010 series on the vendor.  

In February 2011, IFS released its 2010 earnings report, which highlighted strong earnings and cash flow. After investments, the cash flow was up 25 percent over the same 2009 period. In our written exchange, the company spokesperson said that IFS was fortunate that market conditions continued to improve in all regions with the resulting earnings before interest and taxes (EBIT) increasing by 14 percent and net revenue increasing by 4 percent, both adjusted for currency.

IFS also had a good number of new customers sign up during the year, which further strengthened the company’s presence in its target markets. In terms of industries, although the Aerospace and Defense (A&D) market is experiencing cut-backs in some geographies, e.g., the austerity measures in the United Kingdom (UK), IFS continues to see strong investment occurring in other regions, such as the Middle East, India, and the Far East.

The vendor believes that it is well placed to benefit from this activity thanks to its strong market solution and established global partnerships. In 2010, IFS signed a number of high-profile new customers in A&D, including the US Army, the US Federal Aviation Administration, Sabreliner Corporation, and an unnamed European defense organization.

The vendor is also continuing to build upon recent success in the specialist markets of Engineering, Procurement, Construction, and Installation (EPCI) as well as Offshore Marine, where it secured more high-profile customers such as Technip Engineering, Semco Marine, and Huber SE.  The energy sector was also strong in all regions, especially renewable energy, including solar and nuclear. Other key wins in 2010 included:

  • Shan Dong Nuclear Power Company (Energy & utilities industry, China)

  • SPG Solar (Alternative energy industry, US)

  • Torresol Energy (Alternative energy industry, Spain)

  • Chengdu Metro System (Rail & transit industry, China)

A Common Thread

What ties all these industries together is their vertically integrated nature, global requirements, and the need for solutions that can support not only manufacturing, but also project execution and delivery. In addition, service and asset management within one product is another area where IFS feels it can offer these companies a competitive advantage.

That said, IFS continues to sell well in its long-standing sectors of process and general industrial manufacturing, with new customers that include William Grant & Sons in the food & beverage industry and Toyo Denki Seizo in the manufacturing of electrical equipment for traffic, industrial and information technology. 

The competition continues to be the usual suspects: SAP, Oracle, Microsoft Dynamics, Epicor, etc.  IFS’ customers are generally in highly regulated industries, with global operations that require tight integrations to specialized third-party applications where necessary.  It is important to them that they control when and where they have access to their data and generally prefer to deploy their applications on-site, rather than in (supposedly less secure) the SaaS public cloud.

IFS is also starting to execute on a software plus (cloud) services strategy. Although IFS' core applications such as ERP and EAM will not be deployed in a multi-tenant SaaS environment, the vendor does however offer and will continue to add cloud-based services that complement its core applications. Recently, IFS' major partner NEC has launched a program to offer components of IFS Applications and its own add-on services in the cloud to specific markets, i.e., Asia Pacific to automotive and high tech companies in the Asia-Pacific region.

Last but not least, IFS has been seeing a few customers in Europe purchase the recently launched Eco-footprint Management module as an add-on, including Akzo Nobel Casco Adhesives and Saab. The environmental capability also helps the vendor in new sales opportunities as a differentiator, but it is much more often that companies like to know that IFS offers Eco-footprint as an integrated module when they are ready to (or when they are required to) add it. As for the future outlook, IFS expects good organic growth in 2011, with stronger license sales and an improvement in EBIT.

Dear readers, what are your views, comments, opinions, etc. about the outlined market trends, and about IFS and IQMS per se? How do you think these vendors will fare against their formidable competitors in light of their espoused strategies and recent concrete moves? If you are EnterpriseIQ or IFS Applications users, I would appreciate hearing about your experiences with the product and the company.
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