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What is IFS Up To in the CRM Arena?!

Written By: Predrag Jakovljevic
Published On: May 16 2000

What is IFS Up To in the CRM Arena?!
P.J. Jakovljevic - May 16, 2000

Event Summary

On April 12, Industrial & Financial Systems, IFS AB, a Swedish business applications supplier, announced the signing of a definitive agreement for Pivotal Corporation to acquire Exactium Ltd. Exactium, based in Atlanta, GA, is a leading provider of eSelling solutions optimized for Internet and Microsoft standards and was acquired by IFS in 1998. The agreement also launches a global alliance between IFS and Pivotal that will result in Pivotal's industry leading sell-side eBusiness solutions being integrated with IFS eBusiness modules and enterprise applications, which will be marketed by IFS globally.

By integrating Pivotal's eBusiness solution with IFS' eBusiness modules and enterprise application suite, IFS will provide companies with one of the industry's most comprehensive end-to-end e-business solutions. Both Pivotal and IFS are experiencing rapid growth as a result of their leadership roles with their complementary e-business solutions. The combination of Pivotal's award-winning eBusiness relationship management solution suite and Exactium solutions possibly surpasses the current generation of eSelling.

Under the terms of the agreement, Pivotal will pay IFS $34 million for its share of Exactium. This payment retires debt from Exactium to IFS and transfers IFS' 69% ownership in Exactium to Pivotal. Consideration will consist of $9.4 million in cash, with the balance paid in common shares of Pivotal. As part of the transaction, Pivotal and IFS have established a broad alliance agreement whereby IFS will license and sell Pivotal's award winning e-business relationship solutions.

"The acquisition of Exactium establishes Pivotal as the unrivalled leader in Microsoft-based Internet solutions in two mission-critical areas: intelligent eSelling and eBusiness relationship management," said Norm Francis, president and CEO, Pivotal Corporation. "Pivotal and Exactium's complementary Web solutions combine to offer businesses an unprecedented opportunity to exploit the Internet as a channel for selling to, and servicing their customers. Our common standardization on the Microsoft Windows 2000 platform will enable fast, comprehensive integration of our products."

"At the same time," Francis continued, "we are pleased to announce that as part of our agreement with IFS, Pivotal's innovative eRelationship 2000 solution will be integrated with IFS' component-based eBusiness and enterprise applications solutions. The fusion of sell-side eBusiness with the back-office is a critical next step in eBusiness technology that companies around the world are demanding. The seamless integration of Pivotal eRelationship 2000 with IFS' advanced component based enterprise application will provide easy-to-use, cost-effective path to end-to-end eBusiness."

According to Bengt Nilsson, IFS President and CEO, "IFS benefits by enhancing its access to Pivotal's award-winning front office technology while taking advantage of Pivotal's eCommerce expertise in this area to continue rapid development of these products. In addition, this opens up an exciting new migration path for our customers and prospects."

Terje Vangbo, President, IFS North America said, "IFS' agreement with Pivotal provides our existing customers and prospects with a solid commitment to continued technology innovation in the customer relationship management (CRM) arena. As part of our eVolve initiative, IFS will continue to support our customers with current Exactium products as well as the rest of Pivotals eBusiness relationship management solution suite."

Market Impact

IFS is taking an intriguing approach to delivering its CRM capability. It initially expanded into the CRM arena by acquiring Exactium for its product configuration module. The most recent move represents IFS' indirectly conceding that it has gone beyond its means with its ambitious product scope and geographic expansion. The mitigating factor, however, may be the fact that IFS was one of the first ERP vendors to incorporate concepts of component technology and a high-level of integration with both its own and other vendors' components. The company supports most of the IT industry-accepted middleware standards and has efficiently incorporated Exactium within its IFS Applications product suite.

We believe that, after careful soul searching, IFS' management heavy-heartedly decided to stay focused on its core competencies (vertical ERP solutions and integration of recently acquired Effective Management Systems, a manufacturing execution system provider) and global expansion, instead of painstaking efforts to develop full e-commerce and CRM suites and possibly follow Baan's misfortunate example.

By selling Exactium, IFS may not only control potential damage but also kill two birds with one stone by:

  1. obtaining equity for the channel acquisitions needed to continue strong growth and increase its currently developing global market presence

  2. earning Pivotal's commitment to a true partnership and product integration.

The parallel technologies used by both vendors should offer customers and business partners lower cost of ownership, as well as training and knowledge transfer costs. Nevertheless, past experiences have shown that true integration takes time and is very seldom painless.

User Recommendations

We generally recommend including IFS in a long list of an enterprise application selection to mid-market and low end tier 1 companies (with $50M-$1B in revenue) within the following industries: Energy, Engineer-to-Order and Project delivery, Forest Segments, Automotive, Service Management, and Transportation.

IFS should be included on a short list in any selection within the following industries: Aviation, Engineer-to-Order and Project delivery, Service Management, and Transportation, on the condition that a Payroll module is not of primary significance to the customer.

However, potential clients should conduct preliminary research on industry expertise and reference sites of a regional IFS office or an affiliate service provider when IFS is included in the selection process due to its nascent distribution network outside of the European market.

As for the future CRM product offering in question, users are advised to query IFS regarding product functionality scope and a firm general availability date. Also, make sure that IFS offers a single contract and is held accountable for all disparate components in its product offerings.

 
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