Will 2013 Be IBS’ Comeback Year? Part 1

Several years ago enterprise applications market observers might have talked about Sweden’s “Three I” enterprise resource planning (ERP) vendors: Intentia, IFS, and IBS. While hardly anyone has ever questioned those publicly traded vendors’ industry savvy and product functionality, all three of them have struggled with stagnant growth and red ink for the major part of the late 1990s and early 2000s. The first one is no longer an independent company and is now part of Infor, after first merging with Lawson Software in 2005. IFS seems to be doing very well of late as still an independent publicly traded company, after undergoing its own thorough soul searching and regrouping a few years back. After refocusing on only asset-intensive and project-centric industries as well as via a few non-taxing acquisitions in the field service management (FSM) space, IFS has lately had an array of impressive customer wins.

Enter IBS AB

The third vendor, IBS (International Business Solutions), has also had its fair share of challenges and changes over the past several years. Since the mid-2000s the vendor has had a few chief executive officer (CEO) changes, but it seems to be on a recovery path under Symphony Technology Group (which acquired IBS and took it private in mid-2011) and a new CEO, Douglas Braun, formerly second in charge at RedPrairie Corporation.

IBS is a global provider of what it calls distribution resource management solutions—including distribution-oriented ERP, supply chain management (SCM), business intelligence (BI), and digital content solutions for the wholesale distribution and manufacturer/distributor markets. For more than 30 years (founded in 1978), IBS has helped its customers (about 3,000 installations worldwide) streamline, automate, and accelerate the processes they need to run their distribution-intensive businesses more profitably, efficiently, and rapidly. The company currently has more than 600 employees and spends more than 12 percent of its revenues on product innovation and development.

Through its software and services expertise, IBS delivers value by improving inventory planning, purchasing and supplier management, warehouse processes, demand management, and returns processing. IBS employees are experts in automotive, consumer goods, electrical, paper, publishing, pharmaceuticals, food and beverage, rental, and many other industries. The company operations cover 20 nations with partners in several more.

Current IBS ERP Offerings

Currently, IBS has two established ERP suite offerings, starting with IBS Enterprise (formerly IBS ASW), the main IBM System i-based ERP for distribution with about 900 customers (130 in the US). The product remains a great solution for certain industries with its depth of related expertise and breadth of industry-specific capabilities, e.g., for food and drugs distribution. IBS Enterprise combines the following six solutions into one comprehensive business platform:

  1. Financials

  2. Supply Management

  3. Manufacturing

  4. Logistics Assembly and Services

  5. Sales Order Management and Settlement

  6. Demand Management

Figure 1 shows the main ways the solution enables a typical customer to achieve reduced sales-to-cash cycles, lower inventory, and improve margins. IBS’ customers in the aforementioned industries talk about IBS Enterprise as a low-risk solution that is quick to implement for fast return on investment (ROI).


Figure 1

The second ERP solution suite, IBS BookMaster, is a book publishing and distribution solution with about 125 customers, stemming from the acquisition of Australia-based IDS Enterprise Systems in 2005. IBS has since developed RightsMaster, a specialized software module designed to manage the complexities of contracts, rights, and royalties in any medium, including books, music, or video, by electronic means, from the point of origin (content provider) to destination (consumer). IBS’ publishing solutions provide publishers the ability to release one chapter or many chapters, or illustrations from a book (or an e-book) independently as viable products.

Newer IBS Solutions

A brand new product, IBS Dynaman, is a best-of-breed warehouse management system (WMS) that has come out of about 100 IBS’ custom WMS projects in multiple industries, including automotive, food and beverage, third-party logistics (3PL), pharmaceutical, and wholesale. Based on these experiences, IBS has meanwhile commercialized its “new breed” of WMS for a preconfigured off-the-shelf use.

IBS Dynaman is a modular cloud-ready solution that is a good fit for tier two distribution centers trying to streamline, automate, and accelerate processes in the most high-volume, time-critical, and complex logistics environments. IBS Dynaman is a cost-effective WMS that supports complex solutions without being complicated itself. It brings together the following capabilities:

  • Concurrent pick-pack-ship functionality

  • Balance between automated and manual operations

  • Synchronized logistics and value-added services

  • Kitting and de-kitting functionality

  • Multi-owner inventory management

  • Dangerous goods handling

  • Third-party billing

Symphony’s Contribution

In addition to helping bootstrap IBS’ new product entries into the market by partnering with IBS to secure its first few customers, Symphony provided IBS with a real-time analytics platform, called IBS RPM, for informed decision making and elimination of highly manual reporting processes. Upon this analytic platform, IBS based the initial version of the brand new sales and operations planning (S&OP) offering. The also recently released IBS FS&OP product has several customers, and, as the “F” in the name suggests, there is financials/ERP integration as well as the nested modeling capabilities (of warehouses in the entire supply network). The product offers the following capabilities:

  • Disparate data source integration across the enterprise

  • End-to-end supply chain visibility

  • A business process technology platform

  • Constraint-based planning

  • Financial and operational plans connectivity

  • Interactive "what-if" simulation

  • Extensive performance reporting

  • Configuration to a company’s specific FS&OP process needs

In addition, Symphony gave IBS the mobility toolkit and now there are IBS Mobility apps for WMS, whose business logic and data reside in IBS Enterprise. The workflow-enabled offering leverages HTML5 for cross-platform use on Apple iPad/iPhone and Google Android devices.

Growth Strategy

IBS is refreshingly frank that addressing most of the challenges that the company was plagued by a while ago (see more details in TEC’s 2005 article series) is still a work in progress. These challenges are as follows:

  • Perception that it is only an “IBM System i shop”

  • Poor brand recognition and marketing

  • Top management exodus and constant transition/flux in recent years

  • No coherent (or opportunistic at best) partner strategy, with only two percent of revenues coming via partners

  • Money loss and no growth in recent years

Nowadays, IBS offers true choice to customers in terms of deployment (on premises or in the cloud via IBM, IBS, or other partners) and license (perpetual or subscription). IBS currently provides cloud and hosted services for 15 percent of its customers. This deployment choice somewhat mitigates the religious platform discussion (i.e., if customers use a cloud/hosted solution, do they really care whether it is IBM or Microsoft’s platform in the data center?). IBS believes in good market growth potential from increased demands on distributors, including increased globalization, retailer demands, and faster cycle times. As cloud computing adoption increases, customers tend to implement new packages more often, which should also increase overall software market demand.

IBS’ go-to-market strategy for Enterprise is to target tier two companies (with revenues between $100 million and $1.5 billion [USD]) across three key categories—strategic, maintain, and opportunistic. The company’s strategic focus areas will be wholesale distribution, food and beverage, automotive, and pharma. IBS has key customers that are willing to serve as references, and these are growing industries with demanding distribution needs. The vendor will target the top 75 percent of companies in each of the aforementioned industries, by revenue. The “maintain” industries will be electrical supply, industrial, and consumer durables, while the “opportunistic” industries will be consumer packaged goods (CPG), manufacturing, and wood and wood products.

As a result, IBS is finally getting profitable, but not necessarily via cost cutting only. The company invested 12 percent of its revenues in research and development (R&D) last year, and saw growth, particularly in the pharma sector and Dynaman WMS sales. IBS has also changed the strategy toward partners—in 2012, 10 percent of its revenues were reportedly via value-added resellers (VARs), and the company wants this figure to be 15 percent in 2013.

In Part 2 of this blog post series, IBS CEO Doug Braun unveils his game plan.

Recommended Reading
comments powered by Disqus