Will 2013 Be IBS’ Comeback Year? Part 2

ibs_ceo_doug_braun1.jpgIn part 1 of this series, we took a look at IBS, some of the challenges the company was facing, and its software offerings for the business community. To discuss the aforementioned issues (see part 1) and IBS’ ongoing turnaround, we recently spoke to Doug Braun, the chief executive officer (CEO) of IBS. As CEO, Mr. Braun is responsible for translating business needs into products that solve customer supply chain problems.

TEC: How would you describe IBS’s current state of affairs?
DB: The top challenges IBS faced were profitability, stability, and maturity of a global software company.  When Symphony Technology Group acquired IBS in June of 2011, it took a long-term view of bringing IBS back to profitability with the customer as the center of all efforts and did the following:

  • Increased our development capacity, which has already resulted in acceleration of IBS’ product roadmap of several customer-driven solutions for cloud, workflow, real-time performance manager, S&OP, mobility and rights & royalties management, as well as a new user experience, integration, and middleware.

  • Gained access to a wide product portfolio through Symphony, allowing IBS to launch more product enhancements and releases this year than in previous years in the history of the company.

  • Expanded the leadership team last year with the hiring of key executives with a demonstrated global leadership and a track record of success in supply chain and distribution management software including a new CEO, chief technology officer (CTO), chief marketing officer (CMO), a cloud delivery leader, and heads of services and of Asia Pacific (APAC).

TEC: Has your market and competitive landscape changed of late and how? What trends have you noticed in the market?
DB: We focus on value creation in everything we do. This starts with our sales efforts—we aren’t selling, we are listening to problems and then developing comprehensive solutions that create value. We have adjusted our professional services structure to have more customer-facing personnel and are training them on value creation. As part of this process, we are ensuring these personnel have the responsibility and accountability for customer success.

We also are concentrating on key vertical markets where IBS has a strong track record of adding customer value. Industry-specific applications are a core part of IBS’ DNA. IBS focuses on the most critical differentiating business functions for distributors. Our industry expertise allows IBS to deliver enterprise-wide industry solutions that uniquely position customers to address the challenges of the changing complexity facing today’s distribution and manufacturing companies.

In terms of the industry trends, we’ve observed the following:

  • Businesses must continue to know more about their customers—this provides the opportunity to have the right products at the right time for their customers. Enhancing the customer experience ensures the longevity of the relationship. Improving customer service and attracting and retaining new customers are the highest requirements.

  • Optimizing supply chain throughput and cash-to-cash cycle time is equally important, as companies want neither to be carrying excess inventory nor having large warehouses. They need the ability to quickly react to changes in demand to sustain and capture market share.

TEC: What is your ideal customer profile for each of your four main offerings? What underserved market needs are you trying to fill?
DB: For Enterprise, we are targeting the CEO of tier two and tier three distribution companies ($250 million to $1.5 billion [USD]) with complex distribution needs in pharmaceuticals, food and beverage, automotive aftermarket, and wholesale distribution, who are trying to grow an organization while managing and evolving their business model in a competitive environment. IBS Enterprise is a platform that fuels revenue, growth, and efficient operations in a fully integrated solution available via the cloud.  This is accomplished in an environment that minimizes the cost to serve the end customer.

For IBS Dynaman, we are targeting the CEO, CFO, chief information officer (CIO), vice president (VP) of operations, VP of logistics, or VP of supply chain who is looking for a solution to manage complexity in space, efficiency, inventory, and customer service levels. Usually our target customer has more than 20 employees and a warehouse that is larger than 2,500 square meters with existing WMS systems that need to be replaced. In addition, we have advanced 3PL tools to manage and control inventory and create the proper invoicing based on complex contract attributes between the 3PL and its customer. A sophisticated billing model based on a rule engine allows a 3PL to come up with a competitive billing concept that is easily implemented into the software.

For IBS FS&OP, we are targeting the CFO or VP of supply chain of a tier two distribution intensive company with more than 200 stock-keeping units (SKUs) who is looking to boost margins and increase inventory turns. FS&OP provides a collaborative platform that brings the organization together to continuously match demand and supply and connect the impact of operational decisions to the financial plan.

Last but not least, for IBS Media, we are targeting book publishers and new media who must deal with the industry shift to e-books and Web technologies. They are concerned with reducing labor costs and IT expenses while managing customer satisfaction and the complexities of managing rights, royalties, and permissions vital to the digital supply chain.

TEC: Are multitenant software-as-a-service (SaaS) and on-demand capabilities a major drive for you? Is the availability of these options an order qualifier or order winner yet?
DB: We have determined the benefit of multitenant deployment mainly rests with the software provider and as such we do offer a cloud solution in shared and dedicated environments. Many customers prefer to have the flexibility of their own instance of the application so they can control the upgrade schedule and develop custom code, if needed. As such, we deliver our applications in a dedicated instance environment but with the ability to provide on-demand capabilities, such as compute power. In most of the requests for proposals (RFPs) and customer inquiries we receive, on-demand capabilities far outweigh the request or requirements for multitenant applications.

TEC: What is your current partner ecosystem, i.e., who are your major system integrators (SIs), independent software vendors (ISVs), resellers, and other partners? How do you plan to increase your partner-based revenues (as mentioned in our call)?
DB: IBS is in the process of rolling out its new IBS Partner Circle Program. The program will target key SIs and ISVs in major markets focused around the IBS business verticals: wholesale and distribution, automotive, food and beverage, and pharmaceuticals. IBS is focusing on growth markets in South America, Canada, Europe, Russia, Africa, Japan, and key Middle-Eastern countries where we have minimal channel conflict. We continue to have a long-term relationship with IBM and will leverage our partnership to expand our reach worldwide. Our current partners are located with organizations in Europe, Mexico, Africa, and the Nordics. We have aggressive plans to expand the partner footprint in 2013, and quadruple our partner revenue stream through a focused recruitment plan designed to engage the right partners interested in license, service, and support revenue growth. IBS will be offering marketing assistance, training, and a number of value benefits to ensure success.

TEC: What is your high-volume analytics (big data) strategy, and are there any generally available (GA) offerings?
We believe big data presents an interesting and exciting possibility for our products, especially as it relates to consuming big data services for enhancing and augmenting our forecasting and modeling of product demand and the supply chain. One of the companies in the Symphony portfolio is focused on big data in the healthcare and pharmaceutical business, and we see possibilities of synergies with our pharma customers. At this point, we are watching these developments and looking for the right time to partner with our customers to bring additional capabilities to the market. Today there are no GA offerings at this point beyond our traditional analytics offering.

TEC: What are the evident remaining white spaces (gaps) in your broad suite and how do you plan to fill them?
DB: The most evident areas where we feel there are good opportunities to expand our footprint in our market and our base includes the following:

  • Workforce management for both our best-of-breed WMS base as well as our ERP warehouse module users

  • Business-to-commerce (B2C) e-commerce capabilities for our ERP base

  • Best-of-breed customer relationship management (CRM) capabilities for our ERP base

In the instances above, we look to address those areas through partnerships. We recently announced an agreement to original equipment manufacturer (OEM) SugarCRM to provide highly sophisticated CRM capabilities to our customers whose needs extend beyond our ERP-based CRM functionality.

TEC: Can you please explain your FS&OP differentiators and who might benefit from that?
Our S&OP product is about the fundamentals and the financial results—IBS S&OP continuously matches supply and demand and connects the impact of operational decisions to the financial plan. The system is geared around a concept of flow of inventory into and out of the supply chain. We set an expected range (maximum and minimum) of inventory we want to have on hand for unexpected events (quality hold, damage, supply disruption, etc.). As such we allow the flow of inventory through the channel to navigate through these bands, preventing the system from reacting or overreacting to a demand signal unless the boundaries are breached. We also provide a much better forecast to our suppliers, which in turn will provide a better pricing strategy. Finally, our customers carry fewer inventories as our supply chain has become more predictable and dependable. All four parties in the process benefit: supplier, distributor, retailer, and customer.

TEC: What is your strategy for leveraging social collaboration tools? Is it the requirement for your target market?
DB: While there is a lot of blogging about social collaboration and the influence of social media, we frankly don't see much more than a passing interest from the distribution market. The reality is that while many people can find ways to integrate social media into systems, no one has really figured out how to take it beyond a contrived use case and into an integral component of the enterprise workflow. We get much more interest in enabling collaboration and connecting what used to be distinct systems—a good example of that is the interest we see with our SugarCRM offering.

TEC: Is there anything that you are at liberty to volunteer on the company's future moves (that we should look for in 2013), i.e., new functional scope, verticals, main event messages, etc.?
DB: You’ll see IBS start to talk about Enterprise in a unique and different way. Driven by our channel enablement and supply chain capabilities, IBS Enterprise cloud ERP delivers increased revenue and lowered costs. Simply put, IBS Enterprise is the ERP solution that fuels growth in the distribution industry.

IBS will become the group to talk with about FS&OP and WMS. Our focus in 2013 is to maximize our deep products to gain significant market share and become the de facto leader. IBS will participate in the mergers and acquisitions market. We are actively looking for accretive opportunities to broaden our footprint in terms of product coverage and/or geographic coverage.
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